Federal Court of Australia

Carbery v Fire Rescue Victoria [2025] FCA 948

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application of the respondent dated 8 April 2025 is dismissed.

2.    The proceeding is adjourned for case management to 10.15 am on 17 October 2025.

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

REASONS FOR JUDGMENT

MCELWAINE J:

1    This is a test case. The applicant is employed as a firefighter by the respondent. He is also a member of the United Firefighters Union of Australia – Victorian Branch. He claims that the respondent has incorrectly calculated and reported certain fringe benefits, derived in the course of his employment, to the Australian Taxation Office (ATO).

2    The fringe benefits concern amounts paid by the respondent to the applicant, described as a reimbursement allowance, pursuant to orders made by the Fair Work Commission (FWC) of a weekly amount to cover the premium cost of income protection insurance (the scheme). The present arrangement is that the applicant is within the class of beneficiaries of a discretionary trust, the trustee of which has effected an excess liability insurance policy with an insurer. The trust provides for payments to firefighters in the event of acceptance of a valid claim. The trustee is Alternative Risk Management Services Pty Ltd. The scheme was put in place by Howden Insurance Brokers (Australia) Pty Ltd.

3    There are two types of cover offered by the scheme. A discretionary power to advance sums and insurance cover which insures the trustee and the beneficiaries. When an employee becomes a beneficiary, an amount is deducted from their weekly pay to fund the insurance premium.

4    The applicant has been within the class of beneficiaries of the trust since October 2022. A condition of being a beneficiary is he must pay the weekly premium. He made arrangements to authorise the respondent to deduct from his post tax earnings the amount of the weekly premium that he is liable to pay to the trustee, for the respondent to pay that amount to a representative of the insurer and simultaneously to reimburse him for that amount as part of his wages. He contends that in making that arrangement, he did so on the basis that the amount reimbursed by the respondent was not deductible in his personal income tax return, nor was it to be reported as income on his annual payment summary.

5    From 1 January 2023, the applicant pleads (inconsistently with that arrangement, but nothing presently turns on it) that he has paid the weekly contribution required to maintain membership of the scheme and has been reimbursed for those amounts by the respondent as evidenced in weekly payslips.

6    In July 2024, the applicant received a statement from the ATO which specified, amongst other things, that he had been the beneficiary of reportable fringe benefits in that year in the amount of $5,569.51. He further contends that the respondent had assessed and reported to the ATO that he was the beneficiary of “Reportable fringe benefits – taxable employer status amount” in that sum. He contends that the respondent did so “on the hypothesis that substantially the whole of the contributions made by [him] to the [trust] would not have been deductible by [him] in calculating his assessable income if [he] had not been reimbursed for the same” by the respondent.

7    He contends that the basis for the fringe benefits calculation by the respondent was “fundamentally flawed” for a number of reasons. The core contention is that the respondent disaggregated the annual outgoings of the trust “in order to allocate figures to particular activities, including firefighter claims for lost income paid under the excess insurance taken out by [the trustee], firefighter claims for lost income paid with other funds of [the trust], administration overheads of [the trust], and other benefits paid by [the trustee]”. He provides nine particulars why that is so. It is not necessary for present purposes to set them out. The consequence of the flawed calculation was that the ATO adjusted his taxable income for the purposes of assessing his entitlement to a family tax benefit, and consequently reduced his entitlements. For the income year in issue that detriment is calculated by the applicant in the sum of $970. A further consequence is that his adjusted taxable income increased the amount of the child support payment that he is obliged to pay. In each of those ways, he contends that he has suffered detriment.

8    By an originating application lodged on 5 March 2025, the applicant seeks the following substantive relief:

A declaration that the amount reported by the respondent to the Australian Taxation Office as the amount of reportable fringe benefits derived by the applicant in the financial year to 30 June 2024 was incorrect and must be withdrawn.

All incidental orders, directions and other relief as to the Court seems meet, including a direction that the respondent forthwith inform the Australian Taxation Office that the respondent has incorrectly calculated any reportable fringe benefits derived by the applicant in the said reporting period, by the filing of an amended return or otherwise, if the respondent does not voluntarily and promptly correct the reportable fringe benefits amount that the respondent has reported to the Australian Taxation Office in respect of the applicant.

9    By an interlocutory application lodged on 8 April 2025, the respondent seeks orders that the originating application be set aside under r 13.01(1)(a) of the Federal Court Rules 2011 (Cth) or that the entirety of the proceeding be dismissed pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and r 26.02(1) of the Rules. The respondent contends that there is no matter within federal jurisdiction, and therefore, this Court does not have authority to grant the relief that the applicant seeks. It further submits that the applicant has no real interest in the declaratory relief and it is inutile as it will not bind the government agencies responsible for family tax benefits and child support payments who are not parties.

10    Each of the parties rely on affidavits. Ms Kaitlyn Gulle is a solicitor for the respondent and her affidavit is dated 8 April 2025. It sets out the background history. The respondent accepts for the purposes of the interlocutory application each of paragraphs [1] – [24] and [27] of the statement of claim. It does not accept the pleaded facts at [25] or [26]. I reject the respondent’s position that it is able to be selective as to which of the pleaded facts it accepts. As is well understood, on applications of this type, the Court assumes that each pleaded fact will be established by an applicant at trial.

11    That criticism aside, Ms Gulle helpfully identifies the crux of the interlocutory application at paragraphs [7] – [10] of her affidavit:

At the heart of the Proceeding is a question of whether amounts paid by [the respondent] on [the applicant’s] behalf totalling $5,569.51 (see SoC [20]) are 'reportable fringe benefits amounts' as defined ins 135P of the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBT Act). That is relevant to [the applicant] because the quantum of his reportable fringe benefits amounts affects:

(a) his entitlement to the family tax benefit; and

(b) the amount of child support he is required to pay.

