Glennan v Commissioner of Taxation S65/2001

[2001] HCATrans 627

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S65 of 2001

B e t w e e n -

MICHAEL JOHN GLENNAN

Plaintiff

and

COMMISSIONER OF TAXATION

Defendant

Application for summary dismissal or stay of proceedings

GLEESON CJ

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 30 NOVEMBER 2001, AT 2.17 PM

Copyright in the High Court of Australia

MR M.J. GLENNAN appeared in person.

MR D.B. McGOVERN:   If the Court pleases, I appear for the Commissioner of Taxation with my learned friend, MR M.J. LEEMING.  (instructed by Australian Government Solicitor)

HIS HONOUR:   Yes, Mr Glennan.

MR GLENNAN:   If the Court pleases, I have a solicitor representing me, Mr Dunne, but I would like to, with the Court’s permission, speak on my own behalf today.

HIS HONOUR:   Do you have any problem with that, Mr McGovern?

MR McGOVERN:   No, your Honour.

HIS HONOUR:   Yes.  Now, you are the moving party today, Mr McGovern.

MR McGOVERN:   Yes, your Honour.

HIS HONOUR:   I have read the written submissions.  I think it would be convenient for me to hear what Mr Glennan has to say at this stage.

MR McGOVERN:   If your Honour please.

HIS HONOUR:   Mr Glennan, I think that the most useful thing that you could do at this stage to assist me would be to explain the nature of the proceedings, the relief you seek and the structure of your statement of claim.

MR GLENNAN:   Your Honour, I would only be too pleased to do that.

HIS HONOUR:   Yes.

MR GLENNAN:   May I preface my remarks on that subject by submitting and, indeed, applying for this matter to be stood over because of the fact that we have now raised constitutional issues in this matter.  We have filed a notice under section 78B(1) yesterday and served it and it is our respectful submission, based on the contents of that document, that there is now a duty on this Court not to proceed further until we have replies to those notices.

HIS HONOUR:   Your submission may be right, but section 78B does not require proceedings to come to an end just because there is a piece of paper with section 78B written on the top of it.

MR GLENNAN:   That is correct, your Honour.

HIS HONOUR:   And section 78B requires a course to be taken:

When a cause pending in a federal court . . . involves a matter arising under the Constitution or involving its interpretation –

and I cannot form a view on whether this case “involves a matter arising under the Constitution or involving its interpretation” until I understand what the case is about, which is why I issued the invitation I did.

MR GLENNAN:   Your Honour, there is no way that I could cavil with what your Honour has just said, and I do not.  May I therefore proceed immediately to outline the case.

HIS HONOUR:   Yes, certainly.

MR GLENNAN:   Your Honour, this matter, or the writ and the statement of claim that is before the Court today, raises probably one of the most fundamental issues in British constitutional law.  The issue at stake is of such dimensions that a civil war has been fought over it; a King has lost his head; and, in a slightly analogous relationship, the Crown has lost certain colonies in North America.  This case, if it is allowed to proceed, as I will be submitting it should be allowed to proceed, will be a test case for virtually every taxpayer in Australia.

To come right to the point, for something like 41 years, as a result of the decision of this Court in Allsop’s Case – and there are other related cases to the same effect:  McLaurin’s Case and Spedley’s Case – the law in Australia has been accepted up until last Friday, at least, that where a party receives a lump sum settlement by way of compromise of legal proceedings and where that lump sum relates to a multiplicity of income and capital components which are not dissected in any way, shape or form, then according to Allsop’s Case the whole sum is capital for the purposes of the Income Tax Assessment Act 1936 and of most importance to this case, there is an additional overriding factor, and that is this, that in 1992 the Federal Parliament passed the self‑assessment taxation code and pursuant to that code the Commissioner in 1993 in a public – and I emphasise the word a “public” – tax ruling No 58 of 1993 issued a ruling in which he made specific reference to Allsop’s Case and McLaurin’s Case and he said in that ruling to the effect that acting on the authority of those cases, except in relation to two exceptions, which he spelt out in very clear language and which, in my submission, is not in any way open to debate and which, in my further submissions, is not relevant anyway, apart from those exceptions where a compromise of legal proceedings involves the payment of a lump sum which is not dissected or apportioned orF between capital and income items, then for the purposes of that tax ruling and for the purposes of section 25(1) of the Income Tax Assessment Act, the Commissioner was bound to treat the whole of the amount involved as capital and as not assessable under section 25(1) of the Income Tax Assessment Act.

