IEL Finance Limited v Commissioner of Taxation - [2006] FCA 267

FEDERAL COURT OF AUSTRALIA
IEL Finance Limited v Commissioner of Taxation [2006] FCA 267
INCOME TAX – large corporate group – inter-group transactions undertaken over six consecutive fiscal years – transactions involving inter-group interest bearing borrowings principally by one group member and transfers of tax losses arising out of those borrowings to other group members – prior primary and appellate claims by proceedings in Federal Court made by borrowing member against the Commissioner for interest deductibility in respect of one fiscal year – decision at first instance and on appeal in relation to that fiscal year adverse to that single group member – findings made in context of those proceedings as to assessability to tax of that group member in respect of some transactions for differing fiscal years – after conclusion of single fiscal year further proceedings commenced by the same corporate group member together with other corporate group members in respect of transactions involving borrowings and transfers of tax losses in respect of antecedent as well as subsequent fiscal years to that resolved by Federal Court in favour of Commissioner – whether issue estoppel, Anshun estoppel and/or abuse of process should operate in favour of Commissioner in respect of deductions for losses of antecedent and subsequent fiscal years – meaning of privies – authority in Australian Courts of earlier decisions of Privy Council and House of Lords – summary judgment application of Commissioner granted
Income Tax Assessment Act 1936 (Cth) ss 51(1), 79E and 80G and Part VII
Tax Administration Act 1953 (Cth) Part IVC
Federal Court Rules O 20 r 2 subrule 2(1)(b) and (c) and Order 52B
Spassked Pty Ltd v Commissioner of Taxation (No. 5) (2003) 197 ALR 553 cited and applied
Spassked Pty Ltd v Commissioner of Taxation (2003) 136 FCR 441 cited and applied
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 applied
Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62 applied
Jackson v Goldsmith (1950) 81 CLR 446 referred to
Effem Foods Pty Ltd v Trawl Industries of Australia Pty Limited (1993) 43 FCR 510 referred to
Blair v Curran (1939) 62 CLR 464 applied
Rogers v The Queen (1994) 181 CLR 251 referred to
Trawl Industries of Australia Pty Ltd (in liquidation) v Effem Foods Pty Limited (1992) 36 FCR 406 referred to
Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 applied
Walton v Gardiner (1993) 177 CLR 378 applied
Sea Culture International Pty Ltd v Scoles [1991] 32 FCR 275 referred to
Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 discussed
Hoysted v Federal Commissioner of Taxation [1926] AC 155; (1925) 37 CLR 290 discussed
Henderson v Henderson (1843) 3 Ha 100 discussed
Murphy v Abi‑Saab (1995) 37 NSWLR 280 applied
Johnson v Gore Wood & Co [2002] 2 AC 1 cited
Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 applied
Taylor v Ansett Transport Industries Limited [1987] 18 FCR 342 cited
Mohamed Falil Abdul Caffoor, The Trustees of the Abdul Gaffoor Trust v Commissioner of Income Tax Colombo [1961] AC 584 discussed and distinguished
Broken Hill Proprietary Company Limited v The Municipal Council of Broken Hill (1925) 37 CLR 284 discussed and distinguished
The Council of the Municipality of Broken Hill v The Broken Hill Proprietary Company (1922) 30 CLR 400 discussed and distinguished
Chamberlain v Deputy Commissioner of Taxation (1987-1988) 164 CLR 502 discussed
Chamberlain v Commissioner of Taxation (1991) 21 FCR 21 cited
Federal Commissioner v Wade (1951) 84 CLR 105 referred to
Society of Medical Officer of Health v Hope [1960] AC 551 discussed and distinguished
Federal Commissioner of Taxation v A.N.Z. Savings Bank Ltd (1994) 181 CLR 466 referred to
Falk v Haugh (1935) 53 CLR 163 cited and discussed
Viro v The Queen (1978) 141 CLR 88 referred to
Orica Ltd v Federal Commissioner of Taxation (2001) 182 ALR 77 not followed
Queensland Trustees Limited v Commissioner of Stamp Duties (1956) 96 CLR 131 applied
Commissioner of Taxation v Dulux Holdings Pty Ltd (2001) 113 FCR 436 referred to
re Sharpe (1944) QSR 26 referred to
Cook v Cook (1986) 162 CLR 376 cited and discussed
Skelton v Collins (1966) 115 CLR 94 referred to
Hawkins v Clayton (1986) 5 NSWLR 109 referred to
Federal Commissioner of Taxation v Cappid Pty Ltd (1970) 127 CLR 140 distinguished
Saffron v Federal Commissioner of Taxation (1981) 30 FCR 578 discussed and distinguished
Arthur JS Hall & Co v Simons [2002] 1 AC 615 discussed
R v O’Halloran (2000) 36 ACSR 315 discussed
IEL FINANCE LIMITED, QUEENSLAND TRADING AND HOLDING COMPANY LIMITED AND SPASSKED PTY LIMITED v COMMISSIONER OF TAXATION
NSD 539 OF 2004
NSD 543 OF 2004
NSD 540 OF 2004
NSD 94 OF 2005
CONTI J
21 MARCH 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 539 OF 2004
NSD 543 OF 2004
NSD 540 OF 2004
NSD 94 OF 2005