[The applicant] contends that the relevant amounts are not reportable fringe benefits amounts. If he is right, that would increase his family tax benefit entitlement and decrease his child support liability.

Whether the relevant amounts are reportable fringe benefits amounts is also relevant to [the respondent]. In short, [the respondent] is liable to fringe benefits tax on fringe benefits it pays to its employees (including [the applicant]). [The respondent] does not get reimbursed for that tax by [the applicant] or anybody else so bears the cost itself.

Therefore, [the respondent] does not have any interest in opposing or arguing against [the applicant] contention that the relevant amounts are not reportable fringe benefits amounts. On the contrary, if [the applicant] is right that those amounts are not reportable fringe benefits amounts, that would reduce [the respondent’s] fringe benefits tax liability.

12    It is important to pause and reflect on those paragraphs, in the knowledge of the submissions that have been put to me by Mr Andrew de Wijn SC and Mr Jakub Patela for the respondent. The respondent does not say that there is no matter arising under the laws made by the Parliament. Rather, the submission is that there is no concrete or justiciable controversy between the applicant and the respondent. That is because if the applicant is correct, the amount of fringe benefits tax (FBT) payable by the respondent will decrease, the applicant’s entitlement to the family tax benefit will increase and the amount of child support that the applicant is required to pay will decrease. In other words, a lower taxable value would benefit both parties.

13    That submission is taken further in the written case for the respondent where it is said:

Here, while the FBT issue raised has consequences for both [the applicant] and [the respondent], their interests are aligned rather than opposed. There is no application of rights, duties or liabilities about which [the applicant] and [the respondent] disagree in the relevant sense. Rather, they agree that they want the taxable value to be lower. As explained above, it would be against [the respondent’s] interests to oppose or argue against [the applicant’s] contention that the fringe benefits provided by [the respondent] have a nil, or lower, taxable value. If this proceeding proceeds to trial it will effectively be ex parte.

14    In contrast, Mr Rodney Garratt KC and Mr Angelo Germano for the applicant submit that there is a justiciable controversy to be quelled by the exercise of judicial power because the respondent incorrectly calculated and reported fringe benefits amounts to the ATO, and in consequence the applicant suffered financial detriment. The controversy between the parties is:

[The respondent] declines to perform and report a correct FBT calculation in [the applicant’s] case. The practical effect of the declaration sought is that [the respondent] would be obliged to perform its calculations correctly, and in consequence to amend its return to the ATO for the 2024 FBT fiscal year. There is accordingly a controversy between [the applicant] and [the respondent] which gives rise to a ‘matter’.

15    The submission continues that the alignment of interests identified by the respondent:

[S]eeks to obliterate the disputes between the parties by viewing them from a high level of abstraction. Parties almost always both want the court to reach the right outcome, sometimes by applying agreed law to agreed facts, and so it may be said, at a high level of abstraction, that their interests are “aligned” but this does not mean that there is no controversy to be quelled. Here [the applicant] contends that on the proper application of the otherwise deductible rule there was no amount of reportable fringe benefits for [the respondent] to return to the ATO; [the respondent] disputes this contention directly.

16    Attention is also drawn to that which is described as “tenacious disagreement” between the parties and correspondence before commencement of the proceeding, as referred to in the affidavit of the applicant’s solicitor, Antonia Sakkas made on 29 April 2025. I should mention that the applicant also relies on his affidavits made on 29 April and 24 July 2025 together with an affidavit made by Laura Campanaro, the industrial officer coordinator of the Union, dated 9 May 2025.

17    Something more should be said about the underlying controversy. On 8 February 2023, Deloitte gave FBT advice to the respondent in relation to the application of the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBT Act) to the scheme and in particular the employee reimbursement arrangement. The advice concluded that in respect of the total reimbursement by the respondent of $50.43 per week, a fringe benefit taxable value of $48.01 would arise on a weekly basis, leading to an annual taxable value of $2,496.52 for each employee and a Reportable Fringe Benefit Amount (RFBA) of $4,710 for full-year participating employees. This was based on Deloitte’s view as to the appropriate payroll treatment of each component and the related post-tax deduction, summarised as follows:

18    The respondent then filed its FBT return for the 2023 year and paid tax accordingly.

19    In July 2023, the respondent raised with the Union the possible FBT implications of the arrangements. Between July 2023 and February 2024, there were exchanges and meetings between respondent and the Union, including Deloitte, to discuss the issue. On 1 May 2024, the respondent sent the Union a formal letter setting out its position. Inter alia, it stated:

Currently the reimbursement payments amount to $50.43 per employee per week, commensurate with the adjusted amount that was reimbursed through the previous income protection arrangement.

Based on information recently provided to [the respondent] and/or its advisers to date, [the respondent] relevantly understands that:

•    the [trust] provides both “insurance cover” (being external insurance purchased by the trustee for the [trust] and its members) and “trust cover” (a discretionary cover component);

•    in relation to the “insurance cover”, the [trust] has taken out insurance policies underwritten by [the insurer] to cover the following risks:

•    loss of income;

•    lump sum; and

•    additional benefits;

•    of the member contributions of $50.43 per week, approximately $4.06 per week is used to secure income protection insurance with [the insurer];

•    the remaining member contributions are used to secure other insurance cover and to contribute to the trust cover; and

•    the trust cover may also be utilised to meet claims relating to income protection.

[The respondent’s] preliminary assessment is that a significant portion of these reimbursements is likely to be subject to [FBT]….

20    The letter next set out the detailed reasons for that preliminary view. One of the matters raised was that the assessment had significant adverse financial implications for the respondent, in that it calculated its FBT liability for the reimbursed amounts of approximately $7,000,000 per annum. It further noted that for each employee recording the RFBA on employee income statements would likely increase their adjusted taxable income by approximately $4,550 per annum which “may have implications for employees’ ability to access various means tested government benefits and certain payment obligations including child maintenance payments”.

