ACT CIVIL & ADMINISTRATIVE TRIBUNAL

FANDS (ACT) PTY LTD v COMMISSIONER FOR ACT REVENUE (Administrative Review) [2017] ACAT 65

AT 16, 23, 24, 25, 26, 27/2017

Catchwords: ADMINISTRATIVE REVIEW - subpoenas – application for subpoenas to be set aside – whether documents required to be produced are relevant to the substantive issues in the proceedings – test of relevance that applies to subpoenas generally – whether a different or additional test has to be satisfied for documents to which section 99 of the Taxation Administration Act1999 applies – whether the Commissioner for ACT Revenue can be compelled to answer a subpoena for production of documents containing protected information because the production is necessary for the purpose of the administration of a tax law – whether the subpoenas are oppressive

Legislation cited: Taxation Administration Act 1999 s 99Rates Act 2004 ss 6, 9, 10, 11, 11A, 14, 71

Cases cited: Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq)[2017] FCA 358Canberra Cleaners Pty Ltd & ors v Commissioner for ACT Revenue [2017] ACTSC 197Propend Finance Pty Limited v Commissioner of Australian Federal Police (1994) 27 ATR 584Donnelly v Davison (2000) 105 FCR 1National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372

Tribunal: President G Neate AM

Date of Orders: 31 August 2017Date of Reasons for Decision: 31 August 2017

AUSTRALIAN CAPITAL TERRITORY )CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 16, 23, 24, 25,

26, 27/2017

BETWEEN:

FANDS (ACT) PTY LTDApplicant

AND:

COMMISSIONER FOR ACT REVENUERespondent

TRIBUNAL: President G Neate AM

DATE: 31 August 2017

ORDER

The Tribunal orders that:

1. The application for the subpoena dated 20 July 2017 to be set aside is dismissed

subject to the qualification that the Commissioner for ACT Revenue need not

produce the amounts of the assessments of stamp duty in respect of the

nominated transactions.

2. The application for the subpoena dated 25 July 2017 to be set aside is dismissed,

and FANDS (ACT) Pty Ltd is directed to provide, as soon as possible, a written

reply to the request for clarification of the scope of the second subpoena set out

in the letter dated 22 August 2017 from the Commissioner’s solicitors to the

solicitor for FANDS.

3. Liberty to apply.

………………………………..President G Neate AM

REASONS FOR DECISION

Introduction

1. FANDS (ACT) Pty Ltd (FANDS) has applied to the ACT Civil and

Administrative Tribunal (the Tribunal) for a review of the decision by the

Commissioner for ACT Revenue (the Commissioner) dated 3 March 2017 to

disallow FANDS’s objection to the Commissioner’s decision to re-determine

the unimproved value of Block 15, Section 28, Braddon, known as 11 Lonsdale

Street (the subject land) which FANDS owned from about mid 2002 until

about May 2017.

2. Subpoenas have been issued on behalf of FANDS to the Commissioner to

produce a range of documents in relation to proceedings AT 16, 23, 24, 25, 26

and 27 of 2017.

3. On 23 August 2017, the Commissioner applied to the Tribunal for orders that:

(a) the subpoena (a) dated 20 July 2017 (the first subpoena) is set aside; and

(b) the subpoena (b) dated 25 July 2017 (the second subpoena) is set aside.

4. The Tribunal as presently constituted heard the application on 28 August 2017.

5. The decision about whether those two subpoenas should be set aside requires

consideration of the scope of the subpoenas, the legal principles governing what

material must be provided in response to subpoenas, and practical issues in

relation to compliance with those two subpoenas, particularly whether they are

oppressive.

The scope of the original and amended subpoenas

6. The first subpoena, as originally worded, sought:

1. Assessments, contracts, and transfers for all matters relating to the sale or purchase transactions in:

(a) The period 1 July 2008 to 1 July 2017;

(b) For properties within the district/division of Braddon in the Australian Capital Territory but limited to properties in:

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i. Lonsdale Street;

ii. Mort Street;

iii. Torrens Street; and

(c) Excluding any transactions involving the sale, purchase or transfer of residential property known as units under the Unit Titles Act 2001 (ACT).

2. Copies of any of the documents sought in paragraph 1 above where the original documents are no longer in the possession, custody or control of the recipient of the subpoena.

