Bell Group NV (in Liquidation) & Anor v The State of Western Australia
Document type: Decision Impact Statement
Venue: High Court (S248/2015, P63/2015 and P4/2016)
Judgment date: 16 May 2016
Date published: 24 June 2016

Summary of decision:
Outlines the ATO's response to this case which concerns the validity of the Bell Group Companies (Finalisation of Matters and Distribution Proceeds) Act 2015 (the Bell Act).

Overview of facts:
In November 2015 the Parliament of Western Australia enacted the Bell Act - an 'Act to provide a legislative framework for the dissolution, and administration of the property, of The Bell Group Ltd (In Liquidation) and certain of its subsidiaries and for related purposes'. | When the Bell Act was enacted, each WA Bell Company was in liquidation or deregistered. | None of the windings up of the companies in liquidation had concluded prior to 27 November 2015, which was the day on which Part 3 of the Bell Act came into operation. | The Plaintiffs each brought proceedings stating a special case and questions of law arising for the opinion of the Full Court under rule 27.08.1 of the High Court Rules 2004 (Cth). | The questions of law included whether the Bell Act or certain provisions of the Bell Act are invalid by the operation of section 109 of the Constitution because of inconsistency with one or more provisions of the Income Tax Assessment Act 1936 (ITAA 1936), the Taxation Administration Act 1953 (TAA), the Corporations Act 2001 and subsection 39(2) of the Judiciary Act 1903. | The Commissioner of Taxation sought, and was granted, leave to intervene in each proceedings in relation to the questions of inconsistency between the Bell Act and the Tax Acts. | The Attorney-General of the Commonwealth intervened pursuant to section 78A of the Judiciary Act 1903 in each proceeding. | Issues decided by the court | Having found that the plaintiffs had standing to seek relief in respect of the alleged invalidity of the Bell Act, the High Court found that the Bell Act was invalid in its entirety. | The High Court unanimously held that the Bell Act was invalid because of section 109 inconsistency with Commonwealth taxation laws. | The plurality of 6 justices held that the Bell Act is inconsistent with: • section 177 of the ITAA 1936 (now Item 2 of the table in subsection 350-10(1) of the TAA); • sections 208 and 29 of the ITAA 1936 (now section 255-5 of Schedule 1 to the TAA); • section 215 of the ITAA 1936 (now section 260-5 of Schedule 1 to the TAA); • section 254 of the ITAA 1936. | • section 177 of the ITAA 1936 (now Item 2 of the table in subsection 350-10(1) of the TAA); • sections 208 and 29 of the ITAA 1936 (now section 255-5 of Schedule 1 to the TAA); • section 215 of the ITAA 1936 (now section 260-5 of Schedule 1 to the TAA); • section 254 of the ITAA 1936. | His Honour Justice Gageler decided the case on the basis that the Bell Act is inconsistent with sections 215 and 254 of the ITAA 1936, without needing to address other possible grounds of inconsistency with Commonwealth taxation laws.

Issues decided:
Having found that the plaintiffs had standing to seek relief in respect of the alleged invalidity of the Bell Act, the High Court found that the Bell Act was invalid in its entirety. The High Court unanimously held that the Bell Act was invalid because of section 109 inconsistency with Commonwealth taxation laws. The plurality of 6 justices held that the Bell Act is inconsistent with: • section 177 of the ITAA 1936 (now Item 2 of the table in subsection 350-10(1) of the TAA); • sections 208 and 29 of the ITAA 1936 (now section 255-5 of Schedule 1 to the TAA); • section 215 of the ITAA 1936 (now section 260-5 of Schedule 1 to the TAA); • section 254 of the ITAA 1936. • section 177 of the ITAA 1936 (now Item 2 of the table in subsection 350-10(1) of the TAA); • sections 208 and 29 of the ITAA 1936 (now section 255-5 of Schedule 1 to the TAA); • section 215 of the ITAA 1936 (now section 260-5 of Schedule 1 to the TAA); • section 254 of the ITAA 1936. His Honour Justice Gageler decided the case on the basis that the Bell Act is inconsistent with sections 215 and 254 of the ITAA 1936, without needing to address other possible grounds of inconsistency with Commonwealth taxation laws.

ATO view of decision:
The Commissioner sought and was granted, leave to intervene in each proceeding in relation to the question of inconsistency between the Bell Act and the Commonwealth Taxation Acts. | The Commissioner notes the decision of the Court is consistent with the submissions to the Court made by the Commonwealth Solicitor-General on his behalf.

Administrative treatment:
Implications for impacted ATO precedential documents (Public Rulings, Determinations, ATO IDs) | None. | Implications for impacted Law Administration Practice Statements | None.

Legislative references: Constitution 109 Income Tax Assessment Act 1936 177 208 209 215 254 Taxation Administration Act 1953 Schedule 1; 350-10(1) Schedule 1; 260-45 Schedule 1; 350-10(1) Bell Group Companies (Finalisation of Matters and Distributions of Proceeds) Act 2015 (WA)
Case references: Jemena Asset Management (3) Pty Ltd v Coinvest Ltd (2011) 244 CLR 508 Victoria v The Commonwealth ("The Kakariki") (1937) 58 CLR 618 [1937] HCA 82 Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 [1999] HCA 12 Dickson v The Queen (2010) 241 CLR 491 Metal Trades Industry Association v Amalgamated Metal Workers' and Shipwrights' Union (1983) 152 CLR 632 [1983] HCA 28 APLA Ltd v Legal Services Commissioner (NSW) (2005) 224 CLR 322 [2005] HCA 44 Momcilovic v The Queen (2011) 245 CLR 1 [2011] HCA 34 Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 [2008] HCA 32 2008 ATC 20-039 (2008) 69 ATR 41 Bruton Holdings Pty Ltd (In liq) v Federal Commissioner of Taxation (2009) 239 CLR 346 [2009] HCA 32 2009 ATC 20-125 (2009) 72 ATR 856 Federal Commissioner of Taxation v Australian Building Systems Pty Ltd (In liq) (2015) 90 ALJR 151 326 ALR 590 [2015] HCA 48 2015 ATC 20-548 Wenn (1948) 77 CLR 84 Sportsbet Pty Ltd v New South Wales (2012) 249 CLR 298 [2012] HCA 13 The Commonwealth v Cigamatic Pty Ltd (In liq) (1962) 108 CLR 372 [1962] HCA 40 Australian Mutual Provident Society v Goulden (1986) 160 CLR 330 [1986] HCA 24 Stock Motor Ploughs Ltd v Forsyth (1932) 48 CLR 128