21    The letter requested cooperation from the Union “in minimising the above implications of the current arrangements, both for [the respondent] and individuals”. One option that was canvassed was an application to the ATO for a private binding ruling. For that pathway, the respondent foreshadowed that the ATO would likely require further additional information, including the number of members of the trust, the details of claims made, the proportions of member contributions to cover income protection insurance claims and that which is applied to fund the insurance premium. The letter concluded as follows:

Without the above information, the ATO is unlikely to have sufficient relevant information upon which to make a decision and the current FBT treatment would need to be maintained. This would disadvantage [the respondent] in relation to the FBT expense and its employees in relation to the quantum of reportable fringe benefit amounts. As [the respondent] cannot support the continuation of the significant implications for [the respondent] or its employees outlined above, in these circumstances it will likely be necessary for [the respondent] to propose steps to reduce the reimbursements paid to employees to reflect the amount which it can assess (based on the information provided) to be referrable to income protection insurance and therefore falling within the "otherwise deductible rule".

22    The Union responded by letter on 20 June 2024, and notified the respondent of a dispute pursuant to the Fire Rescue Victoria Operational Employees Interim Enterprise Agreement 2020 (EBA). The respondent provided its response on 25 June 2024. The dispute concerned the proposal by the respondent to reduce the reimbursement amount. There was further correspondence, and meetings between the representatives in each party. The dispute remained unresolved.

23    There were protracted proceedings in the FWC. A direction was made that the dispute be dealt with by the Full Bench. On 11 March 2025, the dispute was heard by the Full Bench and on 16 March 2025 it published its decision: United Firefighters’ Union of Australia v Fire Rescue Victoria [2025] FWCFB 54. It concluded that the scheme is not a policy or scheme for the purposes of the income protection clauses of the EBA, and in consequence the requirement to make the reimbursement payments “do not operate in respect of the [scheme]” and “there are presently no such arrangements”. It concluded:

The parties should now do what the Income Protection clauses in the Agreement require, which is to consult and implement an agreed income protection policy or scheme for all employees covered by the two divisions of the Agreement.

24    There is an unresolved application for leave to appeal that decision to this Court. Mr Garratt stated that the “status quo has been maintained in the meantime”, pending the outcome of the leave application.

25    The applicant corresponded with the respondent on 19 July 2024. He queried the RFBA listed on his Income Statement for the financial year ending June 2024 (correcting for a typographical error):

I'm seeking some more info to help understand my RFBA listed on my income statement for FY23-24. Is this a new thing to be reported, or was this also in place last FY22-23? I'm not aware of my remuneration or benefits changing significantly between FY22-23 and FY23-24, but I didn't have any RFBA shown on my Income Statement for FY22-23.

I'm trying to understand what benefits I received that this is reporting. I assume it includes the Howden [reimbursements] listed on our payslips each week for Income Protection? Are you able to list the fringe benefits I received last year, if there were any others? My sum of the Howden payments comes close to but falls short of the RFBA figure once grossed up.

26    The same day, a member of the FBT team of the respondent responded:

I can confirm there was no Reportable Fringe Benefit Tax Amount (RFBA) amount relating to you for 2022-23.

The RFBA of $5,569.51 reported on your 2023-24 Income Statement relates to Income Protection payments that have been assessed as non-deductible.

The change in income protection providers January 2023 has resulted in change from insurance cover to a cover provided by a discretionary trust as per 'UFUVIC Accident & Sickness Product Disclosure Statement'.

The weekly payment components are set out below for you and have been assessed based on advice from the new provider of this insurance, and [the respondents] tax advisors:

•    $2.65: Insurance Cover - Loss of Income (Deductible amount)

•    $52.57: Other Cover amounts- (Non Deductible amount), which include Discretionary trust cover, Insurance Cover - lump sum, Insurance Cover-Additional Benefits.

As this is the first full year with the new income protection provider, along with the increased premium amounts in response to the Fair Work Decision to increase operational entitlements dated 8 September, it is the first year most employees will see a change in their reportable benefits.

[The respondent] can confirm that based on the information available to date, the treatment of the income protection is correct.

A Reportable Fringe Benefits Amount, or RFBA, is an amount which records the value of fringe benefits you received throughout the preceding FBT year (1 April to 31 March). The value reported is the aggregate taxable value of all fringe benefits received by an employee which is grossed up by a factor determined by the ATO depending on the type of RFBA.

27    Mr Garratt submits that this is a definitive response that the applicant was assessed as having a RFBA, which is confirmed to be correct by the employer and which the applicant rejects. The applicant’s case is that the respondent’s position in the FWC proceeding remains unchanged, namely, that it “ought not be required to continue to incur those additional costs, which have resulted from paying money into the [trust]”. The submission went further, that, consistently with its position in the FWC, the respondent’s position in this Court must be that “all but $2.65 of the current reimbursement entitlement is non-deductible on a correct analysis”. Mr Garratt emphasised the following paragraphs of the respondent’s submission in the FWC that make his submission “plain”:

The expansion to [the respondent] funding items that are not otherwise-deductible, through the [trust], has increased [the respondent’s] FBT bill (so far as it is attributable to this item) significantly:

a)    from $610,575 for the FBT year ended 31 March 2022 (the last year wholly covered by ATC/Protect);

b)    to $2,319,930 for the FBT year ended 31 March 2023 (with the [trust] arrangement in place from 1 January 2023; and

c)    to $10,400,512 for the FBT year ended 31 March 2024 (the first year wholly under the [trust] arrangement).

