Durston, Raymond Brian v Deputy Commissioner of Taxation

CATCHWORDS

Bankruptcy - creditor's

petition

- notice of opposition -

bankruptcy notice founded on income tax assessments -

objections

lodged against assessments - decision on objections

- trial

issues as to whether reference	or appeal has been or could now be
instituted.

Income Tax Assessment Act 1936 - S S . 185, 186, 187

Income Tax Resulations - regulation 29

Fancourt v. Mercantile Credits (1983) 48 A.L.R.l

RE:	RAYMOND BRIAN DURSTON

EX PARTE:

THE DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH

OF AUSTRALIA

NO. P709 of 1985

Jenkinson J.

Melbourne

4 March, 1986

IN “HE FEDERAL COURT OF AUSTRALIA	)
BANKRUPTCY DISTRICT	} NO. P709 of 1985
OF THE STATE OF VICTORIA	1

RE: RAYMOND B. DURSTON

Debtor

Creditor

CORAM :

Jenkinson J.

PLACE :

Melbourne

DATE :

4 March,

1986

REASONS FOR JUDGMENT

The petition for sequestration of the estate of the

debtor, Mr.

Raymond Brian Durston, is founded upon an allegation

of his failure

t o comply with the requirements

of a

bankruptcy

notice.

The bankruptcy notice in turn is founded upon a

judgment

of the Supreme Court of Victoria and that judgment

in turn was for

recovery of the amounts

of assessments which the petitioner had

made in respect

of the income of Mr. Durston for income years

ended 30 June 1978, 1979, 1980, 1981 and 1982.

The petition is opposed on a number of grounds. One

the grounds, or one

of the s e t s of

grounds, is that Mr.

Durston

was not effectively subjected to

a liability to income tax in

respect of those years beyond question

by process of appeal or

review.

It is common ground that no appeal

or review in respect

of	objections against the assessments has been undertaken in

pursuance of 5.187 of the Income Tax Assessment Act 1936.

Mr.

Durston says that that is because he was not, until very recently, aware that a decision had been made by the Commissioner upon

objections

lodged

against

the

assessments.

The

Commissioner, on the other hand, contends that the objections

which were made were the subjects of decision and that notice of

those decisions was duly given to Mr. Durston in the middle of

1984, not long after the objections were lodged.

With - I think I can say

.- the acquiesence of counsel an

order was made

by me on

12 February that the issues be tried,

whether in respect

of each of those assessments

a reference or

appeal of the

kind

referred

to in s.187 of the

Income

Tax

Assessment Act 1936 has been or could now be instituted,

so that

what has

been heard today has been the trial

of those issues,

being

part of the

litigation

the

contested

sequestration

petition.

I have been greatly assisted by counsel for the parties.

They have framed the

issues which arise with precision.

Mr.

Margetts of counsel for

Mr.

Durston contends first

of all thak

there has not been yet

a decision within the meaning of

s.186 upon

any of the objections which

Mr. Durston lodged by a letter sent to

the petitioner on 2 April 1984. That is a document which is exhibit GRF4 to the affidavit of Geoffrey Raymond Flynn sworn 19

February 1986. The only

written

notice

of the petitioner's

decision on any objection against these assessments is a

notice,

3 .

the terms

of which are

to be found in exhibit

GRF6 to that

affidavit.

Mr. Margetts points out that that document identifies

the objections with

which it purports to

deal by reference to a

date of objection. In respect of each

the assessments the

document says that the 6bjection

has been disallowed. In respect

of each of the assessments the document specifies

or describes the

objection by reference to what is called in the document the date

of objection.

In respect of each assessment the date is stated to

be 22 February 1984.

The fact was that

Mr. Durston had forwarded

on that date to the petitioner a document dated

2 2 February

1984.

The document commenced

with the statement:

"I am lodging an objection to your

assessment

which was issued

to me during the

first week

of February

1984.

(The parties have treated that statement

as a reference to each

the five assessments to which I have previously referred.)