In addition, and not without significance, at the top of the relevant public tax ruling the Commissioner in his wisdom inserted a statement in block capitals that the effect of that ruling operated retrospectively, immediately and prospectively, or words to that effect.  It involved past, present and future matters coming before him.  It was not necessary for the Commissioner to do that, in my respectful submission, but he did it, and having done it, it is not without significance.

Now, the next point is that the Commissioner – I withdraw that.  I made an income tax return in 1995 for my taxation year of 30 June 1988 from recollection and in that return I disclosed that I had received a lump sum settlement which I claimed was capital by way of a compromise of a certain legal proceeding.  Annexed to the return was a statement of the circumstances in which that money was obtained, together with the relevant statement of claim and the relevant terms of settlement.

The Commissioner requested and sought certain documents from me, which were supplied quite willingly, and, indeed, everything that the Commissioner requested of me I believe I was in a position to comply with in accordance with his wishes.  So I would be arguing – and I do not think there is any contest on this issue – that I made a true and fair disclosure, a full and complete disclosure of all matters relevant to enable him to do a proper assessment.

The Commissioner then issued an assessment and he treated the whole of the lump sum settlement, which is approximately $1.3 million, as income assessable pursuant to section 25(1) of the Income Tax Act or, in the alternative, 25A(1) of the Income Tax Assessment Act.  I objected in writing in due time and the Commissioner furnished reasons for his objection and in his reasons the Commissioner stated that he had assessed the amount to be income by reference to a joint venture agreement which antedated by a year or two the settlement matter and, in fact, that the agreement that the Commissioner relied upon was the document that was sued on in the action that was compromised.

In the terms of settlement of that matter the terms explicitly state that as between the parties to the settlement the joint venture agreement is rescinded.  So what the Commissioner in effect did was to go behind the written terms of settlement to the antecedent agreement and assess that as income under the two sections that I have mentioned, notwithstanding that he knew full well that it was explicitly part of the settlement terms filed in the Supreme Court of New South Wales, that that agreement as between the parties had been rescinded and had been replaced by the compromised terms of settlement.

Having obtained those reasons, I then applied to have the decision set aside through the normal mechanisms through the Administrative Appeals Tribunal.  The Commissioner filed what is colloquially known, I think, as section 37 statement and that is a statement filed with the tribunal pursuant to a statutory obligation set out in section 37 for him to file all relevant documents or copies of all relevant documents with the tribunal and to serve a copy thereof on the applicant.

The Commissioner purported to comply with that obligation, but he did not make any references or include the public tax ruling 58/93.  The tribunal upheld the Commissioner’s decision.  Towards the end of the hearing before the tribunal I filed written submissions.

HIS HONOUR:   Who was the member of the tribunal?

MR GLENNAN:   There were three members, your Honour, Mr Julian ‑ ‑ ‑

HIS HONOUR:   Block, yes.

MR GLENNAN:   ‑ ‑ ‑ Block was the chairman.  There was a Mr Greenwood, a member, and a Miss Armfield, or some name like that – it was a lady – was the third member.  Towards the conclusion of the hearing – in fact, I think it was – I withdraw that.  The tribunal reserved its judgment but in doing so it granted me permission to file written submissions, which I did, within the time allowed.  In those submissions I respectfully submitted that the terms of settlement had rescinded the joint venture agreement, that I had received a lump sum pursuant to the compromise, that that lump sum was capital and not income and I specifically drew the tribunal’s attention to the words in the terms of settlement which specifically rescinded the joint venture agreement.

The tribunal then handed down its decision, upholding the Commissioner’s decision. I appealed to the Federal Court of Australia and my matter came before a single judge of that court. I was substantially successful in receiving a reserved judgment in which the Federal Court held that the amount in dispute was not assessable income for the purposes of section 25(1) nor for the purposes of 25A(1). The judge then made an order remitting the matter to the tribunal for conclusion or rehearing – I forget the exact words – to be concluded in accordance with his reserved judgment.