For the purposes of this Subpoena, the Applicant adopts the definition of “Document” as defined in the Legislation Act 2001 (ACT).

7. Following correspondence and discussions between the parties, the scope of the

subpoena was adjusted as at 22 August 2017 to the following:

1. Documents constituting assessments of Stamp Duty (limited to the Notice of Assessment, and the front pages of the associated Contract for Sale, and/or Transfer, and any associated special conditions) for all transactions in:

(a) The period 1 July 2008 to 1 July 2017 (“the Period”);

(b) For properties within the Sections 20, 21, 28, 29 within the District/Division of Braddon in the Australian Capital Territory (“the Area”);but

(c) Excluding any transactions involving the sale, purchase or transfer of residential property known as units under the Unit Titles Act 2001 (ACT) in that Period and Area.

2. Copies of any of the documents sought in paragraph 1 above where the original documents are no longer in the possession, custody or control of the recipient of the subpoena.

For the purposes of this Subpoena, the Applicant adopts the definition of “Document” as defined in the Legislation Act 2001 (ACT).

8. In effect, the scope of the first subpoena has been narrowed.

9. The second subpoena, as originally worded, sought:

1. Documents associated with any lease variation charges calculated and unimproved value analyses:

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(a) The period 1 July 2008 to 1 July 2017;

(b) For properties within the district/division of Braddon in the Australian Capital Territory but limited to properties in:

i. Lonsdale Street;

ii. Mort Street;

iii. Torrens Street; and

(c) Excluding any transactions involving the sale, purchase or transfer of residential property known as units under the Unit Titles Act 2001 (ACT).

(d) But including any instructions from the Commissioner of ACT Revenue (or his or her representative) to the ACT Valuation Office or the Australian Valuation Office.

2. Copies of any of the documents sought in paragraph 1 above where the original documents are no longer in the possession, custody or control of the recipient of the subpoena.

For the purposes of this Subpoena, the Applicant adopts the definition of “Document” as defined in the Legislation Act 2001 (ACT).

10. Following correspondence and discussions between the parties, the scope of the

second subpoena has been adjusted as at 22 August 2017 to the following:

1. Documents constituting the determination of Change of Use Charge and/or Lease Variation Charge under the Planning and Development Act 2007 (limited to the statutory calculation and associated V1, V2, or other valuation is relied upon) in respect of:

(a) The period 1 July 2008 to 1 July 2017 (“the Period”);

(b) For properties within the Sections 20, 21, 28, 29 within the District/Division of Braddon in the Australian Capital Territory (“the Area”);but

(c) Excluding any transactions involving the sale, purchase or transfer of residential property known as units under the Unit Titles Act 2001 (ACT) in that Period and Area.

2. Copies of any of the documents sought in paragraph 1 above where the original documents are no longer in the possession, custody or control of the recipient of the subpoena.

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For the purposes of this Subpoena, the Applicant adopts the definition of “Document” as defined in the Legislation Act 2001 (ACT).

11. In effect, the scope of the second subpoena was narrowed in some respects but,

the Commissioner contends, was also broadened by the inclusion of a new

chapeau to paragraph 1.

12. Although the overall scope of these subpoenas has been narrowed, the

Commissioner submits that the documents sought to be produced are not

relevant to the matters in issue between the parties and their production is not

necessary for the purpose of the administration of a tax law, in this case the

Rates Act 2004 (see section 99 of the Taxation Administration Act 1999). In the

alternative, the Commissioner contends that, even in their refined form, these

subpoenas are oppressive. Consequently, the Commissioner presses for both

subpoenas to be set aside.

13. The Commissioner’s submissions have two components:

(a) legal principles in relation to what might properly be the subject of a

subpoena; and

(b) the practical consequences of complying with the two subpoenas.

The applicable law

14. The issues raised by the application for the setting aside of the two subpoenas

have to be resolved by reference to the law relating to subpoenas generally and

the operation of section 99 of the Taxation Administration Act 1999.