In addition, because Victorian payroll tax is calculated on the basis of "wages", which includes the taxable value of fringe benefits, the increase in the fringe benefits component of "wages" from $5,660,220 in 2021-2022 to $25,977,477 in 2023-2024 (at the current payroll tax rate of 4.85%) has increased [the respondent’s] payroll tax bill by approximately $1,000,000 per annum.

28    The applicant argues that the respondent’s submission to the FWC, by which it seeks to reduce it’s liability to fund reimbursements for income protection, is premised on the basis that the current income protection reimbursement payments would not be deductible to the applicant, which is incorrect.

29    There has been further significant correspondence between the solicitors for the parties preceding commencement of this proceeding. It is unnecessary to essay much of it, save to observe it sets out the controversy between the parties in considerable detail. One or two of the exchanges highlight the dispute the applicant seeks to agitate in this Court, apart from the dispute in the FWC. On 27 February 2025, Davies Lawyers for the Union corresponded with Lander & Rogers lawyers for the respondent. The letter begins with the obviously correct statement that the basis for the FBT calculations concerns the proper interpretation of the FBT legislation, which is not a matter for the FWC, but is one for this Court to determine. The division between the parties is crystallised as follows:

Our clients contend, as a matter of principle, that the question of deductibility is to be addressed from the perspective of the employee at the time the employee commits (or re-commits) to purchasing the income protection cover with regard to the benefit sought to be achieved by the employee by that outlay in that year.

…

A retrospective, generalised analysis of the kind that [the respondent] has performed is simply not relevant to the deductibility of contributions made by [the applicant] (or other firefighters) in the 2024 financial year pursuant to a commitment undertaken at the end of 2022. An analysis which pays no regard to the price or availability of alternative cover in the marketplace at the relevant time is not directed to the enquiry that needs to be undertaken in order to determine the amount for which [the applicant] might have obtained a deduction in the 2024 financial year for what he in fact purchased.

30    Davies Lawyers threatened the commencement of proceedings in this Court unless the respondent withdrew “it’s reportable fringe benefit calculations”. Lander & Rogers did not, in a reply of 3 March 2025, accept those contentions, asserted that the legal analysis of the Union was flawed and concluded by stating: “any proceedings of the kind you have foreshadowed will be premature, unwarranted and therefore unreasonable”. This proceeding was commenced on 4 March 2025. There was further correspondence between the lawyers. Amongst other things, Lander & Rogers asserted that certain contentions pleaded in the statement of claim “which are critical to [the applicant’s] claim, are necessarily wrong and he has no reasonable prospect of successfully prosecuting his claim”. It was further stated that the relief sought is inutile in that it will not bind the Department of Social Services, which administers the family tax benefit and child support schemes: letter of 7 March 2025. Davies Lawyers did not accept those contentions. In further correspondence from Lander & Rogers of 21 March 2025, one sees the following:

The interests of [the applicant] and [the respondent] are aligned on the question of whether the relevant reimbursements were taxable fringe benefits (due to the questions’ impacts on [the applicant’s] child support liability/family tax benefit entitlement and on [the respondent’s] liability to pay FBT). It is in both parties’ interests that those amounts are not taxable. [The respondent] would, of course, welcome a collaborative approach with [the applicant] and the [Union] to resolving that question.

We would add that the ATO (and the Department) may well have regard to what both the employer and employee report as to the reportable fringe benefits amount. However, ultimately they must make an assessment of the reportable fringe benefits amount based on law rather than what either the employer or employee reported. Similarly, if a Court or Tribunal is required to determine an employee’s reportable fringe benefits amount for a given income year, then the amount reported (by both the employer and employee) has no legal significance. The determination is made as a matter of law by applying the relevant statutory criteria, and those criteria did not take into consideration what an employer or employee reported to the ATO).

31    By this time, the position of each party had become entrenched. Davies Lawyers responded, by rejecting those contentions on 26 March 2025. There was even more correspondence thereafter, which is unnecessary to set out.

32    It should be noted that the respondent’s arguments are not confined to the proposition that it’s interests and those of the applicant are aligned. As is argued by the respondent in the correspondence set out above, the submissions variously contend that the declaratory relief will not have practical utility for the parties because it will not bind the Department which is responsible for administering the child support and family tax benefit legislation, or the ATO. For unexplained reasons, the applicant has chosen not to seek review of relevant determinations made by the Department about the applicant’s entitlements pursuant to the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (Pt 5 Div 1), or to file an objection concerning his child support assessments pursuant to Pt VII of the Child Support (Registration And Collection) Act 1988 (Cth).

33    The respondent submits that the appropriate course is for the applicant to “avail himself” of the statutory review and objection procedures. If dissatisfied with the Department’s decision he can seek review in the Administrative Review Tribunal and, ultimately, appeal to this Court. The submission continues that at each stage of the process the applicant can make the arguments in support of his position that he currently intends to make in this proceeding.

34    Relevantly, s 111 of the Family Assistance Administration Act sets out the process for an application to be made to the Tribunal for review in respect of the Family Tax Benefit. In regard to the child support assessments, s 89 of the Registration and Collection Act sets out the process for an application to be made to the Tribunal for review. A party to a proceeding in the Tribunal may then appeal to this Court, on a question law, from the decision of the Tribunal in the proceeding: s 172 of the Administrative Review Tribunal Act 2024 (Cth).

35    It is the respondent’s submission that the availability of those procedures is itself “a clear and sufficient basis for this Court to deny the declaratory relief sought”. The respondent relies on Federal Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; (2008) 237 CLR 146, where a taxpayer sought a declaration that an amended assessment of income tax was invalid. The High Court refused that relief because there was another, more appropriate avenue of review available, being the objection procedure in Pt IVC of the Taxation Administration Act 1953 (Cth): at [10], [48] (Gummow, Hayne, Heydon and Crennan JJ); [91] – [92], [157], [168] (Kirby J). In the respondent’s submission, the procedures for challenging family tax benefit entitlements and child support liability are similar to that established by Pt IVC of the Taxation Administration Act. It is important to note that relief in that case was refused on discretionary and not jurisdictional grounds.