The next step was that the Commissioner convened a directions hearing before the tribunal by telephone and informed the tribunal and myself that it was his intention to call evidence on the further matter as remitted to prove that the amount in question was income assessable pursuant to the Income Tax Assessment Act as income.  I then immediately filed an application before the Federal Court for the remittal order made by the judge at first instance to be rescinded.  The matter came back before the same judge and he declined to revoke that order but he did give a formal direction in the form of a court order to the tribunal that they had to abide by the court’s decision that the amount in question was not assessable pursuant to the two sections that the court had nominated:  25(1) and 25A(1).

The next step, briefly, was that, I, not wishing to have any further hearing in front of the tribunal, appealed to the Full Federal Court seeking an order that the remittal order be revoked and, in fact, I think I also sought an order that judgment be entered in my favour.  The Commissioner also lodged an appeal against both of the judgments of the Federal Court, the first one that I mentioned together with the second one where I had applied for the remittal order to be revoked.

The matter came before the Full Federal Court and at that stage, right up until the conclusion of the oral hearing, I was not aware of the existence of the public tax ruling that I have referred to and due to a misunderstanding with my counsel he inadvertently informed the court that I had not claimed before the tribunal that the original joint venture had been rescinded and that I had received a lump sum by way of compromise of legal proceedings.

HIS HONOUR:   Do I gather from what you say, when you say that you were not aware of the public tax ruling up until the time the matter got before the Full Court of the Federal Court, that you had never relied on the public tax ruling yourself?

MR GLENNAN:   That is quite correct.  I was not completely ignorant as to its existence.  I might also add that I was not aware of the existence of Allsop’s Case, McLaurin’s Case and Spedley’s Case.

HIS HONOUR:   Yes, but you had not ordered your affairs in reliance on the ruling?

MR GLENNAN:   No.  No, I had not.  But quite by accident, after the Federal Court had reserved its judgment but before handing down its reserved judgment, about a week later I accidentally discovered the public tax ruling to which I have referred and in view of the fact that my counsel had, in my perception, misled the court on a matter which was not in my interests to have the court misled on, I applied for an immediate stay of proceedings.  When that application came before the same Federal Court as I had just been dealing with or been before, they allowed me to correct the misinformation that I claimed had occurred.  I was allowed to file the written submissions that I had filed in the AAT and I was given leave to make a written reply to late written submissions filed by the Commissioner, which in fact had been filed, to my recollection, after the court had adjourned to reserve its judgment.

In my written submissions that I was granted leave to file I then annexed for the first time, bringing it to the Full Court’s attention, the public tax ruling and I specifically relied upon it. The Federal Court in its wisdom, the Full Federal Court, effectively disregarded completely – in fact, it did disregard it completely – all references that I had made and reliances I had made on the public tax ruling. Without going into any excessive detail, it upheld the Commissioner’s appeal. What is relevant is that the Full Federal Court ruled that the amount in question was not assessable pursuant to section 25A(1) of the Income Tax Assessment Act and in that respect they concurred with the primary judge.

I would indicate now that I do not cavil with that.  I believe that is a correct decision and I have never contested it.  But most relevantly they set aside the judgment of the primary judge so far as 25(1) was concerned and the Full Federal Court held that the amount was properly assessable under that section, more or less exactly as the AAT or the tribunal had found.

HIS HONOUR:   Income according to ordinary concepts?

MR GLENNAN:   Yes.  Now, I then applied for special leave to appeal to this Court and while that application was pending I sought a prohibition against the Commissioner on the basis that the assessment was effectively – it was not a bona fide assessment; it was unlawful; and in fact, for reasons which I will now proceed to explain, was not a bona fide taxation assessment.

HIS HONOUR:   Just before you go any further, it is my understanding from the materials that I have read, including the judgment of Justice Kirby, that you made an application for special leave to appeal to this Court ‑ ‑ ‑

MR GLENNAN:   That is correct.

HIS HONOUR:   ‑ ‑ ‑ from the decision of the Full Court of the Federal Court.

MR GLENNAN:   That is correct.