The

remainder of the contents of that document dated

22 February 1984,

explains, or seeks to explain, difficulties that Mr. Durston had

had in dealing

with his taxation affairs and does not really

contain any information at

all as

to the grounds on which

relies in support

of his objections.

The evidence shows that this.

circumstance, this lack

of statement of grounds, was drawn

to Mu:.

Durston's attention by officers of the Taxation Department in the

course of discussions with him and was

also the subject

letter to him under the signature

of the Deputy Commissioner of

Taxation at Melbourne, a

letter dated

26 March 1984, which is

exhibit F to the affidavit of Mr. Durston sworn on 2 8 February 1986. That letter points out that there has been lacking any

4 .

information

concerning

the

grounds

of the

objection

and

includes this statement:

“The

ground

stated

your

letter,

that

certain circumstances precluded you from being

able to capabiy deal with the production

of a

correct return, does not comply with those

requirements and accordingly your letter of

objection is considered to be invalid.”

The

requirements

which

reference

there

made

are

the

requirements of s.185 of the

Income

Tax

Assessment

Act

1936

concerning

particulars of the

grounds

objection.

m e n Mr.

Durston forwarded the undated letter which was received by the

petitioner on about 2

April, he was plainly endeavouring to make

good the deficiencies in his earlier communication which had been

pointed out to him.

His letter, which I will call the letter of

April, although it is as I have indicated not dated, commences in these terms:

“In reference to your letter of the 26th March

which advised me

of the requirements

under

Section 185 of

the Income Tax Assessment Act

1936. I will endeavour to state

more fully

and

detail

the

grounds

on which

the

objection lies.

The letter then proceeds to

detailed consideration of some

the issues apparently involved in these assessments.	Mr. Margetts
contends that in those circumstances the notice in which the

petitioner expresses disallowance

of objections must be understood

as dealing with, and disallowing, the objections which found

expression in the letter from Mr. Durston dated 22 February

1984.

That is the way the objection is identified in the petitioner’s

5 .

communication and, according to Mr. Margett's submission, that

was

an objection to each	of the assessments separate and distinct from
the later objection,	which in Mr. Margett's submission was made by

the letter of 2 April. Accordingly, the conclusion follows

that,

there being no

evidence,.of any other disallowance

of any other

objection than is recorded in this document, objections embodied

in the letter of

2 April have never been the subject

of a decision

by the Commissioner. And even

if, contrary to that submission,

the Commissioner has made a decision upon those later objections,

Mr. Margetts says : well, he certainly has not ever given

or even

attempted to give any written notice	of such a decision or such
decisions.

As I have

indicated

the

only communication

ever

attempted by the Commissioner in writing concerning a disallowance

of objection to any of these assessments is the communication to

which I have been referring, which identifies the objections

as of

22 February 1984.

I am unable to accept the argument

Mr. Margetts

presents. In my opinion, upon

a reading of the documents to which

(

I have referred, the document prepared by the petitioner is

document which shows

disallowance, a decision to disallow, the

objection which found its first expression in the letter

February 1984 and which in

my opinion then found

an expression of

grounds in the later letter. In my opinion it is quite clear

there was never anything but one objection to each

these

assessments.

The objection was quite inadequately particularized.

I mean

"inadequately"

that

statement

objection

originally

furnished

failed

completely

comply

with the

requirements of s.185, that the objection in writing should state

fully and in detail the grounds on which the taxpayer relies. But there was, in my opinion, only one objection, the grounds of which

were stated

by the later letter. Accordingly, insofar

Mr.

Margetts' arguments are based upon the premise that there were, in

truth, two objections, 'the arguments fail.

I am unable also to

accept his contentian

that

document

prepared

the

Commissioner is to be understood, or

would be understood by Mr.

Durston or anybody

else

familiar

with

course

correspondence, as dealing only with an objection confined in its

expression to the letter

of 22 February.

The next submission that it is necessary to deal

with is

the submission that the evidence does not establish proof

posting of a written notice	by the Commissioner of	his decision on
the objections.

