Commissioner of Taxation v Briggs, P

[1986] FCA 354

. h 2

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CATCHWORDS

Income taxatlon - challenge to assessments - appllcatlon to dlsmlss

proceedlngs for want of reasonable cause - whether challenge to

assessments precluded by S. 177 Income Tax Assessment Act 1936 or by operatxon of doctrlne of res Judicata - whether a serxously arguable case.

DEPUTY COMMISSIONER OF TAXATICX FOR TRE STATE OF WESTERN AUSTRALIA,

R.A. GILL, GEOFFREY TROMAS WIGGINS and PETER ROBERT KNOX PEACOCK

EX Parte P. BRIGGS

G162 of 1986

LOCKHART J.

SYDNEY

4 JULY 1986

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IN THE FEDERAL COURT OF AUSTRALIA

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NEW SOUTH WALES DISTRICT REGISTRY	)	No. G162	of	1986
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DIVISION GENERAL )

APPLICATION FOR WRITS OF MANDAMUS

AND PROHIBITION AGAINST

DEPUTY COMMISSIONER OF TAXATION FOR THE STATE OF WESTERN AUSTRALIA

Fxrst Respondent

R.A. GILL

Second Respondent

GEOFFREY THOMAS WIGGINS

Thlrd Respondent

PETER ROBERT KNOX PEACOCK

Fourth Respondent

EX Parte P. BRIGGS

Prosecutor

MINUTE OF ORDER

JUDGE MAKING ORDER: LOCKHART J.

ORDER: OF DATE 4 JULY '1986

MADE WHERE : SYDNEY

The Court orders that:

1. The respondents' notlce of motlon dated 1 1 June 1986 be

dismissed. -*

2. The prosecutor's costs of the notlce of motlon be the

prosecutor's costs In the proceedlngs.

NOTE: Settlement and entry oforders IS dealt wlth In Order 36 of

the Federal Court Rules.

--	S	'	C
I N THE FEDERAL COURT OF AUSTRALIA

)

NEW SOUTH	WALES	D I S T R I C T	R E G I S T R Y	)	N O .	G 1 6 2	Of	1986
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D I V I S I O N G E N E R A L 1

A P P L I C A T I O N O F W R I T S F O R

MANDAMUS	AND	P R O H I B I T I O N
A G A I N S T

DEPUTY COMMISSIONER OF TAXATION

W E S T E R N	S T A T E	O F	T E E	F O R
A U S T R A L I A

Frrst R e s p o n d e n t

R. A . G I L L

Second R e s p o n d e n t

GEOFFREY THOMAS WIGGINS

T h l r d R e s p o n d e n t

P E T E R R O B E R T KNOX PEACOCK

F o u r t h R e s p o n d e n t

Ex P a r t e P . B R I G G S

P r o s e c u t o r

REASONS FOR JUDGMENT

LOCKHART J.

T h l s 1s a m o t l o n p u r s u a n t t o 0. 2 0 R. 2 of t h l s ' c o u r t ' s R u l e s

for a n o r d e r t h a t t h e p r o c e e d l n g be s t ayed o r d lsmlssed g e n e r a l l y on

t h e b a s l s t h a t no r easonab le cause of a c t l o n 1s d x s c l o s e d , o r t h e

p roceed lng IS f r l v o l o u s o r v e x a t l o u s , o r t h e p roceed lng 1 s a n abuse of

t h e C o u r t ' s process. T h e p r o c e e d l n g s were l n s t l t u t e d p u r s u a n t t o S.

39B of t h e J u d x c l a r y A c t 1903 by P e t e r B r l g g s a s p r o s e c u t o r , t o w h o m I

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"the taxpayer". The taxpayer seeks orders in substance quashing

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decisions of the Deputy Commissioner of Taxation for the State of

Western Australia to issue notices of assessments and amended

I assessments to income tax f o r the years ended 30 June 1976 to 1981.

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I	Following an investigation into the affairs of the taxpayer
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i	the Deputy Commissioner issued notices of assessment to income tax to
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I	the taxpayer for the six years in question. The case concerns both
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assessments and amended assessments, but I shall for convenience
simply refer to them as assessments or notices of assessment as the
I	case may be.
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The notice of assessment for the year ended 30 June 1976

stated that the taxable income of the taxpayer was $75,000. Each of

the assessments for subsequent. years stated the taxable income at a

figure $25,000 higher than its predecessor. All notices of assessment

issued on the same day: 4 July 1983.

The total income tax payable pursuant to the six notices of

assessment together with penalties is a substantial sum, in excess of

$ 1 million. The taxpayer obJected to the assessments and the Deputy

Commissioner disallowed the obFctions. The taxpayer has requested

the Deputy Commissioner to take the necessary steps to enable appeals

to be instituted in the Supreme Court of Western Australia,

I	challenging each of the purported assessments. The Commissioner has
-	not yet taken those steps.
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The taxpayer brought proceedings in this Court in substance

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to quash the following decisions and conduct, the description of which

I shall, for convenience, take from the order nisi which was granted

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by another judge of this Court on 29 April 1986: -.