HIS HONOUR:   And, indeed, at the time of Justice Kirby’s decision that we have not yet come to, that application for special leave to appeal to this Court from the decision of the Full Court of the Federal Court was pending.

MR GLENNAN:   That is correct.

HIS HONOUR:   Now, what has happened about that?

MR GLENNAN:   Your Honour, just as that matter was coming on for hearing, I formed the view that as an applicant for special leave to this Court, because of some unusual way in which the Federal Court Act relates – for instance, there is a section there that says you cannot appeal from a single judge of the Federal Court to the High Court.  I formed the view that if I was successful in having the Full Court appeal that I had made and the Commissioner had made declared to be a nullity I was falling back on the position then of having to appeal directly to the High Court from the primary judge, and that is statute barred.  I could not do that.  That was the reason why I applied for the prohibition.  Now, the prohibition matter ‑ ‑ ‑

HIS HONOUR:   Before you come to the prohibition matter, I am interested to know the history of the tax litigation with the Commissioner.

MR GLENNAN:   Yes.

HIS HONOUR:   We got to the stage where you have lost in the Full Court of the Federal Court.  The Full Court has held that this is assessable income under section 25 and you have lodged an application for special leave to appeal to this Court.

MR GLENNAN:   Yes.

HIS HONOUR:   Presumably one of the grounds of your application for special leave being that the Full Court of the Federal Court was in error in concluding that this was income according to ordinary concepts.

MR GLENNAN:   That is correct, but I ‑ ‑ ‑

HIS HONOUR:   Now, what happened to your – I am not really asking you what your motivation was but, as a matter of record, what happened in relation to your application for special leave to appeal to this Court?

MR GLENNAN:   As a matter of record, three things happened on one day.  I discontinued all the special leave applications by formal notice filed in the Registry.  I discontinued my appeal from the adverse decision of Mr Justice Kirby on the prohibition matter ‑ ‑ ‑

HIS HONOUR:   Well, we have not come to that yet.

MR GLENNAN:   ‑ ‑ ‑ and the third thing – it all happened together – I filed the writ that is before this Court today and in there I pleaded that I discontinued all those matters and that I had commenced this action as a substitute means of obtaining legal redress.

HIS HONOUR:   Well, that means, amongst other things, as a substitute means of appealing against the decision of the Full Court of the Federal Court.

MR GLENNAN:   Well, in a sense it is and I do not cavil with that description because I would wish to argue and submit to this Court that I, or any other litigant in my situation, is entitled to do that and ‑ ‑ ‑

HIS HONOUR:   Well, that is a matter we may have to address.

MR GLENNAN:   Yes.

HIS HONOUR:   But I can ask you what was the consequence of your discontinuance of the application for special leave to appeal from the decision of the Full Court?

MR GLENNAN:   Well, the consequence is that I am faced with a valid judgment of a court of law that I owe a large sum of money to the Commissioner and under normal circumstances the Commissioner is entitled to execute on that judgment forthwith.

HIS HONOUR:   Well, let me just check on the accuracy of that.  Where do I see a report of the decision of the Full Court of the Federal Court?

MR GLENNAN:   It is reported in the law reports and it is in the ‑ ‑ ‑

HIS HONOUR:   Yes, I have it. It is [1999] FCA 297.

MR GLENNAN:   That is it.

HIS HONOUR:   Now, the order of that court was an order that the appeal from the decision of the Administrative Appeals Tribunal be dismissed.

MR GLENNAN:   That is correct.

HIS HONOUR:   That is not a judgment for an amount of money for the Commissioner against you.  The order, and so far as I can see the only order, made by the Full Court of the Federal Court was an order dismissing your appeal to the Federal Court against the decision of the AAT.

MR GLENNAN:   That is correct, your Honour, yes.

HIS HONOUR:   Right.  So the fact that you owe an amount of money to the Commissioner of Taxation is a consequence of some provisions of the Income Tax Assessment Act ‑ ‑ ‑

MR GLENNAN:   It is, your Honour.

HIS HONOUR:   ‑ ‑ ‑ as they operate having regard to the ultimate outcome of your proceedings in the Administrative Appeal Tribunals and the Federal Court.

MR GLENNAN:   Yes.  Subject, of course, to whatever may be the ultimate fate of this writ that we are discussing today.

