(Other than Applications for Special Leave to Appeal)
DECEMBER 2000
PATTERSON; EX PARTE TAYLOR (S165/2000)
The proceedings before the Court challenge a decision that the prosecutor be deported from Australia to England.
The prosecutor who is now aged 40, was born in England and came to Australia at the age of 7. He arrived on his father's passport. He was raised and educated in Australia. He has never been overseas. Originally he was a British subject resident in Australia without differentiation from Australian citizens. Subsequently, the law was changed and this change affected his status. He is on the electoral roll and is an elector of the Commonwealth.
In 1996, the prosecutor pleaded guilty to eight counts of sexual assault and acts of indecency involving young boys, mostly aged 11. He was sentenced to a minimum term of three and a half years imprisonment to be released in August 1999. Immediately after his release, the Minister for Immigration and Multicultural Affairs cancelled his visa under s501(2) of the Migration Act 1958 (Cth) ("the Act"). The prosecutor was taken into custody. He commenced proceedings in this Court seeking writs of prohibition, certiorari and habeas corpus against the Minister for Immigration. On 19 March 2000, Callinan J granted an order nisi on the ground of denial of natural justice (but not unreasonableness). Subsequently, the Minister consented to that order being made absolute, as it was by Callinan J on 11 April 2000. The prosecutor was then released from detention and returned to Gunnedah where he lives with his aged mother and brother.
On 30 June 2000, the respondent Parliamentary Secretary, Senator Patterson, cancelled the prosecutor's visa under s501(3) of the Act. Unlike s501(2) this procedure does not require the provision of natural justice before a decision, but the Minister must be satisfied that deportation is justified in the national interest.
The prosecutor contends that the decision was in excess of jurisdiction and void because, while there was a reasonable suspicion that the prosecutor did not pass the character test (because he had a substantial criminal record for relevant purposes)
1. the relevant decision was not made by the Minister personally, but by his Parliamentary Secretary;
2. no reasonable repository of the s501(3) power could have been satisfied that cancellation of the prosecutor's visa was in the national interest;
3. the Migration Act, insofar as it purports to authorise the cancellation of the prosecutor's visa is not a valid law of the Commonwealth as the prosecutor is no longer an immigrant and never was an alien; and
4. the respondent in making the decision took into account an irrelevant consideration, namely the wishes of Minister Ruddock.
An order nisi was granted by Kirby J on 29 September 2000.
MARSHALL v. DIRECTOR-GENERAL, DEPARTMENT OF TRANSPORT (B74/1999)
Court Appealed from: Court of Appeal of the Supreme Court of Queensland
Date of Judgment: 22 October 1999
Date of Grant of Special Leave: 21 June 2000
The appellant claimed compensation from the respondent under the Acquisition of Land Act 1967 (Qld) ("the Act") as a result of the compulsory resumption of a strip of land on the boundary of the applicant's property which adjoined the Bruce Highway. The resumption was to permit the extension of the highway.
The appellant's claim for compensation included a claim for damages due to injurious affection. This was based on the appellant's claim that the highway extensions had altered the drainage systems for Eudlo Creek and that in consequence, parts of the appellant's land that had not been resumed were rendered more susceptible to flooding.
Initially, the appellant's claim came before the Land Court, which heard conflicting expert evidence. The Land Court found that the road surface of the new carriage way, the new culverts and the extended bridge, which were all part of the highway extensions, were all located on the original road reserve. The Land Court applied the principle in Edwards v. Minister for Transport [1964] 2 QB 134 and held that the claim for injurious affection could not be entertained at law. As a result of this conclusion, the Land Court did not proceed to resolve any conflicts in the evidence.
The appellant appealed to the Land Appeal Court and applied to adduce fresh evidence. The Land Appeal Court came to the same conclusion as the Land Court and dismissed the appeal and the application.
The appellant then appealed to the Court of Appeal to which an appeal lay pursuant to s45 of the Land Act 1962. The Court of Appeal allowed the appellant to challenge the correctness of Edwards v. Minister for Transport, but concluded that the additional compensation of the kind claimed by the appellant "... could not be granted unless at the very least some damage to the balance land was caused by (or by the use of) works performed on the resumed land." The Court of Appeal dismissed the appellant's appeal taking the view that Edwards v. Minister for Transport was settled law.
The grounds of appeal are:
- Whether the Court of Appeal erred in concluding that s20 of the Acquisition of Land Act 1967 (Qld), as amended, bore a meaning similar to that adopted in relation to s63 of the Land Clauses Consolidation Act 1845 (UK) in Edwards v. Minister for Transport [1964] 2 KB 134; and
- Whether the Court of Appeal erred in concluding that for the purposes of s20 of the Acquisition of Land Act 1967, Edwards' case should be taken as settled law.
