Precedents in Tax Appeal

Introduction

?Any precedents on an issue before an administrative tribunal or on a similar issue will act as a constraint on what the tribunal can reasonably decide. Yet an administrative tribunal’s decision may be unreasonable on the basis that it failed to explain or justify a departure from a binding precedent in which the same provision had been interpreted. Where, for example, there is a relevant case in which a court considered a statutory provision, it would be unreasonable for an administrative tribunal to interpret or apply the provision without regard to that precedent. The tribunal would have to be able to explain why a different interpretation is preferable.

?The Tax Appeal Tribunal (the ‘Tribunal’ or ‘TAT’) is an administrative tribunal. It is a creature of the executive; it does not belong to the judiciary. Precedents operate at two levels in the TAT’s proceedings. First, precedents created by the TAT itself or sister Tribunals, and second, precedents created by higher courts in the judicial hierarchy. This short article is concerned with the former. ?

?Understanding Precedents

?The principle of stare decisis is a legal principle by which courts and tribunals are obliged to respect the precedent established by prior decisions. The words originate from the phrasing of the principle in the Latin maxim stare decisis et non quieta nuuere, meaning ‘to stand by decisions and not disturb the undisturbed.’ In a legal context, this is understood to mean that courts should generally abide by precedent and not disturb settled matters.

?Its meaning is that when a point of law has been once solemnly and necessarily declared by the decision of a competent Court, it will no longer be considered open to an examination, or a new ruling, by the same Court or Tribunal or by those which are bound to follow its adjudications. In a hierarchical judicial arrangement, it precludes the Judges of subordinate Courts from changing what has been determined by a higher court. In other words, they should keep the scale of justice even and steady and not liable to waver with every Judge's opinion.[1]

?The doctrine postulates that where the facts in a subsequent case are similar or close as facts in an earlier case that had been decided upon, judicial pronouncements in the earlier case are subsequently utilized to govern and determine the decision in the subsequent case.[2] However, it is a settled principle in our legal jurisprudence that legal principles established in decided authorities are not to be applied across board and in all matters without regard for the facts and issues framed for adjudication in a particular case. This point was succinctly made by the Supreme Court in Marine Management Association Inc & Anor v National Maritime Consultancy Ltd[3] when the court stated that: ‘Isolated and general principles of law cannot be relied on solely to determine an issue in a case without looking at the circumstances, facts and merits of each case.’

TAT’s Attitude to its Precedents

What should be the attitude of the Tribunal to its past precedents? Are they binding on the Tribunal? Should they even be binding? What effect would the ability of the TAT to depart from its past decisions have on certainty in tax dispute resolution? The decision of the Supreme Court of Canada in Canada (Minister of Citizenship and Immigration) v. Vavilov,[4] below offers some useful guide.

Administrative decision makers are not bound by their previous decisions in the same sense that courts are bound by?stare decisis. As this Court noted in?Domtar, “a lack of unanimity is the price to pay for the decision?making freedom and independence” given to administrative decision makers, and the mere fact that some conflict exists among an administrative body’s decisions does not threaten the rule of law: p. 800. Nevertheless, administrative decision makers and reviewing courts alike must be concerned with the general consistency of administrative decisions. Those affected by administrative decisions are entitled to expect that like cases will generally be treated alike and that outcomes will not depend merely on the identity of the individual decision maker — expectations that do not evaporate simply because the parties are not before a judge.

?Fortunately, administrative bodies generally have a range of resources at their disposal to address these types of concerns. Access to past reasons and summaries of past reasons enables multiple individual decision makers within a single organization (such as administrative tribunal members) to learn from each other’s work, and contributes to a harmonized decision-making culture. Institutions also routinely rely on standards, policy directives and internal legal opinions to encourage greater uniformity and guide the work of frontline decision makers. This Court has also held that plenary meetings of a tribunal’s members can be an effective tool to “foster coherence” and “avoid .?.?. conflicting results”:?IWA v. Consolidated-Bathurst Packaging Ltd.,?1990 CanLII 132 (SCC), [1990] 1 S.C.R. 282, at pp. 324-28. Where disagreement arises within an administrative body about how to appropriately resolve a given issue, that institution may also develop strategies to address that divergence internally and on its own initiative. Of course, consistency can also be encouraged through less formal methods, such as the development of training materials, checklists and templates for the purpose of streamlining and strengthening institutional best practices, provided that these methods do not operate to fetter decision making.