HIS HONOUR:   Yes, but to get it completely clear, the Federal Court has never entered judgment against you for any sum of money at all.

MR GLENNAN:   I do not believe so, your Honour.

HIS HONOUR:   No.

MR GLENNAN:   So, your Honour, unless I, as a taxpayer, who, according to the normal procedures for reviewing tax assessments, fall into a fairly unusual category, I face the immediate prospect of having to account to the Commissioner for the full amount of the assessment plus interest, plus all the legal costs awarded against me.  That is as the matter legally stands unless there is some unusual legal situation that places me in an unusual and exceptional position which permits me to proceed with a writ along the lines of what is filed but which, I would concede, needs tightening up.

HIS HONOUR:   Well, now we have got to the position where I believe I understand the ultimate outcome to date of your dispute with the Commissioner about the assessment.  The next thing I would like to ask you about is the proceedings that you have commenced in this Court that were dealt with and dismissed by Justice Kirby.

MR GLENNAN:   Yes, your Honour.  That is the prohibition application.

HIS HONOUR:   And that is the matter, as I understand it, that is the subject of a report in [2000] HCA 37.

MR GLENNAN:   That is correct, your Honour.

HIS HONOUR:   Now, I am right in thinking that in those proceedings you sought constitutional writs against the Commissioner and others ‑ ‑ ‑

MR GLENNAN:   Yes.

HIS HONOUR:   ‑ ‑ ‑ claiming, on various grounds that were dealt with by Justice Kirby, that you were entitled to that relief.

MR GLENNAN:   I claimed and sought only an order nisi for constitutional writs.

HIS HONOUR:   Now, Justice Kirby, for reasons that he set out at some length, dismissed that application.

MR GLENNAN:   He did.

HIS HONOUR:   And, as I understand it, you then applied for special leave to appeal to the Full Court of this Court against Justice Kirby’s decision.

MR GLENNAN:   That is correct.

HIS HONOUR:   And what happened to that application?

MR GLENNAN:   Well, ultimately I discontinued it.  That was the second item – second lot of procedures that I discontinued on the same day that I filed this writ.  They were all done together on the one day.

HIS HONOUR:   Now, can you explain to me what, if any, difference there is between the complaints, if I can use that expression, that you make in the statement of claim that is presently before me and the arguments that you put to Justice Kirby?

MR GLENNAN:   Your Honour, yes, I will endeavour to do that forthwith.  Your Honour, that was an application for orders nisi for constitutional writs.  It was brought on somewhat quickly, within, I think, three weeks, two to three weeks, of the documents originally being filed in the High Court.  I did not object to that.  I argued it to the best of my ability.  But first and foremost it was an application which falls within a very narrow compass.  It is in a certain sense analogous to an application for an interlocutory injunction and ‑ ‑ ‑

HIS HONOUR:   Which application?

MR GLENNAN:   The application for an order nisi.

HIS HONOUR:   Yes.

MR GLENNAN:   And before I just answer your Honour’s specific question, may I just say that it is my submission that in the event of refusal of the application it cannot create a res judicata because it is not a final judgment and cannot possibly be a final judgment.  But your Honour has asked me to outline the differences and I would seek to do that now.

The main difference between what I wish to proceed with and properly plead in this writ – and I do not think it is properly done yet but it can be done so in the very near future – is to rely on the exceptions to the normal law which governs the operation and validity of an income tax assessment as set out in Richard Walter’s Case, which, as your Honour would be fully aware, is a High Court decision of about 1995, and involved the Hickman principle.  In that judgment, which I think involved five Judges of the High Court – I am open to correction, but I believe all five of them held that there is an exception to the general rule and that is where it is alleged and can be proven that the Commissioner has not acted bona fide in issuing the assessment or making the assessment, and that if that is established in a court of law, then that is an exception to the provisions of the Income Tax Assessment Act which make the production of an income tax assessment in a court of law conclusive as to the correctness of the making of the assessment.