36    Accordingly, the respondent submits there is no “sufficient” or “real” interest in the applicant obtaining the declaration sought: Hobart International Airport Pty Ltd v Clarence City Council [2022] HCA 5; (2022) 276 CLR 519 at [32]. Even if this Court grants the declaratory relief sought, the applicant will still need to pursue the statutory avenues of review, and so, where the Department is not bound by this proceeding, the review process will amount to a re-litigation of the same issues.

37    In oral submissions, Mr Garratt accepted that the outcome of this case will not bind the Department or the ATO, but submits that a declaration between the applicant and respondent would not be inutile because it would be of “great persuasive power”.

38    For completeness, the respondent also submits that the applicant does not have a sufficient or real interest because he has not identified a legally enforceable right that he holds against the respondent and nor has he shown that this is a case of exceptional circumstances which might otherwise entitle him to the declaratory relief that he seeks.

39    In my view, the dispositive issue is whether looking at the whole of the controversy between the parties, that is not confined to the pleaded case and the submissions now advanced, the applicant has identified a justiciable or concrete controversy to be quelled by the exercise of judicial power.

40    Section 21 of the FCA Act grants power to make binding declarations of right, whether or not any consequential relief is or could be claimed. An applicant for declaratory relief need not demonstrate an underlying cause of action: Hobart at [32], Kiefel CJ, Keane and Gordon JJ. But this provision is concerned with power, not jurisdiction. The anterior and first question is always whether there is a matter: AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 26; (2023) 278 CLR 512 at [30], Kiefel CJ, Gordon and Steward JJ.

41    In Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 at 437 – 438, Gibbs J, when speaking of declaratory relief, approved what Lord Dunedin had stated in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448:

The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought.

42    His Honour prefaced that reference by observing that “it is neither possible nor desirable to fetter the broad discretion given by [s 10 of the Equity Act 1901 (NSW)] by laying down rules as to the manner of its exercise”. That was not a case in federal jurisdiction.

43    In Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406 at 414, Lockhart J (with whom Spender and Cooper JJ agreed), set out a summary of what is necessary to obtain a grant of declaratory relief, which has subsequently been widely referred to and endorsed. His Honour observed:

For a party to have sufficient standing to seek and obtain the grant of declaratory relief it must satisfy a number of tests which have been formulated by the courts, some in the alternative and some cumulative. I shall formulate them in summary form as follows:

•    The proceeding must involve the determination of a question that is not abstract or hypothetical. There must be a real question involved, and the declaratory relief must be directed to the determination of legal controversies: Re Judiciary and Navigation Acts [1921] HCA 20; (1921) 29 CLR 257. The answer to the question must produce some real consequences for the parties.

•    The applicant for declaratory relief will not have sufficient status if relief is 'claimed in relation to circumstances that [have] not occurred and might never happen': University of New South Wales v Moorhouse [1975] HCA 26; (1975) 133 CLR 1 per Gibbs J. at 10; or if the Court's declaration will produce no foreseeable consequences for the parties: Gardner v Dairy Industry Authority (NSW) [1977] 52 ALJR 180 per Mason J. at 180 and per Aickin J. at 189.

•    The party seeking declaratory relief must have a real interest to raise it: Forster v Jododex Australia Pty Limited [1972] HCA 61; (1972) 127 CLR 421 per Gibbs J. at 437; and Russian Commercial and Industrial Bank v British Bank for Foreign Trade Limited [1921] 2 AC 438 per Lord Dunedin at 448.

•    Generally there must be a proper contradictor: Russian Commercial and Industrial Bank at 448; and Ainsworth per Brennan J. at 596.

44    Aussie Airlines was a case in federal jurisdiction where the applicant sought declaratory relief that it was a new entrant to the airline industry at a time when the Commonwealth implemented the Two Airline Policy by, inter alia, provisions in long-term leases of Commonwealth airports.

45    In Hobart, that passage was approved at [36] by Kiefel CJ, Keane and Gordon JJ, though earlier at [32] their Honours expressed the need for a contradictor as mandatory. In Hobart, two local councils sought declaratory relief as to the meaning of lease agreements between the Commonwealth and airport lessees concerning the obligation to make payment of rate equivalents, where local rates were not otherwise payable due to Commonwealth ownership of the airport lands. A single judge of this Court dismissed the proceedings on the basis that the councils did not have standing because they were not parties to the leases: Clarence City Council v The Commonwealth [2019] FCA 1568. The Full Court allowed the appeals: Clarence City Council v The Commonwealth [2020] FCAFC 134; (2020) 280 FCR 265. The High Court, by majority, dismissed the appeals. In the Full Court and in the High Court the argument turned not so much on whether the councils as non-parties could not have standing through the prism of privity, but rather whether there was a matter within federal jurisdiction.

46    The High Court held that the councils did have standing because they had a sufficient or real interest in determining the meaning of the lease clause in issue. It did not matter that the parties to the leases were not in dispute about the meaning. The question of justiciable controversy was answered by “asking if the applicable principles permit the councils to seek declaratory relief in relation to the dispute”: [30]. In answering that question, Kiefel CJ, Keane and Gordon JJ at [32] stated:

It is for those reasons that the particular question in these appeals is whether the Councils have standing. What is required to establish "standing" varies depending on the relief sought. Here, the Councils seek declaratory relief. The breadth of the jurisdiction to grant declaratory relief was considered by Gibbs J in Forster v Jododex Aust Pty Ltd. The question must be real, not theoretical. There must be a proper contradictor – someone presently existing who has a true interest to oppose the declaration sought. And the applicant must have a "sufficient" or "real" interest in obtaining the relief]. There is no requirement that an applicant for declaratory relief have a cause of action in order to obtain it. Those principles are not exhaustive. These appeals turn on the nature and adequacy of the Councils' interest in the resolution of the dispute.

