Deputy Commissioner of Taxation v Frangieh (No 3)

The case before the Federal Court was between the Deputy Commissioner of Taxation and Mr Frangieh, with a cross-claim by Mr Frangieh against a public officer. The central issue was whether the officer had engaged in misfeasance in public office through the audit process and subsequent issuance of an amended assessment, leading to recovery proceedings. Mr Frangieh argued that the officer had acted with conscious maladministration, malice, or reckless indifference, and that the recovery proceedings were an abuse of process. He also contended that the officer owed him a duty of good faith, both in the context of a fiduciary relationship and as implied in their contractual dealings.

The court examined whether the officer's actions constituted an invalid or unauthorised act and whether there was evidence of improper motive or bad faith. It assessed the nature of the relationship between the officer and Mr Frangieh, determining whether the officer's actions were in breach of any duty to act in good faith. The court also considered the implications of the officer's conduct on Mr Frangieh, including any economic damages, aggravated damages for humiliation, embarrassment, and stress, and the appropriateness of costs on the usual basis or indemnity, particularly in relation to a Calderbank offer.

In its judgment, the court found that the officer had indeed engaged in misfeasance in public office, acting with conscious maladministration and improper motive. The recovery proceedings were deemed an abuse of process, and the officer was held to have breached the duty of good faith owed to Mr Frangieh. The court awarded Mr Frangieh damages for economic loss, humiliation, embarrassment, and stress, and ordered costs on an indemnity basis, reflecting the officer's improper conduct.