BETWEEN:

IEL FINANCE LIMITED, QUEENSLAND TRADING & HOLDING COMPANY LIMITED AND SPASSKED PTY LIMITED
APPLICANTS

AND:

COMMISSIONER OF TAXATION
RESPONDENT

JUDGE:

CONTI J

DATE OF ORDER:

21 MARCH 2006

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The respondent Commissioner lodge with the Court and with the taxpayer applicants draft declarations and/or orders giving effect to the reasons for judgment within fourteen days, including orders as to costs.
2.The taxpayer applicants lodge with the Court submissions as to the operation and scope of those draft declarations and/or orders, to the extent of disagreement within a further fourteen days.
3.The respondent Commissioner lodge with the Court submissions in reply within a further seven days.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 539 OF 2004
NSD 543 OF 2004
NSD 540 OF 2004
NSD 94 OF 2005

BETWEEN:

IEL FINANCE LIMITED, QUEENSLAND TRADING & HOLDING COMPANY LIMITED AND SPASSKED PTY LIMITED
APPLICANTS

AND:

COMMISSIONER OF TAXATION
RESPONDENT

JUDGE:

CONTI J

DATE:

21 MARCH 2006

PLACE:

SYDNEY

REASONS FOR SUMMARY JUDGMENT
Outline of the context to the principal proceedings and to the Commissioner’s application for summary judgment