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(a) Decisions of the Deputy Commissioner to

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!	issue the notices of assessment in question,
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and

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(b) Recommendations by the third and fourth

respondents who are officers of the Deputy

Commissioner's Western Australtan branch, to

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l	issue the notices of assessment.
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i	As the grounds of the application are fully set out in the application
itself and the order to show cause I shall briefly and broadly
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summarise them. As to the decisions to issue the notices of
I	assessment, they are attacked on the following bases:
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(a) That they were in excess of the power conferred by the Income
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Tax Assessment Act 1936 ("the Act") or, alternatively, were

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I	not authorised by the Act;
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1 (b) They were an abuse of the power conferred by the Act in that

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i	the decisions were made in bad faith	or, alternatively, for a
purpose not authorised by the Act;
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( C ) They were made in such a manner as to be both a denial to the

i-	taxpayer of an opportunity of being heard and a denial of an
i	opportunity of being heard by an impartial person as required

i	I	'	by the rules of natural Justice:
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4.

They were not taken in purported exercise of any power

conferred by the Act and, if any such power is reposed in the

Commissioner, then the power was exercised by taking into

account irrelevant considerations and by not taking into

account relevant considerations;

The decisions were an unreasonable exercise of the relevant

statutory powers and discretions;

They were vitiated and rendered null and void by reason of an

error or errors of law;

There'was no evidence to support the decisions;

The decisions were otherwise contrary to law; and

The decisions were vitiated by fraud of the relevant officers

of the Taxation Department, being the second, third, and

fourth respondents.

Theiapplication for the order to show cause sets forth the various particulars relied upon to substantiate certain of these allegations,

but it is unnecessary that	I	cite them. The orders sought by the
taxpayer are as follows:

1. An order quashing the assessments;

2. Alternatively, order an p ohibiting the Commissioner or

Deputy Commissioner from further proceeding to recover tax

payable pursuant to the assessments;

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3. order An quashing the r levant recommendations the of

departmental officers that the assessments issue;

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5.

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4 . Alternatively to order 3, an order prohibiting the Deputy

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I	Commissioner and his officers from further proceeding with
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l	any investlgation into the affairs of the taxpayer on the
1	basis of the relevant recommendations of the officers;
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!,	5 .	An order compelling the Commissioner to issue notices of assessment for the relevant years in accordance with law and in accordance with the Act and in accordance with returns of
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!	income which have been lodged by the taxpayer;
I	6 .	Damages ;
l	7 .	An assessment of damages;
I	a.	Interest;
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9.	The customary prayer for further or other orders; and
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!	1 0 .	costs.
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I	The grounds of the application to which I have already
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referred are broadly reflected in the grounds of challenge to the

I relevant recommendations of the departmental officers.

i I I Counsel for the Deputy Commissioner advanced three primary

arguments in support of the motion to dismiss this proceeding. First,

i I he argued that S. 177 of the Act is fatal to the success of this

i	i	proceeding because it precludes, other than in an appeal under Part	V
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!	of the Act, any challenge of any kind to the assessments. Second, it was argued that the matters relied upon by the taxpayer to upset the assessments could and should have been raised in earlier proceedings
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!-	brought by the Deputy Commissioner in the Supreme Court of Western
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Australia for recovery of tax, which culminated early this year in

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~udgment being entered for the Deputy Commissioner. That decision is

under appeal to the Full Court of the Supreme Court of Western

Australia and execution on the judgment has been stayed in the

meantime. As the taxpayer defended those Supreme Court proceedings,

but not on the grounds raised in the application presently before this

Court, counsel for the Deputy Commissioner submitted that the taxpayer

is prohibited from pursuing them on the principle of res judicata.

Reliance was placed in particular upon Port of Melbourne Authority V. Anshun Pty. Limited ( 1 9 8 4 ) 1 4 7 C.L.R. 5 8 9 and Yat Tung Investment Co.

Limited v. Dao Heng Bank Limited [ l 9 7 5 1 A.C. 5 8 1 . Third, counsel for

the Deputy Commissioner submitted that none of the relief sought by

the taxpayer in the proceedings in this Court can be, or

alternatively, should be granted and that the proceeding was	in	the
circumstances fundamentally misconceived.

Counsel for the taxpayer ~oined issue with those submissions

and submitted that the S. 177 does not bar this proceeding because it

has no application where there i s no assessment to tax at all.

