By Dan Star KC
Administration law/taxation
Circumstances on appeal on a question of law where the Court can make final orders in lieu of remitter to the Administrative Appeals Tribunal
In Charles Apartments Pty Ltd v Commissioner of Taxation [2025] FCA 461 (9 May 2025), the applicant appealed to the Court on a question of law from the decision of the Administrative Appeals Tribunal (Tribunal), pursuant to s44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), to vary an objection in part.
At the core of the applicant’s submissions on the appeal was that the Tribunal erred, as a matter of law, in relation to whether an additional amount as a deduction for interest in the sum of $946,000 should have been allowed under s8-1 of the Income Tax Assessment Act (Cth) (at [84]). The Court held that none of the matters raised by the applicant established the error advanced by it. The Commissioner of Taxation (Commissioner) resisted the applicant’s appeal and challenged the Tribunal’s decision, by way of a cross-appeal on questions of law in relation to the interest deduction. The Court held that the Commissioner’s cross-appeal must be allowed.
Neither party sought for the matter to be remitted to the Tribunal if they succeeded. This was on the basis that any findings of fact that needed to be made, for either of the outcomes contended for, had already been made by the Tribunal (at [130]). The Court considered ss176 and 177 of the Administrative Review Tribunal Act 2024 (Cth), which are similar to s44 of the AAT Act (at [132]–[136]). Following consideration of relevant case law authorities, Wheatley J summarised the position to be that, if the following matters are satisfied, it may be appropriate for the Court to make final orders, without remitting to the Tribunal:
“(a) neither party sought for the matter to be remitted …
“(b) both parties agree that the Court should resolve the relevant issue (depending on which ground(s) of appeal or the cross-appeal might be accepted) …
“(c) both parties agree that the Tribunal had fully found all … the relevant facts, relevant to the grounds of appeal or cross-appeal
“(d) the resolution of the question(s) of law could only lead to one outcome” (at [142]).
The Court held that, based on the facts as found by the Tribunal, other than findings made as the result of the error of law, there can only be one outcome (at [144]–[152]). The decision of the Tribunal was set aside, and the Court determined that the Commissioner’s objection decision be affirmed.
Civil Penalty
Relevance of whether legal advice was sought to the assessment of civil penalty
In Australian Securities and Investments Commission v HCF Life Insurance Company Pty Ltd (Penalty) [2025] FCA 454 (8 May 2025), the Court was determining a pecuniary penalty order under s12GBB of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) for misleading the public as to the nature, characteristics and suitability of financial services. This was following an earlier judgment on liability, in which the Court found that the respondent (HCF Life) had contravened s12DF of the ASIC Act with certain terms of its life insurance policies.
The principles relating to the assessment of pecuniary penalties were not the subject of significant dispute between the parties (at [3]–[14]). A key factual matter that was in dispute was the weight that should be attributed to obtaining legal advice in determining a suitable penalty, particularly where legal advice was sought but did not raise the possibility that a clause within the terms may be misleading. This issue was addressed as part of the circumstances in which the contraventions took place, during two different time periods (at [68]–[83]).
The Court held that the weight attributed to obtaining legal advice will depend on all circumstances of the case, including nature of contravention, nature of advice obtained and degree of certainty or qualification with which it is expressed (at [70]).
In the earlier time period, the fact that HCF Life sought a review by external lawyers of the relevant product disclosure statements (PDSs) as a whole for their compliance with financial services laws before they were issued evinces an intention by HCF Life to comply with those laws, including s12DF of the ASIC Act (at [70]). HCF Life’s external lawyers failed to identify the misleading nature of the PDSs. Jackman J held that the circumstances in which the contraventions took place in the earlier time period did not in themselves warrant the imposition of any pecuniary penalty (at [76]).
However, in the later time period, ASIC discharged its onus of establishing that HCF Life was aware of some risk of potential unlawfulness of its conduct, but the Court was unable to find, based on the evidence, what level of risk HCF Life was aware of at that time (at [80]). Ultimately, Jackman J held that, while it was a significant matter in the assessment of pecuniary penalties, it was not at the higher ranges of moral culpability (at [83], [110]).
The Court imposed a pecuniary penalty of $750,000 as appropriate (at [107]–[110]).
Practice and Procedure
Nature of concise statements – Leave to amend
In Health Service Union v Asmar (No 4) [2025] FCA 403 (24 April 2025), the Court granted leave to the applicant to amend its originating application and concise statement. Dowling J summarised authorities as to the nature and operation of a concise statement (at [10]–[14]). That included another recent decision of the Court,Commissioner of NDIS Quality and Safeguards Commission v Irabina Autism Services (in liq) (No 2) [2025] FCA 238, in which Horan J explained (at [39]):
“While a concise statement is different from a pleading, it still performs part of the same role of disclosing to another party the case to be made against them. In a concise statement, such disclosure will usually be broader and less comprehensive than in a conventional pleading, so that ‘other documents and case management techniques might be called upon to complete the picture’: NAB (No 2) at [26], [28] … see also ASIC v Westpac Securities Administration Ltd … (2019) 272 FCR 170 at [185] [and] Delor Vue Apartments at [141], [144]1 … In addition to the provision of particulars, this might encompass the delivery of affidavits or witness statements, statements of issues, or written outlines of opening submissions. As McKerracher and Colvin JJ stated in Delor Vue Apartments at [144], ‘[t]he concise statement process recognises that issues may be refined as the conduct of the interlocutory stages progress and that there are often benefits to be obtained in bespoke case management orders’.”
