Police Doorknocking at the High Court: Roy v O’Neill

By Julian R Murphy

On 8 September, the High Court will hear argument in Roy v O’Neill. The case is about whether police can approach a person’s front door to investigate them for a criminal offence. That question, in turn, entails consideration of whether such police are trespassers or whether they can claim the benefit of the common law implied licence normally extended to door-to-door salespeople and Jehovah’s Witnesses.

I have outlined some of the case’s comparative and constitutional dimensions in a ‘Before the High Court’ article in the Sydney Law Review. Here, I want to discuss the case’s potential implications for police practices, particularly during the pandemic. Before discussing those potential implications, it is helpful to provide an overview of the facts and proceedings in Roy.

‘An Orwellian intrusion’?

Aileen Roy and her partner resided in a public housing unit in Katherine in the Northern Territory. The unit complex had a perimeter fence but no locked gate. On 6 April 2018, three police officers attended the unit and knocked on the door. They were there to check whether Ms Roy was complying with a domestic violence order that prohibited her from being with her partner if she was intoxicated. The police had not received any complaint about Ms Roy’s behaviour that day, nor had they any other reasonable grounds to suspect that Ms Roy was committing an offence. Rather, police were attending the residence as part of a ‘proactive policing‘ operation to check compliance with domestic violence orders.

Having knocked on the door, the police could see through the flyscreen into the residence, where Ms Roy and her partner were together, apparently in the lounge room. The police called upon Ms Roy to come to the front door. When she did so, she was required to provide a breath test. Ms Roy returned a positive result for alcohol, was arrested and ultimately charged with the offence of breaching a domestic violence order. Continue reading

The Fluctuating Nature of a Partnership Interest: Commissioner of State Revenue v Rojoda Pty Ltd

By Barry Diamond
Senior Fellow in the Melbourne Law Masters and PwC Partner

When a partner ‘confirms’ she holds land on trust for other partners upon dissolution of the partnership, is this a confirmation of a pre-existing relationship, or a new trust for the purposes of stamp duty?

Commissioner of State Revenue v Rojoda Pty Ltd [2020] HCA 7 arose when a registered proprietor of land in Western Australia and a partner in a partnership, ‘confirmed’ that she held the land on trust for the partners in their respective shares following dissolution of the partnership. If the ‘confirmation’ was a declaration of new trust for the partners, duty was chargeable under the Duties Act 2008 (WA). However, if it was merely an acknowledgement of the same pre-existing trust relationship, no duty was chargeable. So, what was the legal nature of the pre-existing relationship between the partners? Did that differ to the relationship following the ‘confirmation’? Resolution of this question meant identifying the legal nature of the relationship between the partners and particularly the nature of a partnership interest.

The five-member High Court was divided 4:1. The majority (Bell, Keane, Nettle, Edelman JJ jointly) ruled in favour of the Commissioner of State Revenue that a new trust was created. Gageler J dissented and held that it was simply a confirmation of a pre-existing relationship. The respective judgments enlighten us on the different perspectives of the nature of a partnership interest, and I have considered both. There are other issues raised in the judgment, but I have not sought to discuss them here.

Continue reading

Goodwill and Valuations: Commissioner of State Revenue v Placer Dome Inc

By Barry Diamond

How is a mining company valued? Does it have goodwill? How does the goodwill analysis impact the valuation of the company’s land? What role do the facts, evidence and relevant taxing statute (the context) have to play in the analysis? These were the key questions to be answered by the High Court  in Commissioner of State Revenue v Placer Dome Inc [2018] HCA 59. The decision arose from a Western Australian stamp duty dispute, but it has implications far beyond stamp duty. It is significant for what it says about approaches to valuation methodology and evidence, the nature of goodwill and the contexts in which each of these things are  considered. Placer Dome Inc was a substantial gold mining company with land and mining tenements around the world, including in WA. Barrick Gold Corporation was one of the largest gold mining companies in the world. Barrick led a hostile takeover of Placer. The acquisition was the largest of its kind in the gold industry. The amalgamated entity was to become the world’s largest gold mining business.

The decision concerned the ‘land rich’ rules in the former Stamp Act 1921 (WA) (and which have since been replaced with ‘landholder’ rules). Under these rules, a corporation was land rich if 60 per cent or more of the corporation’s total property (by value) comprised land (situated anywhere in the world). The land rich ratio was therefore total land (the numerator) divided by total property (less certain property excluded by the Stamp Act) (the denominator). If a person acquired a controlling interest in a land rich corporation, stamp duty was payable on the value of the corporation’s landholdings in WA.

