Case X75

Members:
HE Hallowes SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 31 August 1990.

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H.E. Hallowes (Senior Member)

In August 1985 amended assessments of taxation payable in respect of the years of income ending 30 June 1980, 1981 and 1982 were issued to the two applicants in these proceedings. As the issues are similar in all four applications before the Tribunal the decision and these reasons for decision are with respect to all four applications.

2. On 10 September 1985 the applicants' agent advised the respondent that the applicants objected to their amended assessments. On 30 March 1987 the respondent replied to the agent by advising that the objections had been considered and disallowed. The standard letter sent to the agent included the advice that:

``Your attention is directed to section 187 of the Income Tax Assessment Act which provides that a taxpayer who is dissatisfied with the decision on an objection may lodge with the Commissioner of Taxation either -

• a. a request to refer the decision to the Administrative Appeals Tribunal; or
• b....

A request made under section 187 must be in writing, and be lodged within 60 days

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ATC 559

after service of this notification. It must be accompanied by a fee of $200. The 60 day period may be extended at the discretion of the relevant Tribunal or Court. Applications for the period to be extended must accompany the request for reference to a Tribunal or Court and provide details of the circumstances concerning, and the reasons for, your failure to lodge the request within the required period.''

3. On 24 April 1987 the agent advised the respondent that he had been instructed to refer the decisions on the objection to the Tribunal. He enclosed the sum of $400. The respondent accepted that the sum of $400 was in respect of the request for reference of the decisions on the objections to the amended assessments for the year of income ending 30 June 1980 for both applicants. Section 187 of the Income Tax Assessment Act 1936 (``the Act'') provides:

``A taxpayer who is dissatisfied with a decision under section 186 on an objection by the taxpayer may, within 60 days after service on the taxpayer of notice of the decision, lodge with the Commissioner, in writing...

• (a) a request to refer the decision to the Tribunal...''

4. Section 14ZAC of the Taxation Administration Act 1953 (``the Administration Act'') provides:

``14ZAC(1) Where a person who is dissatisfied with an objection decision lodges with, or sends to, the Commissioner (whether or not within 60 days after service on the person of notice of the decision) a request to refer the decision to the Tribunal or a court under a relevant enactment, the request shall be accompanied by the required fee.

14ZAC(2) If the request is not accompanied by the required fee, then, notwithstanding any provision to the contrary contained in the relevant enactment, the request shall be taken not to have been lodged with, or sent to, the Commissioner.''

Section 14ZAC was inserted into the Administration Act by Act No. 154 of 1986 and is applicable to a request by a person to refer an objection decision to the Tribunal being an objection decision served on the person after 1 March 1987, which covers the circumstances in these applications.

5. No difficulties have arisen for the applicants with respect to their request that the decisions on the objections be referred to the Tribunal with respect to the income year ending 30 June 1980. However, their requests with respect to the years of income ending 30 June 1981 and 1982 were not lodged pursuant to sec. 14ZAC of the Administration Act.

6. The agent and an officer of the respondent at the relevant time, gave evidence to the Tribunal. Amongst the documents lodged with the Tribunal pursuant to sec. 37 of the Administrative Appeals Tribunal Act 1975 was a handwritten minute with respect to phone calls made by the officer to the agent's firm on 7 and 8 September 1987. I accept the officer's evidence and find that the phone calls were made. The minute records:

``... explained that each year was considered to be a reference and that as only $400 had been received $800 was outstanding as regards the six references. (3 on both husband and wife) Explained that this interpretation was based on ss. 185, 186, 187 of the ITAA and s. 14ZAC of the Tax Admin. Act. I stated that I wanted the additional $800 within the next 2-3 days (ie this week) and then I may have some authority to send the references on.''

A minute of 16 September 1987 records that ``the 1980 returns will be covered by $400'' but that as the agent had not contacted the officer the 1981 and 1982 years would not be referred to the Tribunal. This advice was communicated to the agent by letter dated 16 September 1987. That letter advises:

``It was advised by this office, per the letter dated 30 March 1987 that, as the objection decision in this case was served after 1 March 1987, the $200 fee was applicable and was to be forwarded within 60 days of the notice of decision on the objection for the reference to be considered valid under section 14ZAC of the Taxation Administration Act.''

