McDermott Industries (Aust) Pty Ltd v Commissioner of Taxation (with Corrigendum dated 29 April 2003) [2003] FCA 139 (31 March 2003)

Last Updated: 30 April 2003

FEDERAL COURT OF AUSTRALIA

McDermott Industries (Aust) Pty Ltd v Commissioner of Taxation [2003] FCA 139

CORRIGENDUM

McDERMOTT INDUSTRIES (AUST) PTY LTD (ACN 002 736 352) v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

W51 OF 2002

JUDGE:	LEE J
DATE OF ORDER:	31 MARCH 2003	(CORRIGENDUM 29 April 2003)
WHERE MADE:	PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W51 OF 2002

BETWEEN:	McDERMOTT INDUSTRIES (AUST) PTY LTD (ACN 002 736 352) APPLICANT
AND:	COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT
JUDGE:	LEE J
DATE:	31 MARCH 2003
PLACE:	PERTH

CORRIGENDUM

In the appearance list on page 4 of the reasons for judgment, please replace:

1. "Counsel for the Applicant: W Harris"

with "Counsel for the Applicant: N J Young QC, W A Harris"; and

2. "Counsel for the Respondent: T Burrows"

with "Counsel for the Respondent: L B Price, T P Burrows".

I certify that the preceding paragraph is a true copy of the Corrigendum to the Reasons for Judgment of the Honourable Justice Lee.

Associate:

Dated: 29 April 2003

FEDERAL COURT OF AUSTRALIA

McDermott Industries (Aust) Pty Ltd v Commissioner of Taxation [2003] FCA 139

TAXATION - single notice of objection lodged in respect of three amended assessments - Commissioner responded with a single notice of disallowance - whether single application to Court incompetent for dealing with "objection decisions" relating to more than one year of income

Taxation Administration Act 1953 (Cth) s 14ZZ

Acts Interpretation Act 1901 (Cth) s 23

Federal Court Rules O 6 r 1, O 29 r 5, O 52B

Krampel Newman Partners Pty Ltd v Federal Commissioner of Taxation [2001] ATC 4473 followed

Legge Holdings Pty Ltd v Commissioner of Taxation (unreported, Lockhart J, 23 March 1990) distinguished

McDERMOTT INDUSTRIES (AUST) PTY LTD (ACN 002 736 352) v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

W51 OF 2002

JUDGE:	LEE J
DATE OF ORDER:	31 MARCH 2003
WHERE MADE:	PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W51 OF 2002

BETWEEN:	McDERMOTT INDUSTRIES (AUST) PTY LTD (ACN 002 736 352) APPLICANT
AND:	COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT
JUDGE:	LEE J
DATE OF ORDER:	31 MARCH 2003
WHERE MADE:	PERTH

THE COURT ORDERS AND DECLARES THAT:

1. The application is a competent proceeding.

2. The costs of the respondent's motion be costs in the cause of the applicant.

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W51 OF 2002

BETWEEN:	McDERMOTT INDUSTRIES (AUST) PTY LTD (ACN 002 736 352) APPLICANT
AND:	COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT
JUDGE:	LEE J
DATE:	31 MARCH 2003
PLACE:	PERTH

REASONS FOR JUDGMENT

LEE J:

1 On 8 March 1999 the respondent ("the Commissioner") issued amended assessments of the amount of income tax payable by the applicant ("the taxpayer") in respect of the years of income ending 31 March 1994, 31 March 1995 and 31 March 1997. The taxpayer duly lodged a single notice of objection with the Commissioner in respect of the three amended assessments. In due course the Commissioner informed the taxpayer, by a single notice, that the taxpayer's objections to the amended assessments had been disallowed.

2 Common questions of law and fact were considered in the process of assessment of the taxpayer's liability to pay income tax in the relevant years of income and in determining the decisions made on the objections to the amended assessments. No doubt it was for that reason that the taxpayer lodged a "rolled-up" objection to the three amended assessments and that the Commissioner responded with a single notice of disallowance in respect of the objections.