Was Placer Dome ‘land rich’?

The Commissioner of State Revenue assessed Barrick’s acquisition for duty of $55 million on the basis Placer was a land rich corporation. Was this correct?  The answer to this question required a closer examination of the numerator and denominator of the land rich ratio. Was the land (numerator) correctly valued? Was the total property (denominator) correctly identified and valued, and, in particular, was there goodwill (of substantial value) which could be included as property in the denominator? Continue reading

The Travesty in the Background to AB (a pseudonym) v CD (a pseudonym); EF (a pseudonym) v CD (a pseudonym): JB v The Queen

By Edward Elliot

On 3 December 2018 the High Court of Australia made public its decision in AB (a psuedonym) v CD (a pseudonym); EF (a pseudonym) v CD (a pseudonym) [2018] HCA 58 which in effect revealed that a Victorian barrister had been operating as a police informant, including providing information against her clients’ interests. The identity of the barrister remains suppressed until 5 February 2019, giving her time to enter the witness protection program and take steps to ensure the safety of herself and her children.

Since the High Court’s decision, there has been considerable concern expressed as to how it was police could have considered it appropriate to use a defence barrister as an informant and whether the integrity of the criminal justice system has been called into doubt. Responding to such concerns, the Government of Victoria has announced a Royal Commission to examine the circumstances of the affair, although its scope has not yet been determined.

Jeremy Gans has recently posted his take on the case, along with his hope that the Victorian courts will in due course reflect on their role in the matter. In this post, I will outline the tale of JB, a minor convicted of murder in NSW and ultimately acquitted. The history of litigation in JB reveals the vulnerability of the courts to being caught up as innocent agents in hidden injustices. This is particularly so where the Crown — and perhaps more so the police — dictate if and when information about informant status is disclosed. Finally, at the end of the post I will consider what mechanisms might be available to defendants who are affected by the AB decision and consider how the courts might deal with any resultant appeals.

The Crown against JB

In April 2008, JB, then aged 15, was caught up in a brawl between two groups of youths in Granville, an outer suburb of Sydney. During the brawl, one participant who had withdrawn and become a bystander was stabbed and later died. The police assembled a circumstantial case against JB, including CCTV of the initial of the brawl (but not the stabbing) and witness statements, before arresting him. Continue reading

Construction contractors beware – common clauses may now be unenforceable after Maxcon Constructions v Vadasz

By Owen Hayford and Hannah Stewart-Weeks
Senior Fellow in the Melbourne Law Masters and Partner, PwC Legal and Senior Associate, PwC Legal

Probuild and Maxcon Case Page

If you’re a construction lawyer or construction industry professional, by now you’ve probably heard about the recent High Court decision in Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5 (‘Maxcon’) (handed down at the same time as the decision in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4). Most commentators have focused on the judicial review issue which arose in both of those cases. However, the High Court in Maxcon also determined that a provision in a construction agreement which allowed a head contractor to withhold retention moneys under a subcontract until certain events had occurred under the head contract was a ‘pay when paid’ provision, and was therefore not legally enforceable under the security of payment (SOP) legislation. (See Kiefel CJ, Bell, Keane, Nettle and Gordon JJ at [16]–[29]. Gageler J at [32] and Edelman J at [41] agreed with the conclusions of the plurality regarding the operation of the SOP legislation, but did not consider the issue determinative of the appeal).

In this instance, the relevant SOP legislation was the Building and Construction Industry Security of Payment Act 2009 (SA) (‘SA SOP Act’), but most other States apart from Western Australia and the Northern Territory have similar provisions to the SA SOP Act. Thus, the decision has potentially broad implications for head contractors, not only in relation to retention provisions, but also in relation to other provisions which attempt to make a payment under a subcontract contingent upon an event occurring under the head contract. Head contractors may need to review their subcontracts to ensure that they don’t inadvertently contain ‘pay when paid’ provisions as a result of this decision. Continue reading

Back to the past for dodgy construction payment adjudications: Probuild and Maxcon

By Owen Hayford
Senior Fellow in the Melbourne Law Masters and Partner, PwC Legal

Probuild and Maxcon Case Page

Construction lawyers were very excited last week, when Australia’s highest court handed down two decisions on the rights of principals to construction contracts to seek judicial review of adjudications made under security of payment legislation — Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4, and Maxcon Constructions Pty Ltd v Vadasz [2018] HCA 5.