There is pending before the Court in its original jurisdiction four principal proceedings brought variously by the taxpayer applicants pursuant to Part IVC of the Taxation Administration Act 1953 (Cth) (‘the Administration Act’), whereby there is sought to be set aside determinations by the respondent Commissioner of Taxation (‘the Commissioner’) of objections lodged by the taxpayer applicants against assessments to income tax for the years of income ended 30 June 1991, 1993 and 1994, being questions said by the taxpayer applicants as ‘never previously… in issue’. The taxpayer applicants are respectively identified in these reasons as ‘IEF’ (for IEL Finance Limited), ‘QTH’ (for Queensland Trading & Holding Company Limited) and ‘Spassked’ (for Spassked Pty Limited). What was described by the taxpayer applicants as ‘the underlying issue now in contest’ was the deductibility of the interest expense incurred by Spassked under s 51(1) of the Income Tax Assessment Act 1936 (as amended) (‘the Tax Act’) in respect of the 1991, 1993 and 1994 fiscal years, being issues which they said ‘could not previously have been decided’. I have referred to QTH, IEF and Spassked in these reasons together as ‘taxpayer applicants’ to avoid confusion, given that the Commissioner is the applicant in the present interlocutory proceedings for summary judgment. Each of QTH, IEF and Spassked was at all material times a wholly owned subsidiary of Industrial Equity Limited (‘IEL’), a public company, and IEL in turn traced upwards corporately to the well known Adsteam, David Jones and Tooth & Co public companies.
The context to that so‑called underlying issue was that between 1 December 1987 and 28 June 1990, Spassked borrowed funds from IEF at interest, and claimed that as a result of the interest incurred on those loans during the 1988 to 1994 years of income inclusively, it made losses for income tax purposes during those years of income. The losses so claimed were progressively transferred by Spassked under s 80G of the Tax Act to other members of the IEL group up to and including the 1998 fiscal year. The Commissioner issued assessments against Spassked and the transferees of the tax losses which disallowed the deductions for the interest originally claimed to have been incurred by it on those borrowings, and consequently reduced the amount of those losses to nil. A critical factor, from the Commissioner’s perspective, was that the Federal Court, both at first instance (Spassked Pty Ltd v Commissioner of Taxation (2003) 197 ALR 553) and on appeal ((2003) 136 FCR 441), has already determined the unavailability of those losses or outgoings sustained or undertaken for income tax purposes in the context of Spassked’s challenge related to the fiscal year ended 30 June 1992. I will refer to those earlier proceedings at first instance and on appeal as the ‘earlier concluded Spassked proceedings’. The presiding judge at first instance was Lindgren J, and those presiding judges on the Full Court appeal were Hill, Gyles and Lander JJ. The present proceedings were not commenced until after the conclusion of the appellate proceedings in favour of the Commissioner. The taxpayer applicants described that taxation issue thus resolved at the instance of Spassked in relation to the 1992 fiscal year as having involved ‘a similar but essentially different question’ to those raised by the present proceedings, and not having given rise to an estoppel, and not involving an abuse of process, contrary to the Commissioner’s contentions.
In the context of each of the present four principal proceedings, framed by the applicant taxpayers by reference to the fiscal years 1991, 1993, 1994 and 1996 (see [5] below), the Commissioner seeks by amended notice of motion filed on 25 July 2005 in the present proceedings the following relief in summary:
(i)orders that each of the four present proceedings be summarily dismissed by reason of, or
(ii) orders that each of the proceedings be stayed generally in relation to, and
(iii)in any event declarations that the applicant taxpayers are estopped from advancing or relying on,
the facts and matters asserted and the contentions advanced in specified paragraphs of the taxpayer applicants’ amended statements of facts, issues and contentions filed in the present proceedings pursuant to Order 52B of the Federal Court Rules. Relief by way of the orders and declarations now sought by the Commissioner is purportedly based upon either one or both of Order 20 rule 2 and Order 29 of the Federal Court Rules, and/or the inherent jurisdiction of the Court. As to Order 20 rule 2, the Commissioner indicated reliance solely on sub‑rules 2(1)(b) and (c), upon the footing that the proceedings are an abuse of the processes of the Court or are otherwise frivolous or vexatious. The Commissioner acknowledged that the present application for summary dismissal of the proceedings now brought by IEF, QTH and Spassked is not intended to preclude the taxpayer applicants from contesting the quantum of additional or penalty tax imposed by the disputed notices of assessment. So much is said to involve very substantial issues for later determination.