47    At [43] further emphasis is placed on the requirement that there be a contradictor, noting that the lessees in that case “each have a real interest in opposing the declaratory relief sought”, specifically by reference to Gibbs J in Forster.

48    Gageler and Gleeson JJ in separate reasons also concluded that the matter requirement was satisfied in that the councils had a sufficient material interest in seeking declaratory relief: [74]. At [76] their Honours emphasised the controversy between the councils, on the one hand, and the Commonwealth and the lessees, on the other “about the content of the contractual obligation owed” by the lessees to the Commonwealth to make the equivalent rate payments.

49    The requirement that there must be a contradictor with an interest in opposing declaratory relief for there to be a matter was also stated by Gummow J as a member of the Full Court in CTC Resources NL v Commissioner of Taxation (1994) 48 FCR 397. At issue were appeals by the taxpayer against the disallowance of objections to private rulings in circumstances where the Commissioner contended that the appellant was not a person dissatisfied for the purposes of s 14ZZ of the Taxation Administration Act. The reason being that the period covered by one of the rulings had passed without the taxpayer implementing the proposal. The Court concluded that appeal was incompetent as the circumstances of that ruling had not occurred and might not occur. Gummow J at 406 – 407 drew attention to the difference between the position at common law, where declaratory relief may be refused on discretionary grounds if there is no contradictor, and the matter requirement for such relief in federal jurisdiction. His Honour observed:

The rigour of the rule preventing conferral of federal jurisdiction to give advisory opinions has been mitigated by the broad scope of the declaratory judgment, but this still requires a controversy and a contradictor. Chapter III is concerned with the resolution of justiciable controversies.

50    Recently, the New South Wales Court of Appeal (White JA, Stern JA and Griffiths AJA), reasoned that the “rules” formulated by Gibbs J in Forster “are not confined to discretion and bear upon jurisdiction”: Zurich Australian Insurance Ltd v CIMIC Group Ltd [2024] NSWCA 229; (2024) 115 NSWLR 297 at [560], which in their view is authoritatively supported by Hobart at [32].

51    In AZC20, the Court held by majority that the Full Court of this Court did not have jurisdiction to make orders in an appeal when the subject matter of the preceding had become moot by the exercise of Ministerial determinative power. At [32], Kiefel CJ, Gordon and Steward JJ emphasised the justiciable controversy element as follows:

As to the second element, as was most recently affirmed in Unions NSW v New South Wales ("Unions [No 3]"), "[e]xceptional categories aside, there can be no 'matter' within the meaning of Ch III of the Constitution unless 'there is some immediate right, duty or liability to be established by the determination of the Court' in the administration of a law and unless the determination can result in the Court granting relief which both quells a controversy between parties and is available at the suit of the party seeking that relief". The requirement to identify some "immediate right, duty or liability" to be established by the determination of the court "reinforces that the controversy that the court is being asked to determine is genuine, and not an advisory opinion divorced from a controversy". That requirement applies in both original and appellate jurisdiction.

52    At [52], their Honours noted that determination of whether there is a matter is not limited to the legal proceeding, but extends to “all claims made within the scope of the controversy”. Writing separately, Edelman J identified three aspects of a matter at [68]:

The first element of a matter—a justiciable controversy—is commonly present in the exercise of judicial power. But the focus of a matter is narrower than the concept of judicial power. The element of a matter usually requiring a justiciable controversy has three aspects. First, a justiciable controversy must concern legal rights. Secondly, it must generally involve a dispute about those legal rights that can be resolved in a judicial manner by a court. Thirdly, the parties before the court must have standing to agitate that dispute. Each of these aspects is different although they are cumulative. The failure to recognise all aspects of a justiciable controversy can lead only to confusion and the dilution of its requirements.

53    At [72] his Honour emphasised that there must be “a real dispute about” rights, duties or liabilities that “must concern some concrete, or real-world, application of rights, duties or liabilities about which opposing parties disagree”. It is not sufficient for the controversy to be historic: it must be live, which his Honour categorised at [73] by reference to his reasons in Unions NSW v New South Wales [2023] HCA 4; (2023) 277 CLR 627 at [52] as follows:

[T]he position in the United States and Australia in this respect was the same: "[t]he requisite personal interest that must exist at the commencement of the litigation [which is the foundation for standing] must continue throughout its existence".

54    That brings me to authority in this Court that in civil penalty proceedings declarations of contravention may be made by consent where the respondent admits the contravention. The principal case is the decision of the Full Court in Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378 (Greenwood, Logan and Yates JJ). The Court allowed an appeal from the primary judge who declined to make declarations of contravention in conjunction with the imposition of civil penalties. The primary judge considered himself bound by an earlier decision of the Full Court to the effect that where a contravener consents to the orders, there is no proper contradictor and therefore no matter.