Security of payment legislation has been enacted in every Australian state and territory to ensure that that construction contractors and sub-contractors are promptly paid for the work that they have performed. Although different in each state and territory, the legislation establishes a fast-track process for the interim resolution of progress payment disputes under construction contracts by an adjudicator. The two cases arose when decisions by adjudicators in relation to progress payments were sought to be challenged by principals for alleged errors of law.

The High Court answered the question of when an error by an adjudicator will entitle the principal to apply to the court to have the adjudication declared void and set aside. Numerous judges have provided different answers to this question since it was first considered in detail in the 2003 decision of Musico v Davenport [2003] NSWSC 977. The sad news, for those who have funded the intervening litigation, is that the High Court has basically taken us back to the position that was espoused in Musico almost 15 years ago.

Sadder still, the High Court hasn’t exhaustively determined when a court will be allowed to set aside a determination because the requirements of the security of payment legislation have not been satisfied. As such, further litigation on the grey areas can be expected. Continue reading

A Brief Word on the ‘Always Speaking’ Approach to Statutory Interpretation: Aubrey v The Queen

By Dan Meagher

Aubrey v The Queen Case Page

If a person passes a sexually transmitted disease to their partner, do they ‘inflict’ harm on that other person? In Aubrey v The Queen [2017] HCA 18, the High Court opted to read the word ‘inflicts’ in a NSW statute in light of the way twenty-first century readers would understand the link between sex and disease, rejecting an earlier, more limited reading by nineteenth century judges. This choice of statutory approaches left Michael Aubrey to serve a five year prison term for recklessly passing HIV to his unwitting lover in 2004.

Are Australian Statutes ‘Always Speaking’ …?
In Aubrey, the High Court applied the ‘always speaking’ approach to statutory interpretation to s 35(1)(b) of the Crimes Act 1900 (NSW). As a consequence, it was held that a person having sexual intercourse with another causing them to contract a grievous bodily disease could amount to the infliction of grievous bodily harm. In doing so the Court overturned the settled understanding of what constituted the ‘infliction of grievous bodily harm’ within the meaning of s 35(1)(b). That statutory meaning — which had stood for more than a century — was ‘that the “uncertain and delayed operation of the act by which infection is communicated” does not constitute the infliction of grievous bodily harm’ (Bell J, at [55]). As was noted in the joint judgment of Kiefel CJ, Keane, Nettle and Edelman JJ, ‘until this case, Clarence [the 1888 authority for that settled statutory meaning] had not been distinguished or judicially doubted in New South Wales’ (at [35]).

The joint judgment offered nine reasons why Clarence should no longer be followed. A central plank of that reasoning — and the focus of this brief comment — was the endorsement and application of the ‘always speaking’ approach Continue reading

Sham Self-Employment in the High Court: Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd

By Dr Alysia Blackham

Quest South Perth Holdings Case Page

In Australia, workers may be engaged as employees or as self-employed independent contractors. Employees are entitled to a range of employment rights, but independent contractors are not — after all, they are not employees. ‘Sham self-employment’ is where individuals are supposedly engaged as independent contractors, but they are actually employees. Cases where employers have misrepresented employees as being independent contractors are increasingly prevalent, affecting well-known companies like Myer (here and here), Australia Post (here) and the MCG (here and here). This may significantly affect workers’ terms and conditions of work — for example, cleaners employed as ‘independent contractors’ at Myer (via cleaning contractor Spotless) alleged that they were paid less than casual employees, did not receive penalty rates and had to pay their own tax, superannuation and insurance (see here and here).

Sham self-employment has again come on to the political agenda, thanks to the High Court case of Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] HCA 45, which was handed down on 2 December 2015. Under s 357(1) of the Fair Work Act 2009 (Cth), an employer ‘that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for services under which the individual performs, or would perform, work as an independent contractor.’ Section 357(1) does not apply where the employer proves that, when the representation was made, the employer:

(a) did not know; and

(b) was not reckless as to whether;

the contract was a contract of employment rather than a contract for services (s 357(2)). Continue reading

Scott Stephenson, Michael Crommelin and Cheryl Saunders on the Judgments in Plaintiff M68-2015 v Commonwealth

Plaintiff M68-2015 Case Page

This post collects three perspectives on the judgments of the High Court in Plaintiff M68/2015 v Commonwealth [2016] HCA 1 offered by Scott Stephenson, Michael Crommelin and Cheryl Saunders. These remarks emerged from a recent discussion of the case at a workshop by the Centre for Comparative Constitutional Studies at MLS convened by Adrienne Stone. Scott spoke on the joint judgment and the judgment of Keane J, Michael on Bell J and Gageler J’s opinions, and Cheryl on the dissent of Gordon J.