3 Perhaps it was not surprising that, pursuant to s 14ZZ of the Taxation Administration Act 1953 (Cth) ("the TAA"), the taxpayer lodged a single application in this Court as the "appeal" against the "appealable objection decision" of the Commissioner, namely, the decision to disallow the objections. Although the proceeding in this Court is described in the TAA as an "appeal", it is an application in the original jurisdiction of the Court and appellate jurisdiction is not exercised. The "appeal" may be described as a statutory right of action pursuant to which the legal rights of the applicant are determined.

4 The Commissioner contends that the "appeal" is incompetent insofar as it concerns "objection decisions" relating to more than one year of income. It was submitted that as a matter of construction the TAA requires a separate "appeal" to be instituted in respect of each "objection decision". The Commissioner's submission was treated as a motion on which the parties were asked to present argument by written submissions. These reasons have been prepared after consideration of those submissions.

5 The first point to note is that s 14ZZ of the TAA does not purport to instruct the Court on the manner in which "appeal" proceedings are to be commenced or conducted in the Court. It follows, as may be expected in respect of the exercise of judicial power vested in the Court pursuant to the Constitution, that the procedure for commencing and carrying on an "appeal" is governed by the Federal Court Rules ("the Rules") and by orders made by the Court from time to time.

6 In common with the long-standing practice of like superior courts, the Rules, in O 29 r 5, provide for the Court to order that separate proceedings, even if involving different applicants, be consolidated as a single proceeding where a common question of law or fact is raised in those proceedings. Such a rule recognises a public interest in the elimination of the unnecessary multiplicity of legal proceedings. It may be noted that in O 6 r 1 the Rules also provide that an applicant may claim relief in respect of more than one cause of action in the one proceeding.

7 It follows that unless the TAA, in clear terms, provides otherwise, a proceeding in the original jurisdiction of this Court, albeit described by the TAA as an "appeal", may be commenced by an applicant in respect of several "objection decisions" of the Commissioner where common questions of law or fact are involved in those decisions. That is to say, if, implicitly, the TAA acknowledges that several "appeal" proceedings may be consolidated as a single "appeal" by order of the Court, it follows that the TAA also accepts that if the Rules so provide, a single "appeal" proceeding may be commenced by an applicant in respect of several "objection decisions" where appropriate. Furthermore, for the reasons stated by Ryan J in Krampel Newman Partners Pty Ltd v Federal Commissioner of Taxation [2001] ATC 4473, no contrary intention appears in O 52B of the Rules relating to the institution of "appeal" proceedings under the TAA, nor in the TAA, so as to exclude the operation of s 23 of the Acts Interpretation Act 1901 (Cth) which would permit a single "appeal" proceeding to be commenced in respect of several "objection decisions".

8 Counsel for the Commissioner submitted that Krampel was decided in error and should not be followed. I cannot discern the error asserted and, if necessary, would follow and apply the reasoning adopted by his Honour. Counsel for the Commissioner further submitted that Legge Holdings Pty Ltd v Commissioner of Taxation (unreported, Lockhart J, 23 March 1990) required a different conclusion to be reached from that stated in Krampel. I am satisfied that Legge turns on its own facts. That case involved four discrete proceedings in the Administrative Appeals Tribunal ("the Tribunal"), notwithstanding that they were dealt with concurrently. The subsequent "appeal" from those decisions was said to take its character from the "initial act of the Commissioner". That "act" involved four separate decisions of the Commissioner leading to the four proceedings in the Tribunal. It does not appear that the applicant sought to rely on the enabling provisions of the Rules in respect of the commencement of a single proceeding and nor did the applicant seek to rely upon the provisions of s 23 of the Acts Interpretation Act 1901. It does not appear in Legge that his Honour was asked to consider whether the proceeding before him involved causes of action involving common issues of law or fact.

9 The statement of facts, issues and contentions filed by the Commissioner in the instant case shows that the objections and "objection decisions" related to common facts and issues arising in the several assessments. It follows that a single "appeal" proceeding is appropriate for determining the validity of the Commissioner's "objection decisions" set out in the notice issued to the applicant by the Commissioner.

10 The "appeal" has been duly instituted by the application filed and is competent.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Associate:

Dated: 28 March 2003

Counsel for the Applicant:	W Harris
Solicitor for the Applicant:	Freehills
Counsel for the Respondent:	T Burrows
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	26 March 2002
Date of Filing of Submissions:	18 June; 1, 4 July 2002
Date of Judgment:	31 March 2003