55    The Court relied on two earlier decisions, commencing with Oil Basins Ltd v Commonwealth [1993] HCA 63; (1993) 178 CLR 643, Dawson J sitting in original jurisdiction. Proceedings were instituted for declaratory relief as to whether a party to a royalty agreement was liable to pay the petroleum resource rent tax. The Commissioner had not issued an assessment prior to commencement of the proceeding. The Commissioner and the Commonwealth as the named defendants applied for the proceeding to be struck out on the basis that the pleadings did not identify any act, error or omission on the part of the Commissioner that the plaintiff sought to impugn. Dawson J refused to strike out the proceeding. At 649 – 650, his Honour stated:

The question raised by the plaintiff is neither abstract nor hypothetical and the answer to that question will clearly produce consequences for the parties. I would, for my own part, doubt whether the failure on the part of the Commissioner to indicate whether or not he disputes the plaintiff’s claim could preclude the plaintiff from seeking against him the relief which it does. The most that could be urged is that there is no proper contradictor, but I doubt whether that is so when the Commissioner’s participation in the action is likely to force him to abandon his present stand of neutrality. Even if he were to maintain that stand, I doubt whether that would prevent him from being a proper contradictor. He clearly has a true interest in the plaintiff’s claim and, if he were to choose not to oppose it and to abide by any order which the court might make, that might perhaps amount to no more than performance of his role as a contradictor in a particular manner.

But there is no need in this case to reach a conclusion whether the Commissioner is a proper contradictor because the producers obviously have a true interest in opposing the declarations sought. There is no requirement that all defendants in an action claiming the declaration must oppose the plaintiff.

56     At 651, His Honour observed:

I can see no good reason why, in the absence of any assessment or, at all events, any immediate prospect of one being made, the Court should be precluded from determining the liability to tax of a person in proceedings for a declaration if there is a real question.

57    The second is the decision of French J in IMF Australia Ltd v Sons of Gwalia Ltd (administrator appointed) [2004] FCA 1390; (2004) 211 ALR 231 at [47]:

The requirement of a proper contradictor in a declaratory context is not merely to ensure that the court will be provided with all materials but also arises because absent a contradictor there is no person to be bound by the relief sought: Acs v Anderson [1975] 1 NSWLR 212 at 215 per Hutley JA citing PW Young, Declaratory Orders, 1st ed, Butterworths, Sydney, 1975, p 210. A proper contradictor, for jurisdictional purposes, in my opinion cannot be confined to the class of party who comes to court ready to oppose the relief sought. There may be a case in which a party, whether a private person or body or a statutory regulator, expresses opposition to, and an intention to oppose, a proposed course of action by another party on the basis that it is in breach of some contractual or statutory prohibition. The party opposing the conduct may however decide for any one or more of a variety of reasons not to contest declaratory proceedings about the lawfulness of the proposed conduct. So the declaration may be made by consent or may be uncontested. This does not mean that the court lacks jurisdiction or power to grant the declaration in such a case. The proceedings will have resolved a pre-existing controversy. A more difficult question arises where a party with an interest in opposing a particular course of conduct refuses to say whether it will take any action in respect of that conduct. Such a party may be said to be one which, notwithstanding its silence, has an interest in opposing the proposed conduct.

58    Returning to MSY Technology, at [20] the Court noted the distinction between a condition precedent to the existence of a matter, an “initial controversy with respect to a right, duty, liability or obligation as between an applicant and a respondent with an interest in the same” and resolution of the controversy after the proceeding is commenced. There is no “want of jurisdiction if, after the institution of proceedings, what was once a controversy is resolved.” In distinguishing the earlier Full Court decision in BMI Ltd v Federated Clerks’ Union of Australia (NSW Branch) (1983) 6 IR 416 the Court reasoned at [30]:

Subject to one qualification, we agree with the observation made by the primary judge. The qualification is that we would not, with respect, describe the joint judgment of Keely and Beaumont JJ in B.M.I. as “analytically opaque”. Nonetheless, to the extent that the statement in the joint judgment of Keely and Beaumont JJ suggests that the absence of opposition by an interested party to the declaratory relief sought means that there is no proper contradictor and that this disentitles an applicant to a grant of declaratory relief, it evidences a misunderstanding of the explanation given by Lord Dunedin in his speech in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd, adopted by Gibbs J in Forster v Jododex. The correct position is as opined by Dawson J in Oil Basins and by French J in IMF (Australia) Ltd v Sons Of Gwalia in the passages quoted above. In this case, the MSY parties had an interest to oppose the declaratory relief sought. That was sufficient to make them a proper contradictor. There was no want of power to grant declaratory relief. Rather, the question was whether, in light of the events which had transpired, which relevantly included a lack of any continued opposition to the declaratory relief sought, that relief ought still to be granted as a matter of discretion. B.M.I. should be understood as a case where, because the question of the invalidity had become academic, that discretion had been exercised so as to refuse the declaratory relief sought. As the passage from their Honours’ joint judgment reveals, that was an additional basis upon which Keely and Beaumont JJ refused the application for declaratory relief.

59    In the present case, the respondent’s position is with respect opaque. In written submissions, it emphasised that it interests aligned with those of the applicant with the consequence that if the proceeding continues the trial “it will effectively be ex parte”. When I questioned what was meant by that in oral submissions, I did not receive a clear answer. The exchange was:

HIS HONOUR: So, when I read in your submissions that – I think the phrase is effectively be conducted ex parte, what do you mean by effectively ex parte?

MR DE WIJN: Well, we’re not going to oppose the relief sought, your Honour.

HIS HONOUR: Are you going to be here at all?

MR DE WIJN: We might not be. We may well, if this proceeds - - -

HIS HONOUR: So, why not just file a notice of submission?

MR DE WIJN: Well, we did consider that, your Honour. It did seem proper to point out to your Honour the problem with what we say is a problem with jurisdiction, and - - -

60    As I have noted, when considering whether there is a justiciable controversy, the Court examines the entire history of the relevant dealings between the parties. What is self-evidently clear from the correspondence in evidence (highlighted in the extracts above) is that prior to commencement of the proceeding there was a clearly articulated controversy as to whether the respondent had correctly calculated the applicant’s reportable fringe benefits for the 2024 financial year and, somewhat obviously, whether the method of calculation thus far applied by the respondent, if carried forward to future years, is correct.