The Commissioner’s case for the summary relief sought against each of the taxpayer applicants was advanced on the footing of issue estoppel, Anshun estoppel and/or abuse of process, by reason of the outcome of the earlier concluded Spassked proceedings in this Court arising out of the disallowance of objections to the income tax assessment issued to Spassked in respect of the year of income ended 30 June 1992. The Commissioner acknowledged that there has never existed any agreement to the effect that the outcome of those earlier concluded Spassked proceedings relating to the 1992 year of income would bind the taxpayer applicants to an outcome in favour of the Commissioner in relation for instance to the present appeals. The taxpayer applicants deny the availability of any such summary relief. They point to the circumstance that objections of the taxpayer applicants respectively involved in relation to those further fiscal years 1991, 1993, 1994 and 1996 had not been determined by the Commissioner at the time of conclusion of the Spassked 1992 fiscal year, and assert that ‘the issue for determination in each year is essentially different’. That assertion was based upon, or at least largely upon, what the taxpayer applicants assert to have been ‘repeatedly held by the Privy Council’, and upon ‘factual differences between the 1992 fiscal year and those fiscal years presently in dispute, and moreover that ‘save as to Spassked, the present applicants were not and could not have been party to the earlier proceedings’, and therefore it cannot be said that the taxpayer applicants’ claims should have been raised in the earlier proceedings if they were to be raised at all.
The issues arising for present determination were summarised by the taxpayer applicants’ so-called ‘Amended Statement of Facts, Issues and Contentions’ filed in the proceeding, involving in each case challenges to the correctness of assessments of the Commissioner to primary tax:
(i)as to proceedings NSD94 of 2005 whereof Spassked is the applicant, whether interest incurred by Spassked in the 1994 fiscal year was lawfully deductible by Spassked.
(ii)as to proceedings NSD539 of 2004 whereof IEF is the applicant, whether losses sustained by Spassked by way of interest expense and purportedly transferred to IEF in respect of the 1993 fiscal year were lawfully incurred for income tax purposes;
(iii)as to proceedings NSD540 of 2004 whereof QTH is the applicant, whether losses sustained by Spassked by way of interest expense and purportedly transferred to QTH in respect of the 1991 fiscal year were lawfully incurred for income tax purposes;
(iv)as to proceedings NSD543 of 2004 whereof IEF is the applicant, whether losses sustained by Spassked by way of interest expense and purportedly transferred to IEF in respect of the 1996 fiscal year were lawfully incurred for income tax purposes;
Put in terms of monetary significance, the findings sought by the respective taxpayer applicants are as follows:
(i)QTH seeks a finding that Spassked was entitled to a deduction of $774,746,526 for interest incurred on IEF loans for the 1991 year of income pursuant to s 51(1) of the Tax Act;
(ii) IEF seeks findings that:
· first, Spassked incurred a loss available under s 79E of the Tax Act for the 1993 year of income of $465,626,785;
· secondly, Spassked incurred a loss of $545,943,416 for the 1994 year of income;
(those findings sought by QTH and IEF turn on the issue as to whether Spassked was entitled to deductions pursuant to s 51(1) of the Tax Act for the interest it incurred on the IEF loans in prior years of income, including 1991, 1992, 1993 and 1994);
(iii)Spassked seeks a finding that it was entitled to an allowable deduction pursuant to s 51(1) of the Tax Act of $79,284,023 for interest incurred on the IEF loan in respect of the 1994 year of income.
The issues arise from complex circumstances which will be later explained and have been debated widely and in terms which need to be largely recorded. For that reason I will set out the submissions in particular of the taxpayer applicants, in many instances by way of citation of the terminology actually used.