Scott Stephenson on the Joint Judgment (French CJ, Kiefel and Nettle JJ) and Keane J

Cheryl, Michael and I have divided our discussion of M68 by judgment. I will start by covering the joint judgment of French CJ, Kiefel and Nettle JJ as well as the judgment of Keane J. I imagine most people are somewhat familiar with the case and the facts, but let me provide a brief overview.

The case was a challenge to the legality of the offshore processing arrangements that operate on Nauru. The arrangements allow the Australian Government to transfer to Nauru non-citizens who arrive in Australia by boat without a valid visa and seek asylum. These persons remain on Nauru while their applications for refugee status are determined. In practice, the arrangements work as follows. The Australian Government intercepts an asylum seeker at sea, brings the person to Australia, and applies on behalf of the asylum seeker, and without their consent, to the Nauru Government for a regional processing centre visa. The Nauru Government grants this visa, allowing them to enter the country. The asylum seeker is transferred to Nauru and placed in a camp that is for the most part operated by Wilson Parking, a sub-contractor of Transfield. The asylum seeker remains in this camp while the Nauru Government determines their application for refugee status under Nauru law. Continue reading

McCloy Symposium: Scott Stephenson on the Complications and Consequences of Constitutional Comparison

By Dr Scott Stephenson

McCloy Case Page

In McCloy v New South Wales [2015] HCA 34 for the first time a majority of the High Court (French CJ, Kiefel, Bell and Keane JJ) endorsed proportionality analysis as the appropriate framework for determining whether a law violates the freedom of political communication, an implication derived from the Australian Constitution. In doing so, the majority turned to comparative materials, especially comparative constitutional scholarship, to explain and justify its decision. In this post, I consider the complications and consequences of the Court’s comparative engagement, examining the difficulties associated with drawing on the scholarship in this field before considering some implications of the Court’s move. I suggest that it gives greater prominence to two dimensions of constitutional adjudication that are typically not accorded priority, namely the value in providing legislatures with clarity about the limits of their powers and making value judgments explicit.

Complications: The necessary yet difficult task of comparatively engaging with proportionality

The decision to endorse proportionality analysis requires careful consideration of comparative case law and scholarship to ascertain what, precisely, proportionality analysis entails. While it may be, as the majority suggest, a ‘uniform analytical framework’ (at [74]), that framework does not have a uniform formulation or application. Some jurisdictions adopt a three-stage test, while others adopt a four-stage test (see [79] fn 100). In some jurisdictions, the majority of laws that fail proportionality analysis do so at the ‘necessity’ (least restrictive means) stage, while in others it is at the ‘adequate in its balance’ (proportionality in the strict sense) stage (Grimm, 2007). Continue reading

McCloy Symposium: Joo-Cheong Tham Sounds a Cautionary Note on Political Equality as a Constitutional Principle

By Dr Joo-Cheong Tham

McCloy Case Page

In its 1974 decision, Buckley v Valeo, 424 US 1 (1975), the United States Supreme Court infamously ruled that:

the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment.

Decades later, Buckley remains powerfully influential with the Supreme Court in McCutcheon v Federal Election Commission stating last year that:

No matter how desirable it may seem, it is not an acceptable governmental objective to ‘level the playing field’, or to ‘level electoral opportunities’, or to ‘equalize the financial resources of candidates’.

In McCloy v New South Wales [2015] HCA 34, the High Court emphatically rejected the approach of US Supreme Court as to the illegitimacy of political equality or fairness as a legislative objective. On the contrary, under the Commonwealth Constitution, ‘(l)egislative regulation of the electoral process directed to the protection of the integrity of the process is … prima facie legitimate’.

