Decision Alert: QSC Confirms That Ex Gratia Relief Generally Not Subject To Judicial Review In Karrabin Estate

On 17 October 2025, Freeburn J of the Queensland Supreme Court delivered judgment in Karrabin Estate Pty Ltd, Hayview Developments Pty Ltd & Avon capital (Australia) Limited v Commissioner of State Revenue [2025] QSC 263 (judgment here).

The three applicants (Taxpayers) are liable for foreign surcharge rates under the Duties Act 2001 (Qld) (Duties Act) and Land Tax Act 2010 (LTA). The Taxpayers sought ex gratia relief from the imposition of additional foreign acquirer duty (AFAD) under the Duties Act and the land tax foreign surcharge (LTFS) under the LTA.

The Commissioner of State Revenue (Commissioner) refused to grant ex gratia relief (Decisions) and the Taxpayers sought judicial review of the Decisions, on the basis that the Commissioner had misinterpreted the public rulings comprising the guidelines for the grant of ex gratia relief (Rulings).

Freeburn J dismissed the proceedings, concluding that:

• the Decisions were not susceptible to judicial review;

• the Commissioner was not bound to apply the Rulings; and

• even on the assumption that judicial review was available, the Commissioner had not misinterpreted the Rulings.

Takeaways

• While the decision does not come as a surprise, it serves as an important reminder of the nature of ex gratia relief, being one of practically boundless and unchallengeable discretion on the part of the Commissioner. Even where taxpayers meet the published criteria for ex gratia relief, they should not proceed on the basis that it will be granted until it has been confirmed by the respective revenue office.
• This case is an excellent illustration of the importance of legislated tax concessions (as opposed to policy-based ex gratia schemes), as they ensure that taxpayers have proper review rights. The consequence of the decision is clear, being that a refusal of ex gratia relief will rarely (if ever) be amenable to judicial review, even where the decision-maker has made significant errors (such as errors of law or errors of fact).
• A frequent obstacle for those seeking ex gratia relief from AFAD and / or LTFS is the 'Australia-based' requirement, which requires that the entity owning the land conduct activities in Australia (such as having Australian employees and management staff). This is often difficult in the case of SPVs, even where the broader corporate group has significant Australian employees and activities. Freeburn J's consideration of whether the Commissioner had misinterpreted the Rulings affirmed the position often adopted by the Queensland Revenue Office, being that it must be the 'entity' (ie the landowner) that itself has Australian employees or management staff. This highlights the importance for foreign-owned groups of choosing the right vehicle to acquire land in Queensland (particularly residential land). An entity that has employees, management staff, and genuine commercial operations will have a greater chance of obtaining ex gratia relief than a SPV with no other activities.
• Freeburn J's finding that policy documents (such as the Rulings) should not be 'construed and applied with the nicety of a statute' as they 'prescribe guidelines in general, and not always in precise language' may inform future applications for ex gratia relief. This supports the view that the language of the Rulings should not be read strictly, and that, as a policy document, the purpose of the Rulings should be prioritised over the strict language used therein. Unfortunately, the utility of this decision in this respect is somewhat nullified by Freeburn J upholding the Commissioner's strict interpretation of the 'plain language' of the 'Australian-based' requirement.

Statutory Framework & Rulings

Foreign Surcharges

• AFAD is imposed under Chapter 4 of the Duties Act on acquisitions of residential land by foreign persons. LTFS is imposed under Part 3 Division 4 and section 32(1)(b)-(c) LTA on land held by foreign persons.
• In both the Duties Act and LTA, 'foreign person' is defined to include foreign corporations and their subsidiaries.

Ex gratia relief

• Section 72 of the Financial Accountability Act 2009 (Qld) (FAA) grants to the Under Treasurer (and, by delegation, to the Commissioner) a discretion to authorise 'special payments' from departmental accounts. Schedule 3 to the FAA includes 'ex gratia expenditure' as included within 'special payments'.
• Pursuant to this delegated discretion, the Commissioner offers ex gratia relief from AFAD and LTFS where certain criteria are met:
• AFAD: where the purchaser is 'Australian-based', complies with FIRB and regulatory requirements, will conduct a 'significant development' of > 50 residential lots, and will contract primarily with Australian employees and suppliers for said development.
• LTFS: where the landholder is 'Australian-based', complies with FIRB and regulatory requirements, and conducts commercial activities that make a 'significant contribution' to the Queensland economy and community.
• These criteria are set out in guidelines contained in the Rulings published by the QRO, being Public Ruling DA000.15.4 (see here) and Public Ruling LTA000.4.3 (see here) respectively.

