Allen (Trustee), in the matter of Allen's Asphalt Staff Superannuation Fund v Commissioner of Taxation (includes Corrigendum dated 17 February 2011) [2011] FCA 108 (14 February 2011)

Last Updated: 18 February 2011

FEDERAL COURT OF AUSTRALIA

Allen (Trustee), in the matter of Allen’s Asphalt Staff Superannuation Fund v Commissioner of Taxation [2011] FCA 108

Citation:		Allen (Trustee), in the matter of Allen’s Asphalt Staff Superannuation Fund v Commissioner of Taxation [2011] FCA 108
Parties:		BRADLEY ALLEN AND ANITA ALLEN IN THEIR CAPACITY AS TRUSTEES FOR THE ALLEN'S ASPHALT STAFF SUPERANNUATION FUND v COMMISSIONER OF TAXATION
File number:		QUD 564 of 2010
Judge:		LOGAN J
Date of judgment:		14 February 2011
Corrigendum:		17 February 2011
Catchwords:		APPEAL AND NEW TRIAL – Right of appeal – Appeal made outside time limit – Whether special reasons existed – Time to lodge an appeal extended
Legislation:		Income Tax Assessment Act 1936 (Cth) s 273 Income Tax Assessment Act 1997 (Cth) Taxation Administration Act 1953 (Cth) Federal Court Rules O 52 r 15(1)(a)(i), O 52 r 15(2)
Cases cited:		Jess v Scott (1986) 12 FCR 187 followed
Date of hearing:	14 February 2011
Place:	Brisbane
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	12
Counsel for the Applicant:	Mr K Wilson SC
Solicitor for the Applicant:	Cleary Hoare
Counsel for the Respondent:	Ms M Brennan
Solicitor for the Respondent:	Australian Government Solicitor

FEDERAL COURT OF AUSTRALIA

Allen (Trustee), in the matter of Allen’s Asphalt Staff Superannuation Fund v Commissioner of Taxation [2011] FCA 108

CORRIGENDUM

1. In paragraph 4 of the Reasons for Judge, in the third sentence, the date “27 February 2010” should read “27 September 2010”.
   

I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Logan.

Associate:

Dated: 17 February 2011

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 564 of 2010

BETWEEN:	BRADLEY ALLEN AND ANITA ALLEN IN THEIR CAPACITY AS TRUSTEES FOR THE ALLEN'S ASPHALT STAFF SUPERANNUATION FUND Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	LOGAN J
DATE OF ORDER:	14 FEBRUARY 2011
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. The time for the applicants to file and serve the notice of appeal is extended until 14 February 2011.
2. The applicants pay the respondent’s costs of and incidental to the application, to be taxed if not agreed.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 564 of 2010