15. The authorities outlining what documents can be covered by a subpoena were

usefully summarised by McWilliam AsJ in Canberra Cleaners Pty Ltd & Ors v

Commissioner for ACT Revenue1 (Canberra Cleaners). In that case, the

Commissioner sought the setting aside of a subpoena issued to the

Commissioner by the plaintiffs. The primary basis for the Commissioner’s

application was that the documents sought under the subpoena were irrelevant

to the issues in the substantive proceedings. Her Honour wrote:2

1 Canberra Cleaners Pty Ltd & ors v Commissioner for ACT Revenue [2017] ACTSC 197

2 Canberra Cleaners Pty Ltd & ors v Commissioner for ACT Revenue [2017] ACTSC 197 at [4]

5

The test for relevance of a subpoena is whether production of the documents would be reasonably likely to add in the end to the relevant evidence in the case, including apparent or adjectival relevance, in the sense that the documents could ‘possibly throw light on the issues in the main case’: Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 103, or that it is ‘on the cards’ that they could do so: Portal Software v Bodsworth [2005] NSWSC 1115 at [24]. See also DPP v Warren [2015] ACTSC 111 at [22] and Elmaraazey v Capital Lawyers Pty Ltd [2016] ACTSC 54 at [44] where Mossop AsJ (as his Honour then was) cited in addition Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 926-927 and Re North Coast Transit Pty Limited [2013] NSWSC 1912 at [7]-[9].

16. As her Honour noted, the application in that case required an understanding of

the issues arising in the main proceedings.3 That observation applies equally to

the present proceedings.

17. Counsel for the Commissioner in Canberra Cleaners also relied on section 99

of the Taxation Administration Act 1999 which provides:

99 Restrictions on disclosures to courts and tribunals(1) A person who is or has been a tax officer is not required to divulge protected information to a court, or produce a protected document or a document containing protected information to a court, unless its disclosure or production is necessary for the purpose of the administration or execution of a tax law.(2) In this section:

court includes a tribunal, authority or person having power to require the production of documents or the answering of questions. divulge includes communicate.produce includes allow access to.protected document means a document obtained or created in the administration or execution of a tax law.protected information means information obtained in the administration or execution of a tax law.

18. There is a question whether, in cases such as this, satisfying the test of relevance

in relation to a subpoena is sufficient to meet the requirements of section 99 that

the production of the protected information “is necessary for the purpose of the

administration or execution of a tax law.”

3 Canberra Cleaners Pty Ltd & ors v Commissioner for ACT Revenue [2017] ACTSC 197 at [5]

6

19. That issue was considered, but not decided, by McWilliam AsJ in Canberra

Cleaners, where her Honour was referred to the decision of the Federal Court in

Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty

Limited; In the Matter of Binqld Finances Pty Ltd (In Liq)4 (Binqld). That case

concerned the Federal equivalent to the non-disclosure provision in the

Taxation Administration Act 1999.

20. McWilliam AsJ wrote:

It seems to me that what is ‘necessary’ under s 99 of the Act will be determined by what is relevant in proceedings before the Court, with the test for relevance being in accordance with the authorities I have set out above.5

21. However, having decided that the documents sought in that case were not

relevant at all, her Honour did not have to decide whether (as submitted by the

Commissioner) the Court had to find those documents were more than simply

adjectivally relevant before disclosure would be required under section 99 of the

Act.

22. In relation to the present application, counsel for the Commissioner submitted

that a two stage process is involved before deciding whether documents have to

be produced in response to a subpoena. First, are the documents relevant to the

issues in the substantive proceedings? Second, would the production of the

documents involve carrying into effect the relevant provisions of a tax law (in

this case the Rates Act 2004)?

23. Counsel for the Commissioner also described this process as a balancing

exercise, having regard to the general complexion of the case.

24. In support of that submission, the Commissioner relied on parts of the reasons

for judgment in Binqld. The Commissioner submitted that the effect of Binqld is

that a court or tribunal should look behind the intention of a provision such as

the secrecy provision of a tax law. If a document or documents might have some

4 Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq)[2017] FCA 358

5 Canberra Cleaners Pty Ltd & Ors v Commissioner for ACT Revenue [2017] ACTSC 197 at [26]

7

relevance to the issues in the substantive case, one must then ask whether the

production of the document(s) involves carrying into effect a tax law.

25. The Commissioner submits that the documents sought by the subpoenas are not

relevant; therefore they cannot be necessary for the purposes of section 99 of the

Taxation Assessment Act 1999.

26. Counsel for FANDS noted that the circumstances in Binqld were different from

the circumstances surrounding the present application because the case was

before the Federal Court and the application was made at a different stage of the

proceedings.