Factual & Procedural Background

• Two of the Taxpayers (Karrabin and Hayview) are wholly owned subsidiaries of the third Taxpayer (Avon), a foreign company registered in the United Kingdom. Each of the Taxpayers acquires land with the intention to develop and ultimately sell the land.
• As 'foreign persons' for the purposes of the Duties Act and LTA, the Taxpayers' Queensland property acquisitions (of residential land) are chargeable with AFAD, and their Queensland landholdings are chargeable with LTFS.
• The Taxpayers made the followingApplications:
• Karrabin and Hayview applied to the Commissioner seeking ex gratia relief from AFAD assessed under the Duties Act.
• Avon and Hayview applied to the Commissioner seeking ex gratia relief from LTFS assessed under the LTA.
• The Commissioner, per the Decisions, refused to grant the relief sought, and the Taxpayers brought proceedings in the Queensland Supreme Court seeking judicial review of the Decisions.
• The core of the Taxpayers' case was that the Commissioner had required that the Taxpayers, in demonstrating the presence of their employees and management staff in Australia, have a direct master-servant relationship with those people (and would not consider the engagement of people through a service company).

QSC Decision

Freeburn J found as follows:

Were the Decisions susceptible to judicial review?

• A decision that may be reviewed under the Judicial Review Act 1991 (Qld) (Review Act) is (per section 4(a)) must be 'made, proposed to be made, or required to be made, under an enactment'.
• 'Under an enactment' has two criteria (per Griffith University v Tang (2005) 221 CLR 99 at [89], Lawrence v Fuller [2024] HCA 45 at [16]:

1. the decision must be expressly or impliedly required or authorised by the enactment; and
2. the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense the decision must derive from the enactment.

• The outcome of the Decisions was that the Taxpayer's legal rights and obligations remained as they were; as such they were decisions which 'change nothing' and were not reviewable under Part 3 of the Review Act.
• The nature of the discretion is not a statutory discretion to waive a tax or duty, it reflects the broad discretion at s 72(1)(b) of the FAA and a policy decision of the Queensland Government. Ex gratia payments are given 'as a favour, or from a sense of moral obligation, rather than because of any legal requirement' – as such, 'the regime stands outside the boundaries of legal obligations'.
• Ex gratia payments do not 'confer, alter, or otherwise affect legal rights or obligations' – the potential recipient has no right to such a payment, and the entity making the payment has no obligation to make it.
• The Decisions were not decisions made under an enactment and were not decisions to which the Review Act applies.

Was the Commissioner bound to apply the Rulings?

• The Taxpayers had contended that the Commissioner had, in misconstruing the terms of the Rulings, failed to take into account a relevant consideration, and made an error of law.
• The principles of statutory interpretation do not apply to construing the Rulings:

'... policy is not to be construed and applied with the nicety of a statute, and ... policy documents are not statutory instruments. They prescribe guidelines in general, and not always in precise language. To apply policy documents with statutory nicety is to misunderstand their function.'

• There are extremely limited circumstances in which a court will interfere with a decision-maker's interpretation or application of a policy; for example (1) where the decision-maker was bound to consider the existence and content of the policy, and seriously misinterpreted the terms or misunderstood the purpose of the policy; or(2)where misinterpretation of the policy may reduce to a misconstruction of the statute or misunderstanding of the statute's purpose.
• The relevant legislation is key, and the key question will be whether the decision-maker's conduct can be regarded as having stepped outside what was contemplated by the statute. Here, the discretion is one to grant ex gratia relief (a form of 'special payment' under the FAA), that is, relief given as a favour (not due to a legal requirement).
• The Taxpayer's contention that an exercise of discretion under section 72 of the FAA can be the source of substantive rights could not be accepted. That the Commissioner chooses to frame the exercise of the discretion in the Rulings does not dilute the effect of section 72, which was to enable the Commissioner to grant the relief as a favour:

'there is no proper legal basis for saying that the Commissioner was bound to apply [the Rulings] in exercising that discretion'.

Were judicial review available, did the Commissioner misinterpret the Rulings?

• For completeness, there was no error in the Commissioner's interpretation of the Ruling; which was that, in demonstrating that the Taxpayers had employees and management staff, the Commissioner would only consider individuals actually employed by the Taxpayers, and not people engaged through a service company.

Given the above findings, his Honour concluded that the proceedings should be dismissed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.