The posting is sought to

be proved in this case by

evidence of the practice followed in the office of the petitioner

in Melbourne in relation to documents of the class with which we

are concerned, that is to say in this particular case notices of

decision upon objections to assessment of income tax. Mr.

Margetts has pointed out, and rightly pointed

out, that the proofs

offered fall far short of - indeed, they

do not purport to attempt

- proof of actual posting of this particular

document, there being

as I infer no recollection on the part

of the people who

were

handling

the

document

into

the

envelope

and

thereafter

the

envelope to

the officers of Australia

Post, no recollection of

that having been done in relation to this paricular

document. But

I find that the proofs offered are sufficient

of the practice to

7 .

persuade me that there was posted on 8 June 1984 the letter of which a copy is exhibit GRF7 to the affidavit of Mr. Flynn,

together with a copy of another letter dated

6 June 1984 addressed

to Mr. Durston of 63 Tivoli Road, South Yarra.

That is to say I

am persuaded to find that those two documents were in the one

envelope which

was addressed to

Mr. Durston at 41139 Union Street,

Brunswick 3056 and

which was posted on

8 June 1984, so that

Australia Post, if it performed its

function would have delivered

the envelope to that latter address, although one of the documents

inside the envelope	was addressed to Mr. Durston at 63 Tivoli
Road, South Yarra.	That circumstance brings me to the remaining

point at issue in relation to these issues

: that is the question

as to whether service was effected on Mr. Durston in consequence

of and a5 a result of events which followed upon that posting.

Section 186 of the

Income Tax Assessment

Act

1936

provides:

"The

Commissioner

shall

consider

the

objection, and may either disallow it, or allow it either wholly or in part, and shall serve the taxpayer by post or otherwise with

written notice

of his decision."

The document which I have referred

to as the letter dated 6

June

1984, addressed to Mr. Durston of 63 Tivoli Road, South Yarra,

the document which contains the notice

of the decision. The other

document is a

letter advising Mr. Durston that that letter of

June had been posted to his address at Tivoli Road and was now being served or sent to him at Union Street. The Income Tax

Resulations

contain

provisions

regulating

service

and

making

provision for addresses for service.

The contention on behalf of

Mr. Durston is

that, at the time when service

was attempted by

posting, the address for service of Mr. Durston was an address which had been on his income tax return for the year ended 30 June

1980. Shortly before the posting

of these documents on 8

June

another income tax return had been furnished by

Mr. Durston in, I

think, about April and that is exhibit

GRF5.

That document had

written on it against the heading "Postal Address

f o r Service of

Notices'! the words "No fixed address." There had been an

address

stated on the exhibit

I have referred to previously, exhibit GRF4,

63 Tivoli Road, South Yarra, but the income tax return came to

hand after receipt

of that letter GRFQ.

So that in my opinion, at

the time when that income tax return

was received, there occurred

circumstances contemplated in Regulation	29 of the Income	Tax
Resulations which provides:

"The address for service last given

to the

Commissioner by any person shall,

for

all

purposes under the Act and Regulations, be

his

address for service, but where

no address for

service has been given

to the Commissioner,

where the departmental records disclose that

such

person has subsequently

changed

his

address

and

he has not

notified

the

Commissioner,

either

the

return

or by

separate written advice,

of such change, then

the address of the person, as described in any

record in the custody of the Cornmissioner,

shall be his address

for service."

The income tax return exhibit

GRF5 disclosed that Mr.

Durston had changed his address, but he had not notified the

Commissioner "of such change". Accordingly, at that time, the Regulation provides, the address of the person in those circumstances as described in any record in the custody

the

Commissioner, shall be his address for service. Now, not at that

time when that income tax return was lodged, but some time later

that is to say on 4

June 1984 - one of the petitioner's officers

recorded (as a minute of a telephone conversation he had had with

another of the petitioner's officers) that Mr. Durston's last

known address was flat 4, 139 Union Street, Brunswick. So that,

upon the making of that record, in my opinion, Mr. Durston's

address as described in that record in the custody of the

Commissioner, was his

address for service by virtue of the

provisions of Regulation 29,

Mr.	Margetts contended that the evidence showed that no

witness who had given evidence on the trial

of these issues had

examined

the

whole

of the

records

the

custody

the

Commissioner to ascertain whether

or not there was some other and

more recent address

than the address, flat

4, 139 Union Street,

Brunswi,ck. Mr.