27. It is not necessary to deal in detail with the decision in Binqld, which dealt with

legislation and circumstances different from those in the present case. However,

some aspects of that decision can be applied in this case.

28. Having reviewed the numerous authorities in relation to statutory provisions

comparable to section 99 of the Taxation Assessment Act 1999, Foster J adopted

the authorities that uniformly supported a liberal approach to the construction of

the provisions, particularly the exception provided in them.6 He considered and

followed earlier authorities in which it was held that “necessary” in this

statutory context should be construed liberally to mean “requisite.” His Honour

quoted judgments to the effect that “necessary” here does not mean absolutely

or essentially necessary. It means appropriate, plainly adapted to the carrying

out of the Act or its efficient administration.7

29. Foster J concluded that, in every case, the nature of the proceeding in the Court

is relevant to the conclusion reached about the applicability of the exception.8

6 Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [78]

7 Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [57], [80](f), [109], quoting Propend Finance Pty Limited v Commissioner of Australian Federal Police (1994) 27 ATR 584, 591-592

8 Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [79](c)

8

30. His Honour also quoted authority for the proposition that the purpose of section

a provision such as 99 is not principally to protect confidential information in

the interests of taxpayers but to protect officers from compulsion to divulge that

information other than in prescribed circumstances.9

31. Counsel for the Commissioner drew the Tribunal’s attention particularly to the

part of the decision where Foster J stated, among other things, that the objects of

the legislation “make clear that it is the intention of the legislature to secure a

reasonable balance between the protection of the taxpayers’ confidential

information, on the one hand, and the efficient and effective administration of

government and law enforcement, on the other.”10 Later in the judgment his

Honour stated:

It seems to me that the concept of carrying into effect the provisions of a taxation law involves, directly or indirectly (inter alia), the recovery of unpaid tax, that is to say, the true or correct amount of unpaid tax. This means that the Court does not simply focus on the position of the Commissioner but looks at the nature of the relevant proceedings and the issues raised in that proceeding in order to determine if it involves the carrying into effect of a taxation law.11

32. Foster J identified the “ultimate aim” or “real purpose” of the proceedings in

Binqld as being to recover the unpaid tax which is the subject of various

assessments issued by the Commissioner. His Honour concluded that, if that

“complexion of the present proceedings is correct,” it would be “quite wrong”

to allow the Commissioner to disclose protected information to one party while

withholding the same documents from other parties. In his view, such a “one-

sided outcome would not be conducive to the recovery of the correct or true

amount of tax and would not be in the interests of justice.” On that basis, the

disclosure of the information in that case was “necessary for the purpose of

carrying into effect a taxation law being those parts of the Commonwealth

9 Donnelly v Davison (2000) 105 FCR 1 at [6]10 Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia

Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [105]

11 Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [113]

9

taxation law which allows the Commissioner to issue assessments and to

recover unpaid tax.”12

Practical issues

33. The practical aspects of the application to set aside the two subpoenas relate to

what the Commissioner submits is the oppressive nature of those subpoenas as

demonstrated by:

(a) the number of documents that the Commissioner would have to produce;

and

(b) the time that employees of the Commissioner would take to produce the

documents.

34. Evidence in relation to those points was provided in the form of witness

statements from Mr Russell Stroud, the Assistant Manager in the Objections

Unit of the ACT Revenue Office and Mr Carlo King, a certified practising

valuer and Senior Manager of the ACT Valuation Office.

35. Those statements were accepted by the Tribunal over the objection of counsel

for FANDS on the basis that that the documents had only been provided to her

minutes before the hearing of this application commenced.

36. For present purposes it is sufficient to note that, in relation to the first subpoena,

Mr Stroud has conducted searches to extract commercial transactions for the

nominated sections within Braddon. He would need to search further 203

dutiable transactions. He estimates that each search will take approximately 10

minutes to complete and the exercise would produce more than 600 pages of

documents.

37. In relation to the second subpoena, Mr Stroud has been advised by the ACT

Valuation Office that there would be approximately 70 Lease Variation Charge

transactions captured under the subpoena. Most of the information is saved on

the ACT Planning and Land Authority’s internal computer system and it would

12 Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [114]

10

take between one and five hours per transaction to collate the requested

information.