That is my case here, your Honour.  This comes to the core of my case, because I will be submitting and I will be wishing to plead, although I do not think it is properly pleaded yet, that when the Parliament passed the self‑assessment legislation in 1992 and specifically had a whole code to govern that new system of administration, which included as an incidental the issuing of public tax rulings, that when in section 170B, I think it is, which is part of the self‑assessment code, Parliament stipulated expressly that where there was a favourable tax assessment – I withdraw that – where there existed a public tax ruling favourable to the taxpayer, that ruling was absolutely binding on the Commissioner.

HIS HONOUR:   Well now, I believe I understand the point you wish to make in relation to that.  Can I therefore ask you to go directly to your statement of claim in the proceedings that are before me and, in particular, to the relief claimed which, as I understand it, appears on pages 36 and 37.  Am I correct that that is where the relief claimed appears?

MR GLENNAN:   You are correct, your Honour.

HIS HONOUR:   All right.  Well, let us just look at that relief.  You seek against the Commissioner of Taxation two declarations:  damages and costs.  That is the only relief you seek.

MR GLENNAN:   That is correct.

HIS HONOUR:   First of all, can you tell me if you obtained that relief, how would that displace your liability to income tax, if you have obtained all that relief?

MR GLENNAN:   Your Honour, one could – and I am speaking, of course, completely hypothetically – arrive at a decision where pursuant to this or an amended version of this document – in fact, the Commissioner is well aware that we do intend to amend it if we are permitted to do so by the High Court.  Theoretically one could arrive a situation, if the action was successful, I was able to persuade the High Court that the assessment was not bona fide ‑ ‑ ‑

HIS HONOUR:   Well, I cannot see anything about the assessment here in this relief.  First of all, the first declaration that you claim is that a certain High Court Rule is unconstitutional.  Well, let us suppose you are right about that.  If I can put it bluntly, how does that help you?

MR GLENNAN:   It does not, your Honour.

HIS HONOUR:   Well now, the second declaration is a declaration that the judgment and orders of Justice Kirby contravene certain rights and certain constitutional provisions.

MR GLENNAN:   Yes, that does not help either, your Honour.

HIS HONOUR:   It does not help.

MR GLENNAN:   No.  So we are falling back onto the damages.  Your Honour, I would like to say that this writ was prepared hurriedly.  It was filed for a specific purpose.  There were matters pending in the High Court list which I did not wish to obstruct the High Court list any further and which the Registrar and I both agreed, if they were not to be pursued, they should be abandoned straightaway.  That was the pressure to file this document at the time it was filed and the relief sought is completely inadequate as a representation for the relief that I would now be seeking.

HIS HONOUR:   Well, the relief sought in this document, so far as I can see, but correct me if I am wrong, even if granted, would not displace your liability to tax.

MR GLENNAN:   Your Honour, I was about to say that theoretically the outcome of this action, even if I amended the relief, which I would be intending to do, as I think, unless your Honour orders otherwise, I have a right to do under the Rules of Court, one could theoretically find the Court saying, “Well, Mr Glennan, you face the combination of the Full Court judgment, the AAT finding and the law” ‑ ‑ ‑

HIS HONOUR:   What you face is the Income Tax Assessment Act.  The Income Tax Assessment Act produces certain statutory consequences operating on what has happened before the AAT and the Full Court of the Federal Court.  Your liability to tax results from the Act, as I pointed out earlier, not because the Federal Court has entered any judgment against you.  In other words, your liability to tax arises from the fact that you have not been able to displace the Commissioner’s assessment as a result of the administrative and curial procedures that you have been through.

MR GLENNAN:   Your Honour, it is my submission that where one fits within the exceptions of the Richard Walter Case, one is not confined to the Part IVA procedures and that you can litigate independently of that if the assessment is not legal.

HIS HONOUR:   But there is nothing about the assessment in this relief sought.  The relief sought is aimed at Justice Kirby as far as I can see, who is not a party to these proceedings.  You want a declaration that a judgment of Justice Kirby’s is unconstitutional.  Justice Kirby is not a party to the proceedings.

MR GLENNAN:   Your Honour, I can relieve your Honour of any further consideration of this.  Unless I am ordered not to do so or face some other obstruction, it is my intention to delete 1 and 2 from the relief that I am seeking.

HIS HONOUR:   Then you want damages against the Commissioner.  What is the cause of action?