Durston has given evidence that

in fact he had

moved at the end of May from flat 4, 139 Union Street, Brunswick

to another address in Port Melbourne. That is as to what the fact

was, but Mr. Margett's point was that so far as the evidence went

nobody had searched the records in the custody of the Commissioner

to determine whether any

later address than the 139 Union Street

address was recorded.

He was

also able to point to the evidence

that at this time, shortly before the posting

of 8 June, there was

a flow

communication from sources outside the

petitioner's

Department, particularly from the Costigan Royal Commission, into the petitioner's Department, information bearing upon Mr. Durston and his activities and perhaps also his movements. In those circumstances, Mr. Margett's submission was that it could not be

10.

said that this particular address recorded on

4 June was the

address which Regulation

29 made the address for service.

In my opinion, the existence "in any record", to use the

language of Regulation 29, in the custody of the Commissioner, of

address, is sufficient

constitute

that

address

the

address for service, but

if I am wrong about that and on its

proper construction Regulation

requires that the address be

shown to be in some sense chronologically the last address to be

found anywhere in the records, yet in my opinion the evidence

sufficient to establish that in these proceedings.

The

evidence

was that an officer

of the Department, Mr. Flynn, had examined the

files and records, but had failed to

go through a very large file

which he referred to as working

papers.

Now, having regard to the

date of the entry in the records

of the address 139 Union Street,

namely 4 June 1984, four days before the posting,

I am prepared to

find and I do find by inference that that was the last - chronologically the last - address recorded in the records in the

custody of the Commissioner, as

at 8 June 1984.

Working papers,

as I

infer from the evidence, are not

source from which one

would expect to gather the latest or a

very recent record of

address of the person under investigation.

If a new address

or a more recent address than the

address of 4 June (or 1

June, I should say, because although the

record was made

on the 4th,

the information was communicated to

the officer Mr. Flynn on the 1st)

- any more recent information as

to Mr. Durston's address

- had come to hand, it would not, as

would infer, be found in the file called working papers, but

11.

would be found

the files f o r use in dealings with and

concerning Mr. DUrston, such

as, for example, what was called the

income tax return file. Accordingly,

I conclude that the notice

was served by post at the address for service

of Mr. Durston

within the meaning

that expression in the Regulations, and

therefore there was compliance with the provisions of Regulation 59 of those regulations. For the reasons which were explained by

the High Court in Fancourt

v. Mercantile Credits (1983)

48 A.L.R.

1, the circumstance - if it be, as is sworn by

Mr. Durston - that

the notice did not come to his possession

or to his notice, hi5

attention, until very recently, does not affect the conclusion

that service in compliance

with

5.186 was effected on or about

June 1984. Accordingly, the 60 days within which the taxpayer may request a reference or an appeal pursuant to

5.187 has long since

expired, and accordingly the issues that were

for

determination

must be determined in the negative sense. In effect, there will

be a declaration in respect

of each of

the assessments that no

appeal and no reference in respect

the decision

has been

instituted and no appeal, no reference could now be instituted. Having regard to the hour, I will not try to formulate terms of

the declaratory order, but

I think it is necessary that there be

declaration so that there

something to carry forward to

the

next stage in the trial

of this proposed petition. I direct that

the petitioner bring in minutes of declaratory orders to give

effect to what I have decided. And

I will adjoun the hearing of

the petition to a

date to be fixed

- the further hearing

of the

petition to a date to be fixed.

c e r t i f y t h a t

t h i s and

t h e t e n

( 1 0 ) preceding pages

are a

t r u e c o p y

O f

the Reasons for Judgment here in

the Honourable

M r .

J u s t i c e

JENKINSON.

Dated : ww&&vL

,p-

Associate

[1986] FCA 674

4 Mar 1986