BETWEEN:	BRADLEY ALLEN AND ANITA ALLEN IN THEIR CAPACITY AS TRUSTEES FOR THE ALLEN'S ASPHALT STAFF SUPERANNUATION FUND Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	LOGAN J
DATE:	14 FEBRUARY 2011
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. Mr Bradley Allen and Mrs Anita Allen are the trustees of a trust which is known as the Allen’s Asphalt Staff Superannuation Fund. As its name implies, that particular trust has as its object the provision of superannuation benefits for named beneficiaries.
2. Some years ago, a business was sold by a trustee of another trust. Some, at least, of the proceeds of that sale were distributed to what one might term an intermediate trust and in turn found their way to Mr and Mrs Allen in their capacity as trustees of the superannuation fund. A controversy arose as to whether those proceeds, as they came to cascade through to and end up in the Allen’s Asphalt Staff Superannuation Fund, constituted special income for the purposes of s 273 of the Income Tax Assessment Act 1936 (Cth) (the 1936 Act).
3. Having that status can have a very significant impact indeed. That is because the result is taxation at a much higher marginal tax rate than that which would otherwise apply to superannuation fund income. The Commissioner of Taxation formed the view that in the prevailing circumstances there did exist special income. On 9 November 2006 he made an assessment accordingly. That assessment was the subject of objection. It took quite some time for that objection to be determined. That occurred on 26 February 2008.
4. An appeal was lodged within time under the Taxation Administration Act 1953 (Cth) by Mr and Mrs Allen to this Court on 23 April 2008. Though termed an appeal such a proceeding as one in the original jurisdiction. It was heard on 27 February 2010. The appeal was determined on 19 November 2010. On 17 December 2010, Mr and Mrs Allen lodged an application for extension of time to file and serve a notice of appeal. Such an application was necessary because the time for lodging an appeal as of right had passed. That time is fixed by O 52 r 15 of the Federal Court Rules. In the circumstances, the time was 21 days after the date when the judgment appealed from was pronounced, see O 52 r 15(1)(a)(i).
5. There are, in essence, two reasons why the application was lodged after the time for the filing of a notice of appeal as of right. They are, as explained in the affidavits read this morning, depression on the part of the clients, particularly Mr Allen, who seems to be the prime source of instructions in the trustees, as a result of the impact of the dismissal of the appeal against the objection decision, and error on the part of their solicitor. The latter arises because, as is frankly admitted in the affidavit material, there was a belief that the time for lodging an appeal was 28 days.
6. Such an appeal period is not unknown in the State jurisdiction. It is though, obviously, a mistake, uncritically to expect that appeal periods which prevail in the courts of the States will translate into the exercise of this Court’s jurisdiction. There is an ability to extend time. That requires the exercise of a discretion. That discretion is conferred by O 52 r 15(2). It provides that:

(2) Notwithstanding anything in the preceding subrule, the Court or a Judge for special reasons may at any time give leave to file and serve a notice of appeal.

It would be imprudent to attempt to give any exhaustive delineation of what may amount to special reasons.

7. Some guidance was offered by the Full Court as to the breadth of the expression, but also as to the imprudence of endeavouring to do anything other than appreciate that it was designed for application in particular cases in their circumstances, in Jess v Scott (1986) 12 FCR 187, where at 195 it was said:

What is needed to justify an extension of time is indicated in rule 15(2) by the words “for special reasons”. It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of 21 days. In that context ‘special reasons’ is intended to distinguish the case from the usual course according to which the time is 21 days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression “for special reasons” implies something narrower than this.

8. This particular application is not opposed. I was informed on behalf of the Commissioner that there are a number of cases pending in the Administrative Appeals Tribunal where the application of the special income provision is at issue. I was likewise informed that this case is the first in which the provision has fallen for judicial consideration.
9. In the ordinary course of events in this country, a citizen is entitled to an appeal as of right against a final judgment in the exercise of civil jurisdiction. Tax appeals are no different in that regard. Regard to the chronology that I have recited shows that the case proceeded in what one might, with respect, describe as a leisurely fashion or perhaps a measured fashion, on and from the time of assessment. A feature, though, of that progression, is that Mr and Mrs Allen have hitherto observed applicable statutory time limits. Further, a feature of the facts at present is that, as they then understood them, they also observed, notwithstanding a very understandable emotional impact of taxation at a higher rate of a superannuation fund, the time limit they thought was applicable.
10. It is not every case where an error on the part of a legal adviser will amount to “special circumstances.” This case, though, seems to be one where it would be unjust, indeed unmerciful, not to extend time, given the history of the case and the wider interest in a determination at intermediate appellate level of the hitherto novel question as to the meaning of the special income provision. In that regard, I note that whilst the provision in the 1936 Act on this subject is no longer applicable to present day assessing, there are similar provisions, or at least provisions which enshrine similar concepts, to be found in the Income Tax Assessment Act 1997 (Cth).
11. As far as the merits are concerned, I do take those into account. There does seem to be scope for genuine debate as to the reach of the special income provision in terms of whether a distribution, which might be regarded as the passive receipt of income, nonetheless constitutes, when looked at in a wider context, a dealing.
12. Taking all of those considerations into account, I propose to extend time in this matter. The formal order then is that I extend until 14 February 2011 the time for filing and serving of the notice of appeal. The further order is that the applicant pay the respondent’s costs of and incidental to the application, to be taxed if not agreed.
    

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Associate:

Dated: 15 February 2011