AAT decision stands despite taxpayer’s death
The Administrative Appeals Tribunal (AAT) recently held in in Mavris and FCT (2018) AATA 4130 that it had the jurisdiction to make a decision concerning an objection decision after the completion of a hearing even though the taxpayer died before the publication of that decision.
Accordingly, a decision of the AAT will stand where all the oral evidence and written submissions of the parties to a taxation dispute have been made and the Tribunal reserves its decision before a taxpayer passes away.
Such an outcome should be contrasted with a scenario where a hearing is ongoing at the time of the taxpayer’s death in which case the AAT would need to determine whether the proceedings could be properly conducted in the taxpayer’s absence.
Our in-house Senior Tax Counsel Mark Morris has summarised the key features of the case below.
Mavris and FCT (2018) AATA 4130
The applicant lodged an appeal to the Administrative Appeals Tribunal (AAT) to review an objection decision made by the Commissioner of Taxation regarding the applicant’s liability for luxury car tax and the imposition of an administrative penalty.
The hearing subsequently took place on 2 March 2018 before the AAT at which both the applicant and his accountant gave oral evidence. The applicant was also represented by counsel as was the Commissioner. On 28 March 2018, final written submissions were received by the AAT.
On 31 May 2018, while the AAT was still reserved in respect of these proceedings, the Commissioner informed the Tribunal by email that the applicant had died. The Commissioner therefore expressed the view that the effect of the applicant’s death was that the Tribunal no longer had jurisdiction to review the application or make a decision until a party with standing was joined to the proceedings.
However, the above email which had been sent to the Tribunal’s registry was not drawn to the AAT’s attention until after the Tribunal’s decision had been handed down on 19 June 2018 due to an administrative oversight by the Tribunal’s registry.
Upon becoming aware of the Commissioner’s concerns regarding the AAT’s jurisdiction, Senior Member G Lazanas listed the matter for a directions hearing to ascertain the respective positions of the parties. The AAT was informed by the applicant’s legal representative that it was unlikely that any person would apply to be joined as a party to the proceedings. The Commissioner maintained that it was important to establish whether the Tribunal had jurisdiction to make the decision in circumstances where the applicant had died, and when no party had joined or intended to join the proceedings.
On 2 August 2018 the Commissioner was directed to file with the Tribunal any submissions which the Commissioner relied upon in relation to its argument that the Tribunal had no jurisdiction in circumstances where the applicant had died.
The Commissioner subsequently filed his written outline of submissions on 18 August 2018, and on 4 October 2008 the Tribunal was informed that no submissions would be filed on behalf of the applicant.
The key issue before the AAT was whether the Tribunal had jurisdiction to make the decision it did in circumstances where the applicant died before the publication of the decision.
The AAT held that it did have the jurisdiction to makes its decision for the reasons set out below:
- The Tribunal had conducted its hearing before publishing its decision. In doing so, the Tribunal had afforded the applicant the opportunity to present his case including giving oral evidence. The Commissioner also presented his viewpoint. Written submissions on certain legal issues arising during the hearing were also allowed to be submitted after the hearing with the consent of the parties. There was nothing further to be done by the parties after they sent their final written submissions and the Tribunal had reserved its decision.
- The applicant in the present case had a right to apply to the AAT for a review of the Commissioner’s objection decision in accordance with the provisions of the TAA (1953). That is, the applicant was challenging, pursuant to the statutory framework for taxation reviews and appeal set out in Part IVC of the TAA (1953), the Commissioner’s objection decision regarding certain assessments.
- The role of the Tribunal when reviewing a reviewable objection decision is to exercise all the original decision maker’s powers subject to the legal constraints imposed under the Administrative Appeals Tribunal Act (1975) (Cth) (the AAT Act (1975)). In these circumstances the Tribunal’s usual course is to conduct a review and reach a decision under section 43 of the AAT Act (1975). Where the Tribunal makes its decision, it takes effect or shall be deemed to have had effect on and from the day on which the decision under review has or had effect under section 43(6) of the AAT Act (1975). Furthermore, where a decision of the Tribunal on the review of an objection decision becomes final the Commissioner must take any required action including the amendment of any assessment concerned within 60 days to give effect to the decision.
- The AAT had actually made a decision and nothing would be gained in the present case if the Tribunal was required to make the decision again especially as the applicant has died. However, it was acknowledged that the Commissioner’s approach would be appropriate if the applicant had died before the hearing in which case the Tribunal would want to be satisfied about the proper conduct of the proceeding given the absence of the applicant.
- Whilst the AAT Act (1975) was not specific as to what should ensue where a party to a legal proceeding dies guidance does exist under the Federal Court Rules 2011 (Cth) which are more prescriptive. For example, under rule 30.24 of the Federal Court Rules 2011 (Cth) it is stated that if a party dies after the hearing of the proceedings has concluded, the Federal Court may still proceed to give judgment and an order be made for the entry of the judgment. Additionally, where a party dies and an interest or liability of a party passes by transmission, devolution or otherwise to another person, the Federal Court may make orders for the addition of parties to the further conduct of the proceeding; and
- Part IVC of the TAA (1953) does not prescribe in any mandatory terms, what must happen when a taxpayer dies part way through the review of an objection decision by the Tribunal.