Central to the conclusion that political equality and fairness are legitimate legislative objectives was the High Court’s insistence that political equality was a constitutional principle. Yet, the latter was hardly necessary for the former conclusion. If elections are to be ‘free and fair’, it would seem absurd to deny Parliament the ability to regulate with the view to advancing electoral fairness, regardless of what the Constitution said about political equality. As McLachlin CJ and Major J observed in the Canadian Supreme Court decision in Harper v Canada [2004] SCC 33 — a decision favourably cited by the joint judgment and Gageler J:

Common sense dictates that promoting electoral fairness is a pressing and substantial objective in our liberal democracy.

Not only does logic fail to bind these two aspects of the High Court’s judgment in McCloy, they also carry quite different implications in terms of legislative ability to regulate elections. The High Court’s ruling that political equality and fairness are legitimate legislative objectives permits Parliaments to regulate elections for these purposes; political equality as a constitutional principle, on the other hand, will constrain the ability of Parliaments to regulate elections, even in situations when the purported justification is one of equality and fairness.

This post sounds a cautionary note on the elevation of political equality as a constitutional principle in McCloy. It does so by posing three questions, questions that alert us to the fact that political equality as a constitutional principle does not necessarily result in the realisation of political equality and, in fact, poses risks to the democratic project. Continue reading

A short obituary of John Toohey by Justice James Edelman

I was in Brisbane on 10 April 2015 this week when I heard the heart-wrenching news that the Honourable John Leslie Toohey AC QC had passed away the previous evening. Although I knew his death was imminent I was still overwhelmed with sadness. John Toohey was a humble and gentle man from whom, and about whom, I never heard an ill word spoken. He was a gentleman in every sense. He talked with crowds and kept his virtue.  He walked with Kings but never lost the common touch.

I had barely graduated from university when I began work for John in 1997.  It was, and remains, for me, an unimaginably fortunate start to a legal career. John had an extraordinary intellect. He was a wonderful teacher. And most of all, he had a human touch without match. In court this manifested itself in a deep respect for his colleagues, for counsel and for his staff. I came to work for him as a fresh-faced graduate.  His intellectual ability, his legal knowledge and his judgement intimidated me. But for the 12 month period of my associateship he treated me, as he did all of his law graduate associates, as an equal. For the two decades that followed, he and his incredible wife, Loma, remained mentors and confidants, and treasured friends.

When Dr Barnett asked me to write this short obituary to honour John Toohey, I accepted un oeil qui rit et un oeil qui pleure. The laughter was prompted by my knowledge that John had already read much of the obituary that I would write. Following his retirement in 1998, Natalie Gray and I wrote a short biography of him for the Journal of Judicial Administration. We had just completed a year as his final associates. John had retired from the High Court and we wanted to express our sentiments of the extraordinary esteem in which we held him, our pride in his powerful sense of service, and our respect for his empathy and compassion. He sent us a warm note of thanks. With his usual dry wit he told us that he was particularly grateful to be given the privilege of reading his obituary. Natalie and I returned to the subject again for the entry we authored on John Toohey in the Oxford Companion to the High Court of Australia. With his wry smile he made another remark about our calling as obituary writers. Continue reading

Conscience or Unjust Enrichment?: The Emperor’s Old Clothes: Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd

By Professor Graham Virgo
Downing College, University of Cambridge

Hills Industries Case Page

The central premise of C J Sansom’s excellent novel Dominion, is that Britain surrendered to Germany in 1940 and became a satellite state of the Third Reich. Sansom describes a very different world as a consequence of this surrender, but one populated by real people whose lives were put on a very different course by that single momentous event. Such counter-factual, ‘what if?’, history is fascinating. The same game can be played with the law of restitution. What if England had not recognised the law of unjust enrichment, developed from Lord Mansfield’s judgment in Moses v Macferlan (1760) 2 Burr 1005, 97 ER 676 via the misconceived implied contract theory, and retained the equitable principles which originally underpinned restitutionary claims? But that question can be answered without resort to fictional speculation. The answer is to be found in Australia. The most recent decision of the High Court of Australia in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14 reveals the nature of this counter-factual (from an English perspective) anti-unjust enrichment, pro-Equity world (see also Elise Bant’s post here). But when that world is investigated rather more rigorously this law of restitution is, to mix the literary allusions, nothing more than Hans Christian Andersen’s Emperor, albeit one who thinks he is wearing old clothes, but he is actually wearing nothing at all. Continue reading

Beyond Male and Female: Time for a Non-Specific Sex Category

By Anna Chapman

Earlier this month the High Court indicated it was prepared to hear a legal case that tests the ability of intersex Australians to be legally recognised as being neither male or female.