HOLLIS v. VABU PTY LTD t/as CRISIS COURIERS (S149/2000)
Court appealed from: Supreme Court of NSW, Court of Appeal
Date of judgment: 5 November 1999
Date of grant of special leave: 16 June 2000
The appellant was knocked down on a footpath by a bicycle courier wearing the uniform of the respondent. The appellant sued the respondent in negligence claiming that the courier was riding the bicycle as its servant and agent and that the respondent was in breach of a duty of care owed to the appellant.
The respondent, trading as Crisis Couriers, conducted a parcel and document courier business. It contracted with approximately 25-30 persons who worked for it as bicycle couriers. The couriers were independent contractors. The respondent had public liability insurance cover, under which policy it was stated that the 'Insured' included 'sub-contractors' in respect of work done on behalf of Crisis Couriers. The respondent levied the couriers each week and used this money to pay the insurance premium.
The trial judge gave judgment for the respondent. The appellant appealed against this decision. The majority of the Court of Appeal found that the respondent engaged the couriers as independent contractors to carry by bicycle, parcels and documents on its behalf and in fulfilment of engagements it had with third parties, saying: "To the extent to which parcels and documents are carried on ... a particular bicycle, the ... rider owes the ordinary duty of care to other users of public streets. If that ... rider is an employee of Vabu, Vabu is vicariously responsible for any breach by the ... rider of that duty. If that ... rider is an independent contractor ... Vabu is not vicariously liable for such a breach."
Davies AJA, dissenting, considered that the respondent was liable for the acts of its bicycle couriers when they were riding in the course of its business. His Honour said: "Taking account of the vulnerability of pedestrians, of the respondent's recognition that there was a need for insurance to cover public liability claims, of its deduction from the couriers' remuneration of weekly amounts to meet the premiums and of the fact that it was the respondent's own act of obtaining insurance in its own name, thereby doing nothing to relieve the vulnerability of injured pedestrians, it seems to me that the circumstances were such as to impose upon the respondent personal liability for the acts of its couriers done in the course of its business. The respondent, by the structure of its business, not only created the risk to pedestrians, but, failed to exercise due care to avoid such risks and failed to take the steps which were necessary to alleviate the problem that injured pedestrians would be unable to recover."
The grounds of appeal are:
- The Court of Appeal was in error:
- When it found that the respondent was not vicariously liable for torts committed during the course of work being performed at its request, and on its behalf by bicycle couriers retained by it;
- When it failed to find that within the neighbourhood of the respondent's delivery area, it owed a duty of care to pedestrians, because of the inherent risk of injury to them created by its system of work, including its system of remunerating couriers retained by it;
- When it failed to find that the respondent owed a general duty of care to pedestrians lawfully using footpaths and roads within the respondent's delivery area; and
- When it failed to find that the respondent was subject to a duty to devise a system of work which would ensure that the bicycle couriers whom it employed to deliver and pick up articles would do so safely.
COMMISSIONER OF TAXATION v. CONSOLIDATED PRESS HOLDINGS LIMITED (S127/2000)
COMMISSIONER OF TAXATION v. MURRAY LEISURE GROUP PTY LIMITED (S128/2000)
Court appealed from: Full Court of the Federal Court of Australia
Date of judgment: 7 September 1999
Date of grant of special leave: 26 May 2000
These appeals concern dividend stripping and the statutory construction of s177E which forms part of Part IVA of the Income Tax Assessment Act 1936 ("the Act").
Consolidated Press Holdings Ltd ("CPH"), CPH Property Pty Limited and Murray Leisure Group Pty Limited ("MLG") are all part of the Consolidated Press Group of Companies ("the Group"). Prior to 16 May 1990 the two holding companies for the overseas members of the Group, namely Consolidated Press International Limited ("CPIL(UK)") and Consolidated Press International Holdings Limited ("CPIHL(UK)") were incorporated in as non-residents of the United Kingdom.
In May 1988 announcements were made by the UK Chancellor and the Australian Treasurer about proposed changes to the tax legislation respectively of the UK and of Australia. The Group was advised that the overseas holding companies should be relocated from the UK to a tax haven. The Bahamas was chosen as the appropriate location for the new holding structure and on 5 April 1990 two companies were incorporated in the Bahamas under the names Consolidated Press International Ltd ("CPIL(B)") and Consolidated Press International Holdings Ltd ("CPIHL(B)").
The Commissioner proceeded upon the basis that s 177E of Part IVA, relating to dividend stripping schemes, applied to transfers of shares by CPH and MLG in each of CPIL(UK) and CPIHL(UK) to CPIL(B) and the subsequent liquidation of the two United Kingdom companies & associated arrangements. The judge at first instance identified the elements necessary to attract the application of s177E. He also distinguished the essential character of dividend stripping. He allowed the appeals of the respondents against the assessments made by the Commissioner.
