Full Federal Court allows taxpayer’s appeal in LVR case – 95% of the Tribunal’s reasons taken from Commissioner’s submissions

Earlier this week the Full Federal Court handed down judgment in LVR (WA) Pty Ltd v Administrative Appeals Tribunal [2012] FCAFC 90 where the Court allowed the taxpayer’s appeal against the decision of the Tribunal to dismiss the application because the applicant failed to comply with a direction of the Tribunal.

The issue in the substantive dispute involved GST and concerned contentions by the Commissioner that the taxpayer carried on the enterprise of property subdivision and sale, was required to be registered as it exceeded the registration threshold and penalties.  The Tribunal found that the applicant had failed “within a reasonable time” to comply with the Tribunal’s directions.

What makes this case particularly unusual is that only days before the hearing of the appeal before the Full Court, the Court drew to the attention of the parties that the Tribunal’s reasons were largely copied from the Commissioner’s submissions without attribution.  This issue was not addressed before the Federal Court on the initial appeal and was not raised in submissions before the Full Court.  The judgment states and approximately 95% of the paragraphs of the reasons were taken from the Commissioner’s written submissions filed in the Tribunal and a further three or four paragraphs of the reasons were taken from the Commissioner’s reply submissions.  While the Full Court did not decide the matter on this point, it noted the following:

Of themselves, these circumstances would give rise to a serious concern that the Tribunal had failed to bring its own mind to bear on the issues before it and thus that it had constructively failed to exercise its jurisdiction.  That jurisdiction in the present circumstances would include whether or not to exercise the discretion conferred on the Tribunal by s 42A(5)(b) of the AAT  Act to dismiss the applications without proceeding to review the Commissioner’s decisions.

The Full Court was also gravely concerned that this matter was not raised with the primary judge and that the case was presented on the basis that the reasons for decision reflected the Tribunal’s own thought processes.

The Full Court allowed the appeal because it did not accept that the Tribunal had taken into account a responsive affidavit filed by the taxpayer which went to compliance with the relevant directions of the Tribunal.  The Court ordered that the matter be remitted to the Tribunal for further consideration.

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