The High Court hearing will be the final decision in a claim initiated in 2010 by NSW resident Norrie, who had applied to the NSW Registry of Births, Deaths and Marriages for a certificate to register a change of sex from male to ‘non-specific’.

The evidence before the hearing was that Norrie (who does not use a last name) did not identify as either male or female. Although at birth Norrie’s sex had been recorded as male, as an adult Norrie had undergone medical procedures, and now self-identified — and was identified in the community — as androgynous.

Statutory declarations from Norrie’s doctors supported the registration of a change in sex to ‘non-specific’. The NSW Registrar initially granted Norrie’s application, but this was later revoked.

Norrie appears to be the first person in Australia to litigate for the right to be identified as being of ‘non-specific’ sex. This ground-breaking litigation squarely challenges the capacity of law to countenance sex and gender diversity. Continue reading

Precedent on High: The High Court of Australia and ‘Seriously Considered Dicta’

By James Lee

This post considers a specific feature of the High Court of Australia’s approach to precedent. Since the 2007 decision in Farah Constructions v Say-Dee [2007] HCA 22, the Justices have moved to restrict the scope of the lower courts to develop the law, by asserting that lower courts are bound by ‘seriously considered dicta’ ([134] and [158]) of the High Court, admonishing courts below for raising new arguments in the course of judgments. Keith Mason has claimed that, in so doing, the High Court has effected a ‘profound shift in the rules of judicial engagement’ (Keith Mason, ‘President Mason’s Farewell Speech’ (2008) 82 Australian Law Journal 768, 769, see the original remarks here at 18–22). An excellent feature-length examination of the issues has been provided by Associate Professor Matthew Harding and Professor Ian Malkin (‘The High Court of Australia’s Obiter Dicta and Decision-Making in Lower Courts’ (2012) 34 Sydney Law Review 239). In this short post, I argue that the approach has uncertain implications for the Australian doctrine of precedent and the scope for intermediate courts of appeal to develop the law.

What is the High Court’s approach? Farah v Say-Dee and subsequent cases
Farah v Say-Dee concerned a claim for a variety of equitable reliefs in respect of various properties which were the subject of a joint venture development scheme between the claimant and defendant. The planning application for the property was unsuccessful, because the site was considered too small to ‘maximise its development potential’. During the application process, the defendant learned that permission was more likely to be granted if adjacent properties were included in the planned development. The defendant bought these properties through a company which he controlled. The claimants contended that these properties had been acquired through a breach of fiduciary duty and that consequently the recipients had knowingly received the properties, which were held on constructive trust for the claimants. The Court of Appeal of the Supreme Court of New South Wales allowed the claimant’s claim, reversing the judge’s finding that there had been no breach of fiduciary duty, and instead held that the defendants were liable in knowing receipt. The Court of Appeal also found that a strict liability claim in unjust enrichment was available. Continue reading

GST – It’s Not a Matter of Choice: Commissioner of Taxation v Unit Trend Services Pty Ltd

By Michael Evans

Unit Trend Case Page

The High Court has had its first opportunity to decide a case on the general anti-avoidance rule in Australia’s Goods and Services Tax (GST) law, enacted more than a decade ago. In Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16, the High Court unanimously decided that the Commissioner can apply the GST anti-avoidance rule, even when a taxpayer makes specific choices or elections to engage in corporate structures, decisions and deals that are expressly allowed in the law.

The decision confirms that the GST anti-avoidance rule in div 165 of the GST law (and the income tax anti-avoidance rule on which it is based) gives the Commissioner of Tax a broad power to deal with avoidance schemes. Importantly, it confirms that, as intended by parliament, s 165-5(1)(b) of the GST law limits the protection for taxpayers that could arise from such statutory choices, agreements and elections contained in the GST law. This broader approach replaces the narrower ‘choice principle’ that was found to apply in earlier tax anti-avoidance rules such as former s 260 of the Income Tax Assessment Act 1936 (Cth). The ‘choice principle’ as explained in W P Keighery Pty Ltd v Federal Commissioner of Taxation [1957] HCA 2, was that the anti-avoidance rule cannot be interpreted to remove from taxpayers their choices to order their affairs as they saw fit. Continue reading