On appeal, the Full Federal Court concluded that s177E was intended to apply only to schemes which can be said to have the dominant purpose of tax avoidance. The Court found that "[t]he section was not intended...to apply to a 'scheme' entered into or carried out primarily for business or other purposes unconnected with avoidance of tax, even if the scheme is implemented in a manner that produces taxation avoidance ... In our view the first limb of s177E(1) embraces only a scheme which can be said to have the dominant (although not necessarily the exclusive purpose) of avoiding tax." The Court held that the scheme was not by way of or in the nature of dividend stripping and therefore was not within the first limb of s177E(1)(a).
The Full Court also considered the second limb of s177E(1)(a). The primary judge held that the scheme had "substantially the effect of a scheme by way of or in the nature of dividend stripping" and therefore fell within the second limb of s177E(1)(a). The primary judge's reasoning had proceeded on the basis that there was a difference between the purpose and effect of a scheme. However, the Full Court held that a scheme is not within the second limb unless the dominant purpose of the scheme is that of tax avoidance in the sense explained earlier. Therefore the scheme in the present case was not within the second limb of s177E(1)(a).
The Full Court unanimously dismissed the Commissioner's appeals.
The grounds of appeal include:
- The Full Court failed properly to construe the meaning of:
1. "a scheme by way of or in the nature of dividend stripping" in s177E(1)(a)(i) of the Income Tax Assessment Act 1936 ("the Act"); and
2. "a scheme having substantially the effect of a scheme by way of or in the nature of a dividend stripping" in s177E(1)(a)(ii) of the Act.
- The Full Court erred in holding that:
1. a scheme is by way of or in the nature of dividend stripping within the meaning of s177E(1)(a)(i); and
2. a scheme has substantially the effect of a scheme by way of or in the nature of a dividend stripping within the meaning of s177E(1)(a)(ii), only if the scheme can be said objectively to have the sole or dominant purpose of avoiding tax.
CPH PROPERTY PTY LIMITED v. COMMISSIONER OF TAXATION (S132/2000 and S133/2000)
Court appealed from: Full Court of the Federal Court of Australia
Date of judgment: 7 September 1999
Date of grant of special leave: 26 May 2000
CPH Property Pty Limited ("CPH Property", the appellant) and Murray Leisure Group Pty Limited ("MLG") are all part of the Consolidated Press Group of Companies ("the Group"). Consolidated Press Holdings Limited ("CPH") is the holding company for the Group and its ultimate shareholder is a private company beneficially owned by Mr Kerry Packer.
In April 1989, the Group participated in a takeover bid for British conglomerate BAT Industries Plc. As part of that bid, the Group needed to demonstrate it had sufficient funds to proceed. Consolidated Press Finance Limited, the finance company in the Group, raised funds on-market in Australia which it loaned at interest to CPH Property. At that time, CPH Property was known as Australian Consolidated Press Limited ("ACP"), and operated the magazine publishing business of the Group.
CPH Property subscribed for redeemable preference shares in MLG, a holding company, which then subscribed for shares in Consolidated Press International Limited (CPIL(UK)), a UK incorporated company which was the holding company for the Group's international operations. CPIL(UK) loaned the funds at interest to CPH Investment (Singapore) Pty Limited which took a one-third equity position in the bidding vehicle. Ultimately, the bid for BAT was withdrawn due to regulatory problems.
The issue in these matters concerns Section 79D of the Income Tax Assessment Act 1936 ("the Act") and Part IVA of the Act to what is said to be a scheme whereby deductions relating to foreign source income were offset against taxable income of CPH Property. Section 79D of the Act was enacted in 1988 to restrict the offsetting of losses relating to assessable foreign income against Australian income. Section 79D replaced former Section 51(6) of the Act, and was further amended with effect from the year commencing 1 July 1990.
The question of the proper construction of s79D of the Act arose in relation to the assessments issued against CPH Property for the years of income 1988-1989 and 1990-1991. The trial judge held that the assessments were excessive and he allowed the applications of the taxpayer. The Commissioner appealed in each matter. At the core of the appeals was the proposition that the trial judge erred in holding that s79D of the Act as in force in the 1988-1989 income year had no application where, in the year of income, no foreign source income was derived. It was also a ground that the trial judge erred in failing to hold that the dominant purpose of a participant in the scheme as found by him, namely to bring about the result that a deduction would be allowed to ACP which, but for the scheme, would have been disallowed because of the application of s79D, was not a purpose of enabling ACP to obtain a tax benefit in connection with the scheme.
For Part IVA to apply to the relevant scheme in the circumstances of this case, a finding must be made that the person or one of the persons who entered into or carried out the scheme or any part of the scheme, did so for the sole or dominant purpose of enabling the relevant taxpayer to obtain a tax benefit in connection with the scheme. The consideration which leads to a finding on that issue must have regard to the eight necessary criteria set out in s177D(b) of the Act.