MR GLENNAN:   The cause of action would be based inter alia but particularly on the Richard Walter judgment, which says that where an assessment is claimed and proven to be not bona fide – I think some of the Judges even use the phrase “abuse of power” – certainly the Judges have different ways of expressing it but the most common way of expressing it is that a taxpayer claims and proves outside the Part IVA procedures that an income tax assessment is not issued bona fide then he is entitled to have legal redress in the ordinary courts of law and the Commissioner’s privilege of producing the income tax assessment and relying on the provisions of the Act making it conclusive do not apply.

HIS HONOUR:   But none of this relief is aimed at that.

MR GLENNAN:   But it will be when I amend ‑ ‑ ‑

HIS HONOUR:   Richard Walter does not establish that the Commissioner is liable for damages.  Your problem in terms of your indebtedness to the Commissioner for an amount of tax and for costs and for interest results from that assessment which you have unsuccessfully tried to get set aside.  Now, when I look at this statement of claim and, in particular, when I look at the relief claimed in it, I cannot see anything there that solves your problem.

MR GLENNAN:   Your Honour, it is my submission that the income tax assessment in this case is illegal.

HIS HONOUR:   There is nothing in the relief sought that would establish that.

MR GLENNAN:   Your Honour – perhaps I have said two or three times – unless there is some order against me or some other fact obstructing me, the relief sought is intended to be radically revised and upgraded.

HIS HONOUR:   Well, do we come to this, Mr Glennan, that you do not wish to press the claims for relief sought in this existing statement of claim and what you are really seeking today is an adjournment of this application in order to enable you to amend the statement of claim?

MR GLENNAN:   Yes, your Honour, absolutely and item 3 in particular would be retained but there would be an expanded and more specifically directed claims for relief and that would not involve any revised versions of paragraphs 1 and 2.

HIS HONOUR:   Well, let me see what Mr McGovern has to say about your application for an adjournment on the basis that you wish to amend your statement of claim.  Yes, Mr McGovern.

MR McGOVERN:   Your Honour, in the absence of an articulation of what the terms of the amendment are, it is rather difficult to put a submission in relation to whether it is appropriate that the adjournment should be granted.  My submission is that on the basis of what has been put by Mr Glennan today in his submissions, the real difficulty that he faces is that even on the basis of an assertion relying upon Richard Walter, that he still confronts the decision of the Administrative Appeals Tribunal confirmed by the Full Court and confirming the assessment that has been raised by the Commissioner.  The public ruling would only apply in circumstances where there was a disconformity between the general law principle and the way in which the public ruling describes the tax should be paid.

HIS HONOUR:   So long as that assessment stands, at the moment I do not understand why it is necessary for you to get involved in the merits of the income tax dispute.

MR McGOVERN:   No.

HIS HONOUR:   The assessment is there.  As I recollect the way the Act operates, it operates on the factum of the assessment to produce certain consequences in relation to the liability of Mr Glennan.

MR McGOVERN:   Yes.

HIS HONOUR:   And that is why the proceedings that he took in the AAT and the Federal Court were aimed at setting aside the assessment, which at the moment stands.  The only question is whether or not Mr Glennan acknowledging that the statement of claim is defective in its form and that the relief claimed in the statement of claim is substantially misconceived, there may be some utility in the long run in giving him a last opportunity to do the best he can by repleading, and, of course, if the statement of claim as he repleaded it when subjected to the critical scrutiny which would be warranted in the circumstances did not disclose a cause of action, then it would be dealt with accordingly.

MR McGOVERN:   Yes.  Well, your Honour, that is a course that does commend itself except for saying that ‑ ‑ ‑

HIS HONOUR:   I take it there is no particular urgency about this.

MR McGOVERN:   No, I do not think so.  There should not be because the assessments themselves will operate.  That is a matter outside of any ‑ ‑ ‑

HIS HONOUR:   Well, interest is running against Mr Glennan.

MR McGOVERN:   Yes.

HIS HONOUR:   The case in one form or another has been around for a long time, even if it does seem to be flying in ever‑diminishing circles.

MR McGOVERN:   Yes, your Honour.  Well, your Honour, if the matter was dealt with on the basis of a formal application for leave to amend so that the matter came back in a timely fashion before the Court and we could then be in a position to ‑ ‑ ‑

HIS HONOUR:   I think it should come back before me, Mr McGovern.  I will deal with this matter.