?Whether a particular decision is consistent with the administrative body’s past decisions is also a constraint that the reviewing court should consider when determining whether an administrative decision is reasonable. Where a decision maker?does?depart from longstanding practices or established internal authority, it bears the justificatory burden of explaining that departure in its reasons. If the decision maker does not satisfy this burden, the decision will be unreasonable. In this sense, the legitimate expectations of the parties help to determine both whether reasons are required and what those reasons must explain:?Baker, at para.?26. We repeat that this does not mean administrative decision makers are bound by internal precedent in the same manner as courts. Rather, it means that a decision that departs from longstanding practices or established internal decisions will be reasonable if that departure is justified, thereby reducing the risk of arbitrariness, which would undermine public confidence in administrative decision makers and in the justice system as a whole.

?As discussed above, it has been argued that correctness review would be required where there is “persistent discord” on questions on law in an administrative body’s decisions. While we are not of the view that such a correctness category is required, we would note that reviewing courts have a role to play in managing the risk of persistently discordant or contradictory legal interpretations within an administrative body’s decisions. When evidence of internal disagreement on legal issues has been put before a reviewing court, the court may find it appropriate to telegraph the existence of an issue in its reasons and encourage the use of internal administrative structures to resolve the disagreement. And if internal disagreement continues, it may become increasingly difficult for the administrative body to justify decisions that serve only to preserve the discord.

?Conclusion

Ordinarily, the decisions of bodies inferior to the High Court do not constitute precedent. They do bind anybody not even themselves.[5] In the use of their own precedence, tribunals are in a radically different position from a court of law.[6] Although the decisions of the Tribunal are said to be similar to court judgments in form,[7] it is common knowledge that they do not constitute precedents. In other words, the Tribunal is permitted to depart from its previous decisions. On the authority of Rand Merchant Bank Nigeria Limited v FIRS[8] there cannot be any blind following of previous decisions.

In practice however, the TAT keeps records of its decisions and is inclined to follow them unless reversed on appeal, given per incuriam, or can be distinguished. Where the statutory framework remains unaltered and the factual circumstances before the Tribunal mirror the circumstances in the previous decisions, the Tribunal will not lightly depart from its previous decisions.

The TAT will constantly face the challenge of balancing its licence to depart from its past decisions without much legal consequence with the necessity to ensure certainty in the tax appeal ecosystem. Precedents foster stability, enhances the development of a consistent and coherent body of law, assures equality of treatment for taxpayers similarly situated. Yet, rigid adherence to precedent may lead to injustice and also unduly restrict the proper development of tax law and practice.[9]

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[1] Adesokan v Adetunji (1994) 5 NWLR (Pt 345) 540, Okeke v Okoli (2000) 1 NWLR (Pt.642) 641. See also Osakue v Federal College of Education, Asaba (2010) 10 NWLR (Pt. 1201) 1.

[2] Nwangwu v Ukachukwu (2000) 6 NWLR (Pt.662) 674.

[3] (2012) 3 NWLR (Pt.1333) 506, 538.

[4] (2019) SCC 65 (CanLII); (2019) 4 SCR 653.

[5] Glanville Williams, Learning the Law (11th edn, Stevens and Sons 1982) 89.

[6] William Wade and Christopher, Foresyth, Administrative Law (10th edn, OUP 2009) 784.

[7] A. A Olowofowoyeku, ‘The Nigerian Tax Appeals System: A Peculiar Mess?’ (1989) 2(8) The Gravitas Review of Business and Property Law 31.

[8] Rand Merchant Bank Nigeria Limited v FIRS (Appeal No. TAT/LZ/WHT/007/2023 04 March 2024).

[9] Eperokun & Ors v University of Lagos (1986) LPELR - 1150 (SC) 19 – 20.

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