There is a further file note dated 30 May 1989 amongst the documents by another officer of the respondent with respect to issues arising out of the 1980 application. The file note records that when the agent attempted to

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ATC 560

discuss the 1981 and 1982 years of income, it was pointed out to him that there was no ``valid appeal in these years''. The agent said he would make further enquiries to establish whether the fee had been paid for those years. The question of the outstanding $800 was again raised at a preliminary conference conducted by Dr. P. Gerber, a Deputy President of the Tribunal, on 19 October 1989. It was not until 7 March 1990 that the agent paid the $800 to the respondent with a request for a reference with respect to the decisions objected to for the years of income ending 30 June 1981 and 1982. Section 188(3) of the Act provides that an application for an extension of time shall state fully and in detail the circumstances concerning, and the reasons for the failure by the taxpayer to lodge the request as required by the Act. On 14 June 1990 the agent advised:

``The reason why the correct amount of money was not paid in time was that we were under mistaken belief that $400 referred to all three years for both of the taxpayers.

Objection and reference to AAT clearly referred that the taxpayers wished all the years to be referred to AAT.

When the officer from the tax office rang, we discussed the case for settlement purposes. I was under the impression that she was the appeals officer. At no stage did she ask for additional money to make good the correct amount.''

As already indicated the Tribunal finds that the officer did request the required fee on 8 September 1987.

7. It is the respondent's contention that there has been an inordinate delay in lodging the request for reference to the Tribunal of the decisions on the objections and that when the application for an extension of time was lodged the applicants failed to comply with sec. 188(3) of the Act, which provides:

``An application under sub-section (1) or (2) shall state fully and in detail the circumstances concerning, and the reasons for, the failure by the taxpayer to lodge the objection or request as required by this Act.''

It was not until 14 June 1990 that the agent's application complied with sec. 188(3).

8. In
Angus Fire Armour Australia Pty. Ltd. v. Collector of Customs (N.S.W.) (1988) 19 F.C.R. 477, the Full Court of the Federal Court considered the issue whether an application was validly made even though the required filing fee had not been proffered. The Court ordered that a declaration be made that the application for review was an application made within time although not accompanied by the required filing fee. That case is clearly distinguishable from the present application because of sec. 14ZAC(2) of the Administration Act.

9. The agent gave evidence that it was not until he attended a preliminary conference at the Tribunal in October 1989 that he was aware that the issues with respect to all three income years ending 30 June 1980, 1981 and 1982 were not before the Tribunal. He said that the officers of the respondent with whom he had dealt were well aware that the three years of income were in issue. However, the Tribunal notes that, despite Deputy President Gerber's advice at that time, it took a further five months before the request for referral of the decisions on the objections for the financial years ending 30 June 1981 and 1982 were lodged.

10. The Tribunal's attention was drawn to Case U175,
87 ATC 1007, an application for an extension of time where a taxpayer had instructed his accountant to proceed with requests for reference which were not lodged until the time for requesting a reference had expired. In that application the respondent argued that it was not open to the taxpayer to blame his tax agent for neglect because the agent's neglect, as against the respondent, became the taxpayer's neglect. In his reasons for decision, Mr P. Roach, Senior Member, said that the object in exercising any discretion to grant or refuse an application for extension of time was to avoid injustice such that there was a concern to provide for fair resolution of legitimate disputes. One of the principles established by decided cases is that neglect by an agent does not automatically entitle an applicant to additional time. He found, on the facts of that application that there was an excusable oversight. However, Mr Roach went on to say that persons who fail to act diligently do so at their peril; the length of any delay may affect the public interest and unless an applicant establishes ``an arguable case'' an extension should not be granted. Relief should be denied

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to those who are dilatory in instituting proceedings.

11. Mr Roach points out that sec. 188(2) of the Act clearly calls for the preparation of and presentation to the respondent of two documents; a request for reference and an application for an extension of time setting out the circumstances concerning the failure to lodge the request as required together with the reasons for such failure. Despite the requests by officers of the respondent and a Deputy President of this Tribunal all the provisions of sec. 188 of the Act were not complied with until 14 June 1990.

