Case: Sutherland v Gustar (Inspector of Taxes) [1994] Ch 304
Outcome: considered
As it happens, in Sutherland v Gustar (Inspector of Taxes) [1994] Ch 304 , an analogous controversy arose in the United Kingdom in respect of the competency of the purported institution of an appeal by one partner, against the wishes of his fellow partners (who had reached an agreement satisfactory to them with the Inspector of Taxes), in respect of a joint assessment of the partnership to income tax which had been confirmed by the general commissioners. Under the then applicable legislation in the United Kingdom, a partner's liability to income tax was joint. The then Vice Chancellor, Sir Donald Nicholls, who delivered the judgement of the Court of Appeal (Nicholls V-C, Leggatt and Henry LJJ) identified the problem raised in that case in a way which resonates in the present: "[Partners] do not always have the same interest in challenging an assessment. What is important to one partner may not matter to another. Similar divergences of interest, and differences of view about what is the best course for the partnership, can and do arise regarding other aspects of partnership business. Here, as elsewhere in the law, the courts evolved practical solutions. In the context of litigation, the courts devised procedures which protect a would-be plaintiff partner by permitting him to go ahead with court proceedings but also protect the partners who do not wish to become embroiled in the proceedings. The traditional means used to achieve this end was for the minority partner to be permitted to bring the proceedings in the name of the partnership. Every partner is an agent of the firm, a principle now enshrined in section 5 of the Partnership Act 1890 (53 &amp; 54 Vict. c. 39). But the other partners had to be protected by an adequate indemnity." [1994] Ch at 310." 39 Section 5 of the Partnership Act 1890 (UK) finds its local analogue in s 8 of the Partnership Act 1891 (Qld). 40 The Court of Appeal solved the problem thus posed by construing the statutory procedural code for the institution of taxation appeals in a way which enabled any person assessed to tax to institute an appeal in respect of the assessment irrespective of whether he had been assessed alone or jointly with others. In the case of an appeal against a joint assessment, Their Lordships opined: "In the latter case, in contemplation of law the notice of appeal is given on behalf of all those assessed in the sense, but only in the sense, that the notice effectually triggers an appeal against the joint assessment. This does not enable the person giving the notice then to conduct the appeal as though he were acting for all the partners. He has authority only to act and speak for himself, unless his co-partners authorise him to act for them. If they do not, and if they wish to pursue a different line, they may do so. But an appeal against the joint assessment having been set in motion, they, along with the partner who gave the notice of appeal, are appellants for the purposes of the Act of 1970. Accordingly, notice of the hearing must be given to them, and their concurrence is needed if the appeal is to be settled or abandoned pursuant to section 54." [1994] Ch at 312. 41 Primacy must, of course, be given to the language of the applicable Australian legislation. Nonetheless, were liability in respect of a GST assessment joint, there would, with respect, be much to commend in the adoption of a similar approach to that adopted in Sutherland v Gustar to the construction of the right to appeal to this Court against an objection decision conferred by s 14ZZ of the TAA on a "person dissatisfied" and in related practice and procedure. The "person dissatisfied" with the Commissioner's objection decision in respect of a GST assessment might well, for just the reasons identified by the Court of Appeal in Sutherland v Gustar , be but one of a number of partners. 42 Yet a partner's liability in respect of GST and any related administrative penalty is not just joint, but rather joint and several. Within Schedule 1 to the TAA, s. 444-30 provides, materially: " 444-30 Partnerships (1) Obligations that are imposed under this Schedule or an indirect tax law on a partnership are imposed on each partner, but may be discharged by any of the partners. (2) The partners are jointly and severally liable to pay any amount that is payable under this Schedule or an indirect tax law by the partnership." 43 Prior to the introduction of this provision into Schedule 1 the now repealed provisions formerly found in ss 50(1) and 50(2) of the TAA made identical provision in respect of the GST liability of partners. It would seem incongruous in these circumstances to construe the right of appeal conferred by s 14ZZ of the TAA as being dependent upon the consent of each partner or even to require that each other partner be given notice of a challenge to an objection decision by one of them.