MR McGOVERN:   Yes.

HIS HONOUR:   Very well then.  Mr Glennan ‑ ‑ ‑

MR GLENNAN:   Yes, your Honour.

HIS HONOUR:   ‑ ‑ ‑ I will note that you have indicated that you wish to amend your statement of claim in various respects.

MR GLENNAN:   Yes, your Honour.

HIS HONOUR:   During the time that you are given to do that, it will then be a matter for you to issue such section 78B notices as you think may be appropriate.  What I will indicate at this stage is that in the circumstances I am disposed to give you a second and final opportunity ‑ ‑ ‑

MR GLENNAN:   Thank you.

HIS HONOUR:   ‑ ‑ ‑ to produce a statement of claim in proper form and seeking relevant and appropriate relief. At the moment I am far from persuaded that this is a case that “involves a matter arising under the Constitution or involving its interpretation”, but in any event you will have the opportunity to issue section 78B notices.

MR GLENNAN:   Thank you, your Honour.

HIS HONOUR:   What will not happen, however, is that if, when the matter comes back before me, 78B notices have not been issued by you, there will be a further adjournment at that stage.

MR GLENNAN:   Yes, your Honour.

HIS HONOUR:   Just take a seat, Mr Glennan, and I will indicate for the record the stage that we have got to.

MR GLENNAN:   Thank you, your Honour.

HIS HONOUR:   I have before me today an application by the defendant in matter S65 of 2001 for summary dismissal or stay of the proceedings on the ground that they do not disclose a cause of action or that they represent an abuse of the process of the Court or are vexatious.  The plaintiff, who is representing himself, informed me that he acknowledges that there are a number of defects in the form of the statement of claim and, after some discussion, made an application for adjournment of today’s proceedings so that he might be given an opportunity to replead. 

Having regard to the long history of this matter, and in the light of the attitude adopted on behalf of the defendant, I am prepared to accede to that application.  I would indicate, however, to the parties, and in particular to the plaintiff, that at the end of the period of the adjournment, when the matter is listed again before me for further hearing, I would expect the application of the defendant to be able to be dealt with to finality on that occasion.

In the course of discussion with the plaintiff I pointed out to him that the relief claimed in the existing statement of claim appears inappropriate and does not seem to me to touch the substance of his real difficulty, which is that the result of the proceedings in the Administrative Appeals Tribunal and the Federal Court of Australia is that the income tax assessment issued against him some years ago by the defendant stands, with all the consequences that has for the application of the relevant tax legislation.

The plaintiff is no doubt aware from the written submissions that have been filed on behalf of the defendant that one of the principal difficulties which the plaintiff will have to face when the matter comes for further hearing is that applications for special leave to appeal to this Court against the decision of the Full Court of the Federal Court of Australia and the decision of Justice Kirby were discontinued by the plaintiff and one of the grounds upon which the defendant claims that these proceedings constitute an abuse of process is that, at least as presently framed, they appear to seek to relitigate the issues that were, or would have been, the subject of those applications for special leave to appeal.

Having said that, I will indicate that I will adjourn the matter for further hearing on a date to be fixed.  That will be a date fixed before me in the New Year and the Deputy Registrar will communicate with the parties as to a suitable date.  It will be a date during one week when I am rostered as the duty Judge.  I will reserve questions of costs in relation to today’s proceedings and I will certify for the attendance of counsel in chambers.

Is there anything else that needs to be attended to?

MR McGOVERN:   A timetable for the circulation of a draft of the proposed amendment.

HIS HONOUR:   Yes.  I will direct that any amended statement of claim upon which the plaintiff wishes to rely must be filed and served on or before Friday, 14 December 2001.

MR GLENNAN:   If the Court pleases.

MR McGOVERN:   If the Court pleases.

HIS HONOUR:   You, of course, Mr McGovern, will have leave to file any amended or additional written submissions that you want to file in response to that document.

MR McGOVERN:   Thank you, your Honour.

HIS HONOUR:   Very well.  Is there anything else I need to attend to?  All right.  I will adjourn.

AT 3.11 PM THE MATTER WAS ADJOURNED