12. In this application there was considerable delay between the date of the initial objections by the taxpayer, in September 1985, and the decision to disallow the objections in March 1987. The letter from the agent dated 24 April 1987 to the respondent advised that the agent had received instructions to refer the decisions on the objections to the Tribunal, which, although not specifically requesting a reference can be read as such a request. However, it was not until 7 March 1990 that the provisions of sec. 14ZAC(1) and (2) of the Administration Act were complied with. It is the contention of the respondent that there was still no application lodged under sec. 188 of the Act on 6 March 1990 when the money was forwarded as sec. 188(3) was not complied with until 14 June 1990. On receipt of the letter dated 6 March 1990, enclosing the required fee, the respondent advised the agent that the correspondence did not constitute a proper request for reference. Similar advice was given at a preliminary conference on 29 May 1990. Section 188(3) of the Act is somewhat more explicit than the requirement in sec. 29(1)(c) of the Administrative Appeals Tribunal Act 1975. It may be an issue that is meant by the words ``fully and in detail'' in the circumstances of each particular application. In the circumstances of this application, I find that the request for reference was lodged on 6 March 1990, rather than on 14 June 1990 when the agent set out the circumstances concerning the reasons for the failure to lodge the request within time. Whether or not the applications were finally lodged in these proceedings on 6 March 1990 or 14 June 1990, does not change the fact that it was approximately three years since the decisions with respect to the objections, and 34 months since the 60-day period for the taxpayer to request a reference to the Tribunal, had expired. Section 14ZAC(1) of the Administration Act provides that the request shall be accompanied by the required fee. If the period has ended, sec. 188(2) of the Act provides that a request for reference, together with an application asking that the request be treated as having been duly lodged, may be lodged by the taxpayer.

13. In
Hunter Valley Developments Pty. Ltd. & Ors v. Minister for Home Affairs and Environment (1984) 58 A.L.R. 305, Wilcox J. considered the principles applicable in the consideration of an application to extend time. In deciding whether an applicant has given an acceptable explanation of the delay and whether it is fair and equitable in the circumstances to extend time, it should be taken into account whether the applicant has taken action so that the decision-maker is aware that he contests the finality of the decision. In this application I am satisfied that the applicants did take such action in September 1985 and during 1987 but, after the failure of the agent to respond to the advice given to him in September 1987 and again in October 1989, whether the finality of the decisions with respect to the financial years ending 30 June 1981 and 1982 were contested, may have been in doubt. I am satisfied that there is no prejudice to the respondent in these applications apart from the fact that officers were tied up dealing with decisions which should have been laid to rest. Established practice should be adhered to, especially when they are prescribed by statute. In these applications the applicants were represented by an agent whose business it is to familiarise himself with the requirements of the relevant legislation. The applicants have not come before this Tribunal unrepresented and unfamiliar with the relevant provisions.

14. In Case U189,
87 ATC 1082, Mr Roach drew attention to the problem of multiple fees for successive applications and in Case U188,
87 ATC 1075, he drew attention to the problem of multiple fees for concurrent applications. He did so in the context of fees, as a condition precedent to the referring of a matter for independent review, leading to injustice if the cost was too difficult for an applicant to raise. The applicants did not avail themselves of the opportunity provided at the hearing of these extension of time applications to satisfy the Tribunal that there are merits in their

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substantial applications which warrant review. It is difficult to draw any conclusions from the letter to the respondent from the agent dated 10 September 1985. The Tribunal was advised that a sum of approximately $19,000 was in dispute. No evidence was given to the Tribunal of the impact of this sum on the taxpayers.

15. There is no acceptable explanation for the agent's lack of diligence in lodging the applications, even were I to accept his evidence that he was unaware of the necessity of paying a further $800 until 19 October 1989, evidence which I do not accept. Mr Roach noted that the fee for instituting any application with the Tribunal had been set at $200 for ``EACH application''. With respect, I would adopt what was said by Mr Roach with respect to the public interest in protecting revenue. There should be finality in decision-making so that files can be closed and officers' attention turned to other matters. The applicants in these proceedings made no attempt to establish that there were grounds for an arguable case before the Tribunal. I am satisfied that the taxpayers' agent was aware of the need to pay the necessary fee with respect to each application since speaking to an officer of the respondent in September 1987. He received a reminder when the Tribunal provided listing advice in May 1989 with respect to the applications for the year of income ending 30 June 1980 and the further advice provided by Deputy President Gerber in October 1989. There is no satisfactory explanation of the continuing delay in lodging these applications. I am satisfied that the explanation lies in the neglect of the agent rather than being a case of error. Applying what was said by Deputy President Gerber in Case W23,
89 ATC 253 at p. 256, the Tribunal has decided not to grant the application that the request be treated as having been duly lodged.