Appellate jurisdiction
Federal Court – cross-vesting
In HBSY Pty Ltd v Lewis [2024] HCA 35 (9 October 2024), the High Court by majority issued writs of certiorari and mandamus remitting the matter to the Federal Court for decision.
The substantive proceedings related to a cause under the Bankruptcy Act 1966 (Cth). This attracted the federal jurisdiction but may be heard in a state court pursuant to s39(2) of the Judiciary Act 1903 (Cth).
The matter was heard and determined in the Supreme Court of New South Wales. Thereafter, HBSY applied for an extension for time to appeal to the Full Court of the Federal Court.
Subject to limited exceptions, s7(5) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (CVA) states:
“. . . [W]here it appears that a matter for determination in a proceeding by way of an appeal from a decision of a single judge of the Supreme Court of a State or Territory (not being a proceeding to which [s7(6)] applies) is a matter arising under an Act specified in the Schedule, that proceeding shall be instituted only in, and shall be determined only by: . . . (a) the Full Court of the Federal Court . . .”
The Full Court read down the jurisdiction and concluded that it did not have the jurisdiction to hear the appeal from a single judge of the Supreme Court and dismissed the application as incompetent.
The majority of the High Court held that the approach under s7(5) of the CVA should not be read down, cited the explanatory memorandum and second reading speech given by Lionel Bowen in construction of the meaning of s7(5) and held:
“The terms of s7(5) operate to require any appeal from a single judge of a Supreme Court that arises under one of the 13 Scheduled Acts to be instituted in and determined by the specified courts, irrespective of the source of the federal jurisdiction exercised by the Supreme Court . . .” (at [105]).
The High Court held that jurisdiction, granted by s24(1)(c) of the Federal Court of Australia Act 1976 (Cth), “in such cases as are provided by any other Act”, is enlivened by an appeal that falls within the scope of s7(5) of the CVA, and that s7(5) “relevantly directs appeals from a Supreme Court decision to the Full Court, irrespective of the source of the Supreme Court’s original jurisdiction . . .” (at [76]).
Gageler CJ, in dissent, rejected the argument and held:
“[O]n its proper construction, s7(5)(a)of the [CVA] does no more than restrict a proceeding by way of appeal from a decision of a single judge of a State Supreme Court raising for determination a matter arising under a Commonwealth Act listed in the Schedule to being instituted in and determined by the Full Court of the Federal Court or of the Federal Circuit and Family Court of Australia (Division 1) . . .” (at [70]).
Taxation
Luxury car tax – quotable purpose
In Automotive Invest Pty Limited v Commissioner of Taxation [2024] HCA 36 (16 October 2024), the High Court allowed an appeal from the Full Court of the Federal Court with costs. The appeal was allowed with a 3:2 majority.
A luxury car tax liability under A New Tax System (Luxury Car Tax) Act 1999 (Cth) (LCT Act) is applicable if there is a purpose other than a quotable purpose. In this case, the quotable purpose was holding the cars as trading stock. Where the taxpayer used the car for a purpose other than a quotable purpose, an increasing or decreasing tax liability is adjusted by operation of Division 15 of the LCT Act.
A central question on appeal was the meaning of the word “purpose” within the meaning of the LCT Act, where cars were held as trading stock and for a museum that generated revenue and was not separated from the car sales business.
The appellant was in the business of selling luxury vehicles. Mr Denny, the sole director of the appellant, was inspired by a trip to Las Vegas in 2013 where he observed vintage cars presented in a cordoned off section of a hotel identified as a museum. On his return to NSW, the director set up the Gosford Classic Car Museum. The museum presented luxury cars that were for sale and charged admission to the public. In the first year, the museum received 100,000 visitors, buying and selling 852 vehicles in 2015–2020.
The Court held that: “The use of the cars as exhibits in a car museum was intended by the appellant only as a means to the ultimate end or object of using the cars as trading stock, [that is,] selling them . . .” (at [58]).
The Court applied a subjective rather than objective test of what the appellant intended, citing the Court’s decisions in Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation [1952] HCA 4; (1952) 85 CLR 159 and Godolphin Australia Pty Ltd v Chief Commissioner of State Revenue [2024] HCA 20; (2024) 98 ALJR 808.
Gageler CJ and Jagot JJ, in dissent, held that use of the car for a quotable purpose was insufficient to exclude the taxpayer from liability and that it must be used only for that purpose; that is, “[t]he focus is exclusivity of the use for a quotable purpose (or quotable purposes) . . .” (at [19]).
The numbers in square brackets in the text refer to the paragraph numbers in the judgment. The full version of these judgments can be found at www.austlii.edu.au.