Counsel recognized the well established principle that, although

courts have ~urisidiction to decide whether an assessment has been

duly made, once a document satisfying the terms of sub-s. 1 7 7 ( 1 ) of

the Act is produced in judicial proceedings a court is compelled to

treat it as conclusive evidence of the making of the assessment

including the fact that it has been duly made and that the Deputy

Commissioner has duly complied with all statutory formalities. I need

not refer to the various cases that touch this question, other than to

mention the leading case, being a decision of a Full Bench of the High

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Court of Australia, in F . J . Bloemen Pty. Limited V. Commissioner of

Taxation of the Commonwealth of Australia (1981) 147 C.L.R. 360.

Counsel argued that the material presently before the Court

establishes that the Deputy Commissioner took no steps to embark on matter is open to be determined afresh by the courts.

the process of assessment at all and that in those circumstances

Counsel for the taxpayer also argued that there is no room

for the operation in this case of the doctrine of res judicata because

the material facts and matters relevant to the taxpayer's present

submissions were not disclosed to the taxpayer until evidence was

given in certain proceedings in the Administrative Appeals Tribunal

under the Freedom of Information Act 1982. Those proceedings were not

heard until after the Supreme Court proceedings in Western Australia

had been heard. He also relied upon other matters to establish the

conclusion that it would be inappropriate at this stage of the case to

apply the doctrine of res judicata. Finally, counsel for the taxpayer

contended that on any view of the matter it was at least seriously

open to argument that the doctrine could not apply in this case.

The principles governing applications of the kind before the

Court yesterday and today to dismiss or stay proceedings are well

established so I need not refer to them except to say that they are to be found in the well known ~udgment of the High Court in General Steel

Industries Incorporated V. Commissioner for Railways (New South Wales)

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(1964) 112 C.L.R. 125. The principles there expressed, especially by

i Barwick C.J., have been applied in many cases since, including many

i	decisions of this Court.
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The Deputy Commissioner accepts for the purposes of this

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motion that he grounds of the application in support of the

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taxpayer's case are established; that is, he accepts that the case

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against him must be treated as being at the highest point that it

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could be in favour of the taxpayer. I have already set out in summary

form those grounds.	1:
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The Deputy Commissioner also accepts for the purposes of this

motion that prior to the issue and service of the relevant notices

of assessment he made no attempt to ascertain the taxpayer's taxable

income, that he did not intend to undertake any relevant process of

forcing the taxpayer to consult with him or his officers. The Deputy	calculation but issued the notices of assessment for the purpose of this case, nor does he concede them for the purposes of the final
hearing. He concedes them solely for the purposes of the motion
presently before the Court. I assume, then, for the purposes of this
motion that:
(1) The Deputy Commissioner made no attempt to ascertain the

taxpayer's taxable income prior to the issue and service	of
the notices of assessment;

i	I	. 3 P
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(2) The Deputy Commissioner did not intend to undertake any

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relevant process of calculation;

( 3 ) The Deputy Commissioner issued the notices of assessment for

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the purpose of forcing the taxpayer to consult with him or

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i his officers; and

I I	(	4	)	The decisions to issue the notices of assessment and the
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!	recommendations which led to them were not made in good faith.
Acting on these assumptions it is, I think, reasonably

arguable that the Deputy Commissioner did not engage in the process of

assessment at all. I need only refer, on this point, to Bloemen's

- Case (supra) and in particular to what is said by Mason and Wilson JJ.

I	in their joint reasons for ludgment at	371.
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It is, I think reasonably arguable that this case raises a

i	question which has not been considered before, even in Bloemen's Case.
It is also reasonably arguable that the decided cases to which I have
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I	been referred, including Bloemen's Case, proceed on the assumption
l	that there is an assessment which has in fact been made by the
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!	Commissioner though not necessarily duly made.
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I If a challenge to an assessment is based on the absence of

good faith or related matters, or the desire to harass or exert

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I	pressure on a taxpayer, then it is well established that those matters
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i	may be raised in appeals under Part V of the Act or on review before
i	the Administrative Appeals Tribunal but not otherwise. But the
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I	assumptions which I referred to earlier raise a real question whether
!	an assessment was made at all.
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I	It may be that	S .	177	confines the taxpayer to establishing
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I	the matters presently the basis of the assumptions mentioned by me in
1	i	his Part V appeal to the Supreme Court of Western Australia; but it is
i	not demonstrably clear that the question must be answered adversely to
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the taxpayer. The other matters to which I have referred and certain
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other submissions concerning the form of relief are not, in my view,
!	sufficiently free from argument to lead me in the exercise of the Court’s discretion to accede to the motion. I should add that I heve
I	no final view on any of the matters that have been argued before me, but in view of the principles that govern applications of this nature,
1	I do not feel the case of the taxpayer is so demonstrably poor or
hopeless that it should not be allowed to proceed to a final hearing.
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1	Accordingly, the notice of motion is dismissed.
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