38. In relation to the second subpoena, Mr King observed that the subpoena relates

to 58 properties within the Braddon Commercial precinct and he estimated the

subpoena would capture approximately 200 valuation files. He stated that the

properties include office blocks, bulky good outlets, licensed premises, service

stations and communication facilities with limited relevance to an assessment of

the unimproved value of the subject property. Having regard to the range of

documents held by each file and the need to identify and copy relevant

documents, he estimated it would take 55 minutes per file. The total time for the

ACT Valuation Office to comply with the second subpoena, if one person with

dedicated to that task full-time, would be in the order of 4.5 working weeks.

39. To illustrate the Commissioner’s submission about the unnecessary, and

perhaps the oppressive, nature of the subpoenas, counsel for the Commissioner

noted that the valuation exercise in relation to the subject land has already been

undertaken by a valuer, Mr Noel McCann on behalf of FANDS. Mr McCann

had adopted a comparable sales approach to making his valuations, referring to

seven comparable sales of land. Counsel expected that, as a highly competent

valuer, Mr McCann found appropriate sales evidence including relevant features

of sale properties. If Mr McCann has determined what are comparable sales

then those sales are in his report. If he did not have sales evidence, that would

have been an impediment before his report was provided. However, there is

nothing to say that his report is incomplete due to lack of evidence.

40. Furthermore, FANDS is affiliated with three valuers. The original submissions

made by FANDS to the Commissioner relied on comparable sales, similar to

those identified by Mr McCann. Therefore, counsel submitted, it is “rather

striking” that FANDS is seeking further information of that kind at this stage.

41. In reply, counsel for FANDS submitted that the information it seeks is relevant

to the substantive issues. FANDS is entitled to obtain that information

notwithstanding the evidence already filed. The purpose of seeking that

11

information may be to attempt to bolster its case and to find weaknesses in the

Commissioner’s case (the outline of which has yet to be provided).

42. Counsel for FANDS stated that it was not seeking information that is subject to

privacy laws, and suggested that any such information in the subpoenaed

documents could be redacted. Counsel for the Commissioner noted that

reductions also take time to do.

43. As I understand her submission, counsel for FANDS suggested that there need

be no breach of privacy in the production of the extracts from the subpoenaed

documents. What FANDS seems to want is the data about transactions that

might inform an assessment of the unimproved value of the subject land.

Although that might be so, Mr McCann’s valuation assessment report indicates

that the identity of a contracting party or parties might also inform the valuer

about the utility of a particular sale for present purposes. Mr McCann stated, for

example, that one sale to which he referred was not a true indicator of a single

block value without adjustment for the keenness of the purchaser of adjoining

blocks to buy that block to deliver consolidated redevelopment site.

44. If the identity of the contracting parties is at least potentially relevant to the

expert analysis of a sale, then that need not prevent the production of a

document or extract from a document. As counsel for FANDS noted, not all the

subpoenaed material would necessarily be relied on, let alone tendered, in the

hearing.13 However, counsel submitted, one might expect that the subpoenaed

material could confirm the case being put by FANDS and be used to critique the

Commissioner’s case. I add that the converse might apply, and the information

might bolster the Commissioner’s case. Either way, it is likely to be relevant to

the matter in issue in this case.

45. There are other circumstances that provide the context for the issue of the two

subpoenas. In the absence of a process for discovery of documents (as would

apply in conventional litigation), parties before the Tribunal use subpoenas to

obtain documents that are not provided otherwise (for example as part of the

T documents). Furthermore, the two subpoenas have been issued in advance of 13 See National Employers’ Mutual General Association Ltd v Waind and

Hill [1978] 1 NSWLR 372

12

the Commissioner filing and serving a statement of facts and contentions. In

accordance with orders made previously by the Tribunal, that document is due

to be filed and served on 1 September 2017. According to counsel for FANDS,

the absence of that document at this stage means that FANDS does not know

the case being advanced by the Commissioner at the time when FANDS is

defending the scope of the subpoenas. In reply, counsel for the Commissioner

observed that FANDS flagged the issues in this case. FANDS cannot claim to

be in the dark because the Commissioner has not filed his case. As counsel also

observed, the absence of the Commissioner’s statement of facts and contentions

is not a proper basis for issuing a subpoena. FANDS can only seek what is

relevant.