The trial judge commented that the scheme was entered into on the advice of the firm Arthur Young. The Full Court held that the relevant dominant purpose can be found by reference to the purpose of the advisers to the Group.
The Full Court unanimously allowed the Commissioner's appeals.
The grounds of appeal include:
- The Full Court erred in holding that it was permissible to take account of matters other than the eight matters to which s177D(b)(i)-(viii) of the Income Tax Assessment Act 1936 ("the Act") refers in reaching the conclusion required by s177D(b) of the Act;
- The Full Court erred in concluding that the dominant purpose of an unidentified person who was not a party to the scheme identified by the respondent could be attributed to the appellant in determining the conclusion to be drawn under s177D(b) of the Act; and
- The Full Court erred in concluding that the share acquisitions identified by the respondent as the scheme, was a scheme within the meaning of s177A of the Act.
COMMISSIONER OF TAXATION v. COMMERCIAL NOMINEES OF AUSTRALIA LIMITED (S150/2000)
Court appealed from: Full Court of the Federal Court of Australia
Date of judgment: 22 October 1999
Date of grant of special leave: 16 June 2000
The respondent is the Trustee of the Miden Group Superannuation Fund ("the Fund") which was established by a trust deed dated 11 March 1988. The Fund was established initially for the purposes of providing superannuation benefits for employees of a company known as Miden Pacific. The Fund incurred significant losses for income tax purposes in the 1989 and 1990 years of income. The Fund deed was amended by a deed dated 1 November 1993, but expressed to be effective from 1 July 1992 ("the Amending Deed"). Under the Amending Deed the operative rules of the Fund were replaced and one of the changes effected was a change in the nature of benefits to which members were entitled. Another change was the introduction of a provision allowing employers to join as participating employers so as to enable employees of such a participating employer to become members without reference to Miden Pacific. By 4 November 1993, receivers had been appointed to Miden Pacific.
This appeal concerns the availability in the year ended 30 June 1995 of losses incurred in 1989 and 1990 to be carried forward under ss79E and 80 of the Income Tax Assessment Act 1936 ("the Act"). In the 1995 year of income the Fund returned a taxable income of $165,881 and sought a deduction in respect of carry forward tax losses of $11,285,876 from the 1989 and 1990 years of income. The respondent contends that at all material times the Fund continued and that accordingly, the respondent is entitled to a deduction of those losses. The appellant contends to the contrary.
The Administrative Appeals Tribunal ("the AAT") found that the Fund in the 1995 year of income was the same Fund as the Fund that existed in the 1989 and 1990 years of income and was accordingly entitled to a tax deduction for the carry forward losses under ss80(2) and 79E of the Act for the 1989 and 1990 years respectively. The AAT held that the hallmark of continuity lay in the purpose for which the Fund was established.
The appellant appealed to the Federal Court from the AAT's decision. It argued that the objects of the Fund and the obligations undertaken in administration of the Fund, were so altered by the amendments made to the Original Trust Deed on 1 November 1993 that those objects and obligations related to a new entity which commenced on that day. Accordingly, it was submitted, any prior losses able to be carried forward and utilised by the previous entity under ss79E and 80 of the Act were not losses which the new entity may deduct from its assessable income pursuant to those provisions.
The Full Federal Court found that the AAT's conclusion was correct and dismissed the appeal.
The grounds of appeal include:
- The Full Court erred in holding that the respondent was entitled to a deduction for carry forward losses and in doing so:
- Wrongly held that the same taxpayer in relation to a superannuation fund for trust estate will exist for the purposes of the Income Tax Assessment Act 1936:
1. Where there has been some degree of continuity of the trust property or corpus that earns the income from the income year of loss to the income year of derivation of assessable income; and
2. Where there has been continuity of the regime of trust obligations affecting the property in the sense that any amendment of those obligations was in accordance with such terms of the original trust as providing for amendment, and
- Wrongly held that it was not to the point whether the changes wrought by the Amending Deed effected a resettlement of the trusts of the superannuation fund or not.
The appellant will move the Court on 14 December 2000 for leave to amend the notice of appeal to add an additional ground of appeal.
The additional ground of appeal that the appellant seeks to rely on is:
- If the Miden Group Superannuation Fund, as it existed in the 1989 and 1990 years of income, did exist in the 1995 year of income, then the Amending Deed effected a resettlement such that there co-existed a separate fund called the Midas Executive Superannuation Plan, with the consequences that:
1. the appellant in its capacity as trustee of the Miden Group Superannuation Fund is entitled to a deduction in the 1995 year of income, to the extent permitted by ss80 and 79E respectively, for the losses incurred in the 1989 and 1990 years of income; but
2. the appellant in its capacity as trustee of the Midas Executive Superannuation Plan is not so entitled to such deductions.