61    That was then a significant disagreement. In my view the fact that the respondent now contends that its interests align with those of the applicant, or that it may not appear at the trial to actively oppose the applicant’s case, does not result in extinguishment of the justiciable controversy between the parties. Whilst in Hobart Kiefel CJ, Keane and Gordon JJ at [32] stated that there “must be a proper contradictor – someone presently existing who has a true interest to oppose the declarations sought”, that case was not concerned with the issue addressed in Oil Basins, IMF Australia or MSY Technology. It was not relevant to examine that issue in Hobart as the lessees and the Commonwealth vigorously opposed the declaratory relief sought by the councils. No absence of a contradictor, one with aligned interests or one with an equivocal or disinterested position arose. Their Honour’s did not in my view state an immutable requirement for a contradictor in all cases where declaratory relief is sought in federal jurisdiction. Moreover, they were not concerned with the present type of case where a justiciable controversy is clearly discernible from the pre-proceedings conduct of the parties but where, upon commencement of the proceeding, the respondent forms the view that its interests are aligned with those of the applicant and in consequence seeks dismissal of the proceeding for want of jurisdiction. Each of Oil Basins, IMF Australia and MSY Technology explain why there does not cease to be a justiciable controversy in such circumstances.

62    For similar reasons, I do not consider that Edelman J in AZC20 at [72] – [73] was intending to, or did, state a principle that the live controversy must exist at the outset when a proceeding is commenced and continue throughout it in these types of case. It depends on identification of what was and remains the controversy. The applicant continues to maintain that the respondent’s treatment of the FBT consequences of the reimbursement arrangement is erroneous. That remains the live controversy, even now the respondent contends that its ultimate interest in paying less tax aligns with the applicant’s. That does not resolve whether the respondent correctly calculated and reported the FBT in issue. Nor does Futuris assist the respondent’s arguments as that case was not concerned with any lack of jurisdiction to grant relief.

63    In my view there was a justiciable controversy at the commencement of the proceeding which has not subsequently evaporated. Interpolating from the reasons of Dawson J in Oil Basins, the respondent has a real interest in the applicant’s claim, even where it considers the outcome favourable to it. Even if ultimately it does not play an active role beyond the interlocutory application, or states that it will abide by any declaration the Court is persuaded to make, that is “performance of its role as contradictor” because its arguments in support of the FBT it reported to the ATO are detailed in the correspondence in evidence. Likewise, as stated by French J in IMF Australia, that declaratory relief may be uncontested does not deprive this Court of jurisdiction because the applicant seeks to resolve the exposed controversy as to the correct method of calculation of FBT on scheme reimbursements.

64    Turning to the respondent’s second point, I am unconvinced that the applicant lacks a real or sufficient interest in the declaratory relief because it will not bind the Department or the ATO and is therefore inutile. If granted, a declaration to the effect that the respondent misreported reportable fringe benefits that he derived in the 2024 financial year, and that in consequence that report must be (by a mechanism yet to be identified) withdrawn or retracted is likely to have, at least, practical consequences for him. Why is demonstrated by Edwards v Santos Ltd [2011] HCA 8; (2011) 242 CLR 421. In that case, certain native title claimants sought declaratory relief in this Court which, if granted, would have had the practical effect of advantaging them in negotiating a new indigenous land use agreement pursuant to the Native Title Act 1993 (Cth). The primary judge dismissed the proceeding on the basis that the claimants did not have standing to seek the relief and the Full Court refused leave to appeal. The High Court allowed the appeal, concluding that it was wrong for this Court to find that there was no justiciable controversy and therefore no matter. One issue concerned whether an Authority to Prospect (ATP) issued pursuant to the Petroleum Act 1923 (Qld) validly entitled the prospecting parties to apply for the grant of a lease. Heydon J gave the principal judgment. It was sufficient for the claimants to point to an improvement in their negotiating position. His Honour explained why at [37]:

The questions which the plaintiffs wished to agitate were not hypothetical. The first defendant's letter of 4 November 2005 had sufficiently indicated the intention of the petroleum defendants to make an application to the Minister under s 40 of the Petroleum Act and it had predicted that success would be "automatic". If so, the plaintiffs would be seriously disadvantaged because their negotiating position would be gravely weakened; if not, the plaintiffs would be correspondingly better off. If the plaintiffs obtained the first declaration sought, it would produce foreseeable consequences for the plaintiffs and the petroleum defendants by allowing them to continue the process of negotiating the new ILUA armed with knowledge of the correct legal position in relation to the ATP.

65    A fortiori, the applicant contends in this proceeding that declaratory relief as to the correct method of calculating and reporting the fringe benefits in issue will be of assistance to him in next dealing with the Department. Further, what must not be overlooked is that if the applicant succeeds, he will achieve a declaration to the effect that the respondent’s reportable fringe benefits for the 2024 financial year were wrong and he will secure relief which determines the manner of future calculations. On either view, the applicant has a sufficient interest in the declaratory relief that is sought.

66    Finally, the respondent relied on other arguments to the effect that because there are other, more effective, avenues for the applicant to have his family tax benefits and child support payments reviewed, that there is no prospect that this Court will ultimately grant declaratory relief. It also argued that there is no mechanism for it to amend, withdraw or revoke the reportable fringe benefits amounts as advised to the ATO. Those arguments go to withholding relief on discretionary grounds. They are unconvincing reasons why this Court should conclude at this stage that the applicant has no reasonable prospect of success.

67    Nothing in these reasons should be construed as understating the importance of this Court receiving the benefit of contradictory arguments when the proceeding is heard. If none are ultimately forthcoming, that may of itself be a reason to refuse relief on discretionary grounds.

68    For these reasons, the interlocutory application is dismissed.

Associate:

Dated:    14 August 2025