46. Finally the orders made previously by the Tribunal have scheduled the hearing

of the substantive matters for 12, 13 and 14 September 2017. Both parties, and

the Tribunal, are committed to complying with the timetable set out in those

orders.

47. It is against that background that the Commissioner’s application is to be

considered and decided.

The issues in the substantive case

48. The hearing of this application, the representatives of the parties agree that the

substantive case raises two issues which are, in essence:

(a) What was the unimproved value of the subject land in each of the relevant

years? 14

(b) Whether the Commissioner should have exercised a discretion to

redetermine the unimproved values of the subject land from 2011

onwards.

Consideration and conclusion

49. In dealing with the Commissioner’s application to set aside the two subpoenas

is necessary to consider:

14 The statement of facts and contentions filed by FANDS expresses this issue as whether or not the redetermination of unimproved values issued by the Commissioner redetermining the unimproved value of the subject land for the years 2009 to 2016 ought to have been made

13

(a) whether the documents sought by the subpoenas are relevant to the

substantive issues in the case;

(b) whether the production of the documents would meet the requirements of

section 99 of the Taxation Administration Act 1999; and

(c) whether, even if the answers to (a) and (b) are yes, the Tribunal should set

aside the subpoenas in the exercise of discretion on the basis that it would

be oppressive to require the Commissioner to produce the documents

specified in those subpoenas.

50. Counsel for the Commissioner submitted that the issue for the Tribunal is the

unimproved value of the subject land and that issue is to be resolved by

reference to expert valuation opinion. That proposition is not disputed. She then

submitted that the documents sought in relation to the unimproved value of

other blocks in Braddon cannot go to the unimproved value of the subject land.

That does not necessarily follow. Information about comparable blocks in the

neighbouring area might throw some light on whether the unimproved value of

the subject land is defensible relative to the values of other comparable parcels.

That information, although not necessarily conclusive of the validity of the

unimproved value assigned to the subject land in each of the eight years,15 is

reasonably likely to assist in reviewing the valuation assessments made by Mr

McCann in his report and any valuation evidence provided by the

Commissioner.

51. The potential relevance of the material sought by the two subpoenas can be

gleaned from Mr McCann’s report on his assessments of the unimproved value

of the subject land for each of the eight years from 1 January 2009 to 1 January

2016.

52. He described the task for the valuer, consistent with section 6(1) of the Rates

Act 2004, as being to assess the unimproved value having regard to the highest

and best (optimum) use permitted by the Crown Lease, generally as a clean

vacant site, with no improvements, no tenants, no agreement to lease and no

15 For example, if the valuations of the blocks were infected by an error in the valuation process then they might be all ascribed incorrect valuations. Hence the valuations relative to each other would be defensible even though each is incorrect

14

pre-sales or any other commercial agreement that adds value. He contended that

the best market evidence to determine the unimproved value of a site, in

accordance with section 6 of the Rates Act, is to analyse sales of similar vacant

sites of a similar value range, with similar development potential. He noted that

it is difficult to obtain “exact like with like.”

53. He described the subject land as being positioned south of the midpoint of the

Braddon former Service Trades redevelopment precinct, and stated that the

Braddon redevelopment area is formed by Sections 20, 21, 28 and 29 Braddon

with street frontages to the western side of Torrens Street, both sides of

Lonsdale Street and the western side of Mort Street. He described the research

undertaken in relation to sales and property trends in the Braddon and other

ACT mixed land use development locations to finalise assessments of the

unimproved value of the subject land at each of the required dates. He stated

that market research indicates that the slow take-up of sites for early

redevelopment in the Braddon Redevelopment Area over the past decade was a

result of a number of factors. According to Mr McCann, “Government policy

variations in how charges are to be assessed and rates charged has concerned

property developers.” When setting out the underlying assumptions for the

valuation report assessments, he stated that the sales information, market trends

and ACT Government policy changes have been compiled from his research.

54. The seven sales in the precinct on which he relied comprise two in Torrens

Street, three in Mort Street and two in Lonsdale Street. His observations about

features of those sales include that four of the Braddon sales analysed confirm a

trend that “the price paid prior to variation of the lease purposes clause,

represents 90% of the value of the development site cost when the lease

variation is paid.” Later in the report he stated:

The Braddon precinct redevelopment site sales, although relevant, are more difficult to analyse due to likely conflicting opinion on issues such as Crown Lease variation costs, demolition costs and Lease payouts from existing tenants and the added value of improvements.

55. Information about decisions in relation to the determination of Change of Use

Charges and/or Lease Variation Charges for neighbouring properties might

throw some light on the Commissioner’s decision in relation to the subject land

15

and hence whether he should have exercised his discretion to issue a

redetermination of its value. The material sought might also indicate when the

Commissioner became aware of the change on the subject land.

56. Information about decisions in relation to the determination of Change of Use

Charges and/or Lease Variation Charges for neighbouring properties might

throw some light on the Commissioner’s decision in relation to the subject land

and hence whether he should have exercised his discretion to issue a

redetermination of its value. The material sought might also indicate when the

Commissioner became aware of the change on the subject land.

57. I am satisfied that, subject to two qualifications set out below, the two

subpoenas seek the production of material that would be reasonably likely to

add to the relevant evidence in the case and could possibly throw light on the

issues in the case.

58. The first qualification is in relation to the first subpoena. The letter dated

22 August 2017 from the Commissioner’s solicitor to the solicitor for FANDS

refers to the opening words of paragraph 1 of the revised subpoena which

identifies documents “constituting assessments of Stamp Duty” for a specified

transactions. The Commissioner’s solicitor states that she is instructed that

stamp duty is payable in relation to the capital improved value of a property,

and therefore the assessment of stamp duty is of no apparent relevance for the

purposes of determining the unimproved value of the subject land. That

statement has not been contradicted in correspondence or before the Tribunal.

If, as I have found earlier, the purpose of this subpoena is to obtain documents

which, after some analysis, could assist in determining the unimproved value of

the subject land at a relevant date or dates, then the assessment of stamp duty on

another basis cannot assist in that determination. Accordingly, although I

dismiss the application to have the first subpoena set aside, I direct that the

Commissioner need not produce the amounts of the assessments of stamp duty

in respect of the nominated transactions.

59. On the basis that documents produced in response to the second subpoena might

assist in determining the unimproved value of the subject land and might

16

provide information in relation to the basis on which the Commissioner

exercised his discretion in 2016 to redetermine the unimproved land values of

the subject land, I have decided not to set that subpoena aside. However, it

would appear that, as at 22 August 2017 and at the date of the hearing of the set-

aside application on 28 August 2017, the Commissioner was still seeking from

FANDS some clarification as to the scope of the second subpoena. Accordingly,

I direct that, if it has not done so already, FANDS is to provide a written reply

to the request for clarification about the scope of the second subpoena set out in

the letter dated 22 August 2017 from the Commissioner’s solicitors to the

solicitor for FANDS. That reply should be provided as soon as practicable. If it

is not provided, then the Tribunal will not be sympathetic to any submission by

FANDS that the Commissioner has failed to produce all of the documents

sought.

The operation of section 99 of the Taxation Assessment Act 1999

60. Having decided that most of the documents described in these subpoenas are

relevant to the issues in the substantive case it is necessary to decide whether

section 99 of the Taxation Assessment Act 1999 operates to inhibit or prevent

the production of any documents in response to the two subpoenas. Section 99

is quoted earlier in these reasons for decision (at [17]) and judicial observations

about its meaning and operation are also summarised above. The key issue is

whether the disclosure or production of the protected document(s) or protected

information would be “necessary for the purpose of the administration or

execution of a tax law.”

61. The Note to section 1 of the Rates Act 2004 states that the Rates Act is a tax law

under the Taxation Administration Act 1999.

62. The Rates Act 2004 provides for annual determinations of the unimproved value

of parcels of land for each financial year.16 If an error was made in relation to a

determination of the unimproved value of a parcel of land is at 1 January in a

particular year, the Commissioner may redetermine the unimproved value at the

redetermination date (1 January of the relevant year). An “error” in relation to a

determination includes an error in making a valuation on which the

16 Rates Act 2004 ss 9, 10

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determination is based, and the duplication of an error in relation to an earlier

determination.17

63. The Commissioner may redetermine the unimproved value of a parcel of land as

at a date if a change of circumstances happens in relation to a parcel of land that

affects the unimproved value of that land.18

64. The rates to be imposed for a parcel of rateable land are calculated by reference

to a statutory formula that includes the unimproved value of the land.19 The

Rates Act provides for objections to be made to an assessment, if the objection

relates to the valuation on which the assessment is based.20

65. Adopting the approach taken by Foster J in Binqld, I have also considered the

nature of these proceedings and the meaning of ‘necessary’ as that word has

been interpreted when it is used in section 99 of the Taxation Administration

Act 1999. I also proceed on the basis that section 99 protects the Commissioner

from the compulsion to divulge information that is relevant to the proceedings

other than as excepted by that section.

66. The ultimate aim of the application by FANDS is to ensure that the unimproved

value of the subject land was correctly determined or redetermined for each of

the eight years and hence that FANDS pays (or paid) the correct amount of rates

and land tax. The resolution of that issue is entirely consistent with the scheme

of the Rates Act 2004, particularly the sections summarised above. Accordingly,

I am satisfied that the exception in section 99 applies to the Commissioner

because the production of the document(s) and information sought by the

subpoenas is necessary (in the sense of requisite or appropriate) for the

administration of the Rates Act.

Whether the subpoenas are oppressive

67. For the reasons outlined above, there are practical difficulties in complying with

the subpoenas within the period before the schedule hearing of the substantive

case. It is apparent from the witness statements of Mr Stroud and Mr King that

17 Rates Act 2004 s 1118 Rates Act 2004 s 11A19 Rates Act 2004 s 1420 Rates Act 2004 s 71

18

the relevant officers can identify, locate and produce or copy the relevant

documents. Indeed it would appear that some work has already been done for

the purpose of responding to the subpoenas.

68. Despite the practical difficulties, I am not satisfied that the subpoenas are

inherently oppressive. To some extent, the scope of work to be done in response

to the subpoenas might be reduced by the qualifications on the subpoenas

outlined in these reasons the decision.

Conclusion

69. Having considered the statement of facts and contentions filed by FANDS on

24 July 2017, the correspondence between the solicitors for FANDS and the

Commissioner between 3 and 22 August 2017, and the submissions made to the

Tribunal on 28 August 2017, I am satisfied that, subject to two qualification set

out below:

(a) the subpoenas seek the production of material that would be reasonably

likely to add to the relevant evidence in the case and could possibly throw

light on the issues in the case;

(b) the production of that material is not prevented by the operation of section

99 of the Taxation Administration Act 1999;

(c) the subpoenas are not oppressive; and

(d) the application that the two subpoenas be set aside should be dismissed.

70. The qualifications are that:

(a) the Commissioner need not produce the amounts of the assessments of

stamp duty in respect of the nominated transactions; and

(b) as soon as practicable, FANDS provide a written reply to the request for

clarification of the scope of the second subpoena set out in the letter dated

22 August 2017 from the Commissioner’s solicitors to the solicitor for

FANDS.

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71. Given the time constraints within which this matter was heard and decided, I

consider it unnecessary to convene another hearing to hear submissions in

relation to revised terms of the subpoenas to reflect this decision. I will rely on

the parties to give effect to this decision. If, however, either or both of the

parties is concerned to have the Tribunal reformulate the subpoena each party is

granted liberty to apply for such orders to be made.

72. In conclusion, I urge the legal representatives of FANDS to consider carefully

how much of the information covered by these orders they need, particularly

after the Commissioner’s statement of facts and contentions and his valuation

report are provided. If, as a result of reading those documents or any other

communications between the parties, FANDS decides that it does not need

some of the information within the scope of either subpoena, FANDS should

advise the Commissioner’s representatives as soon as practicable.

………………………………..President G Neate AM

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HEARING DETAILS

FILE NUMBER: AT 16, 23, 24, 25, 26, 27/2017

PARTIES, APPLICANT: FANDS (ACT) Pty Ltd

PARTIES, RESPONDENT: Commissioner for ACT Revenue

COUNSEL APPEARING, APPLICANT Ms A Irving

COUNSEL APPEARING, RESPONDENT Ms K Katavic

SOLICITORS FOR APPLICANT Mr M Falcetta of Trinity Law

SOLICITORS FOR RESPONDENT Ms L Tomlins of ACT Government Solicitor

TRIBUNAL MEMBERS: President G Neate

DATES OF HEARING: 28 August 2017

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