The Commissioner contended that it was ‘clear’, from the manner in which the earlier concluded Spassked proceedings (that is for the 1992 fiscal year) were conducted by and between the Commissioner and Spassked, that ‘Spassked understood that the decision in those earlier proceedings would determine the question of deductibility of the interest in all the other years of income presently in issue’. In that regard, in each year of income involved, it was explained that interest was incurred in relation to the same set of loans by Spassked as borrower. Hence the present summary judgment applications were brought by the Commissioner upon the basis of abuse of process, and additionally or alternatively upon the basis of issue estoppel and Anshun estoppel. I have of course already identified the earlier concluded Spassked proceedings as related to the 1992 fiscal year, and which were resolved in favour of the Commissioner in the Federal Court, at first instance by Lindgren J on 14 February 2003, and on appeal by all members of a Full Federal Court comprising Hill, Gyles and Lander JJ on 8 December 2003. In the Full Court, the leading judgment was that of Hill and Lander JJ jointly, the outcome wherewith Gyles J agreed for relatively brief reasons of his own. A subsequent application by Spassked for leave to appeal to the High Court was dismissed.
Whether Spassked so ‘understood’ the significance of those earlier Spassked decisions to be that contended by the Commissioner was contested by the taxpayer applicants. So much would therefore need to be established by the Commissioner as a matter of inference arising in and from the events which happened in relation to the context to, the conduct of and the subsequent determination of the earlier concluded Spassked proceedings. The Commissioner drew attention, for one matter, to what appeared in the written submissions of Spassked’s counsel to the Full Court, as follows (inter alia):
‘At issue in this appeal is whether a deduction is allowable to Spassked under sec 51(1) of the Income Tax Assessment Act 1936… for interest incurred by it to IEF in the years of income ended 30 June 1988 to 1994’.
The Full Court at least implicitly acknowledged the significance of that description of the issue arising in the earlier concluded Spassked proceedings in the joint judgment of Hill and Lander JJ observing at [4] as follows:
‘The total of deductions claimed in the years of income 1988 to 1994 inclusive, by the various companies in the IEL Group, which deductions were disallowed by the commissioner, totalled $6,527,082,709.00. The present appeals will resolve not only the issues of deductibility which they raise of amounts disallowed to the three taxpayers which are the appellants in them, but also the deductibility of losses claimed by the other companies in the IEL group.’
My description of the specific issues arising in the proceedings the subject of the present strike-out application relate to losses sustained by Spassked within those six years of income ended 30 June 1988 to 30 June 1994. The present case of the Commissioner was that deductibility of interest incurred by Spassked on its IEF borrowings for each of the fiscal years 1988 to 1994 was resolved and determined against Spassked and in favour of the Commissioner in the earlier concluded Spassked proceedings, and accordingly the taxpayer applicants were seeking impermissibly to relitigate that issue.
The foregoing observation of the joint judgment of the Full Court in Spassked accorded with that which elsewhere appeared in the Full Court’s reasons, as well as the reasons at first instance to which I have elsewhere made reference. Although it was mutually accepted by the parties that there was no formal agreement that the outcome of the earlier concluded Spassked proceedings would operate or prevail as well in relation to other fiscal years of relevance in the present dispute, the Commissioner asserted that there existed at all material times a mutual understanding that so much would be the case. The Commissioner’s contention, as I have foreshadowed to similar effect, was that ‘[i]t is clear from the manner in which it conducted the earlier proceedings that Spassked understood that the decision in those proceedings would determine the question of deductibility of the interest [commitment or liability] in all the years of income, including the years of income in these proceedings’. In that regard, in the Commissioner’s Statement of Facts Issues and Contentions filed in the earlier concluded Spassked proceedings, the following appeared:
‘11.During the period of 1 December 1987 to 30 June 1992, interest expense was incurred by Spassked and accrued due to IEF on the borrowed amounts outstanding. These interest expenses were capitalised and debited in the books of IEF (and, conversely credited on the books Spassked) to the loan account, thereafter themselves, attracting further interest.
12.In the period from 1 July 1987 to 30 June 1994, (the “Period”) the following total amounts of interest were capitalised in the books of account:

Year Ended Interest ($)

30 June 1998 113,184,428

30 June 1989 293,220,636

30 June 1990 658,487,229

30 June 1991 774,746,526

30 June 1992 888,165,526

30 June 1993 465,626,741

30 June 1994 79,284,023

TOTAL 3,272,715,109

13.The interest expenses incurred by Spassked during the Period were incurred for the purposes of furthering its present and prospect of income producing activities, being the acquisition and holding of shares in GIH in respect of which Spassked has received and anticipates receiving in the future, substantial assessable income in the form of dividends.
14.The interest expenses incurred by Spassked and claimed as an allowable deduction in each of the years of income during the Period returned by IEF as assessable income in the same years of income and treated as such by the respondent.’

It appears that the reason why the duration of the years of income deductibility of interest at the instance of Spassked in the first place was specified by the reasons for judgment in the earlier Spassked proceedings in relation to the 1988 to 1994 fiscal years was explained by the primary judge (at [27]-[28]) as follows:
‘[27]In 1994 the Spassked structure as “wound up” when Spassked borrowed from GIH, and to a small extent from IEL, in both cases interest free, and used the borrowed funds to pay out its debt to IEF in full, that is to say, to pay both the capital sums it had borrowed from IEF and the capitalised interest on its borrowings. From that time, GIH was Spassked’s creditor in place of IEF, but, unlike IEF, was not charging Spassked interest.
[28]The parties having an interest, in practical terms, in the outcome of the three proceedings are certain banks as creditors of the members of the Adsteam Group, and, of course, the commissioner.’
The reference above to ‘GIH’ is to Group Investment Holdings Pty Ltd, a member of the subject corporate group referred to in these reasons immediately below.
Further reasons for judgment of Lindgren J at first instance contained the following findings at [193]-[194]:
‘SPASSKED’S GENERAL COURSE OF BORROWING FROM IEF
[193]… the last of Spassked’s borrowings from IEF occurred on 28 June 1990. It was on the total amount borrowed, $3,737,142,866 down to that date plus subsequently accrued and capitalised interest, that the 1992 interest of $888,165,526 must have been calculated. The parties proceeded on the basis that no distinction was to be drawn between Spassked’s various borrowings from IEF and investments in GIH, or between the various investments by GIH in the Subcos, all over the years 1988-90, or between the seven annual amounts of capitalised interest for the years 1988-94… Accordingly, I need not distinguish between the various sums borrowed on which the interest accrued, or between the uses to which those sums were put.
[194]Nor is it suggested that there was any relevant change of circumstances, including a change in the motivation or the subjective purpose of the directors of Spassked, throughout the 3 years of income in which the borrowings were made and the borrowed amounts invested in GIH.’
The reference above to ‘Subcos’ was to an abbreviation adopted for the IEL group subsidiary companies in whose favour GIH in turn placed group funds for purported investment.
Those findings of the primary judge were made in the context of other findings on his part, which included the following:
‘[184]The same individuals were the directors of IEF, Spassked, GIH and many of the Subcos. All those companies were members of the IEL Group. In the years of income 1988 to 1990 Spassked borrowed from IEF, on 10 occasions, amounts totalling $3,737,142,866 at interest, and invested in GIH without any return other than one unfranked dividend of $29,308,093 paid on 30 June 1990. Over the succeeding years of income 1991 to 1994 the amounts so borrowed were allowed to remain owing, accruing interest without any return other than one unfranked dividend of $14,654,046 paid on 8 October 1991. The interest for 1992 of $888,165,526 was one of seven annual amounts of capitalised interest totalling $3,272,715,111 which Spassked incurred to IEF over the years 1988 to 1994… on the borrowings of $3,737,142,866... Although it used nearly the whole of this amount… in subscribing for shares in GIH, Spassked received two comparatively miniscule dividends totalling only $43,962,139.
[185]I am not prepared, on the basis of these circumstances alone, to conclude that it is an adequate description of the interest totalling $3,272,715,111 and therefore of the interest of $888,165,526 incurred in the 1992 year, to say that it was incurred in gaining or producing dividend income from GIH, or that it was necessarily incurred in carrying on a business for the purpose of doing so. The disproportion in the present case is of the kind that their Honours had in mind in the passage from Fletcher (his Honour referring thereby to Fletcher v Commissioner of Taxation (1991) 173 CLR 1 at [17]-[19])).’
Moreover in addition to what I have already extracted, the joint reasons for judgment of Hill and Lander JJ recorded the following observations at [77], [110]-[111] and [113]:
‘[77]… Income tax is an annual tax. Hence the question whether interest was incurred in gaining or producing assessable income or in carrying on a business the purpose of which was the gaining of assessable income is a question which is required to be determined from year to year. The present case was argued and determined by the learned primary judge on the basis that the relevant facts were those which existed at the time the Spassked proposal was implemented. It seems to have been common ground between the parties that there was no relevant factual change in any relevant year of income. We are content to adopt the same course while noting that had there been a relevant factual change so that Spassked would no longer be precluded from deriving assessable income indefinitely the outcome would then be different.
…
[110]The evidence of these two witnesses leads clearly to the conclusion that the interest incurred was not, in any year of income, incurred in gaining or producing assessable income, but rather that it was a part of the structure planned that in the foreseeable future Spassked would not, deliberately, derive assessable income. Further, it leads to the conclusion that any plan to wind up the structure and thus bring about the result that thereafter Spassked would derive assessable income was only fleetingly considered, if at all.
[111]It demonstrates, that far from being a case where interest was incurred on a loan to acquire shares which it was hoped would be dividend producing in the future (where the interest would be prima facie deductible), this was a case on its own facts, those being that interest was incurred on a loan to acquire shares where, in all the years of income in question and for the foreseeable future from the time the structure was established steps would be taken to ensure that the shares acquired would not produce anything but a nominal amount of assessable income.
…
[113]… the present was a case where the proposal was that Spassked should be deliberately non-income producing for the foreseeable future. Far from it being wrong in law to have regard to the evidence to which reference has already been made that evidence makes it clear that far from there being an “expectation” or even hope that the shares in Spassked would be income producing the proposal was designed to ensure and its implementation did ensure that at no relevant time could it be said that Spassked incurred in the years of income interest on moneys used by it to acquire shares in the course of any activity carried on by it in the course of gaining or producing assessable income. Rather the occasion of each outgoing of interest was to be found in those shares deliberately being non-income producing.’
The ‘two witnesses’ referred to in [110] extracted above were Mr Daniels and Mr Cottam, each being senior executives of IEL.
In his reasons for judgment for likewise dismissing the Spassked appeal, Gyles J expressed his agreement with the conclusion of Hill and Lander JJ that the findings by Lindgren J were ‘open to him and… not affected by any operative error’. His Honour continued at [127]-[128] as follows:
‘[127]Some business decisions are good, some are bad. Indeed, with the benefit of hindsight some may be seen as negligent or even profligate. The point may be made by considering the arm’s length external borrowing by the IEL Group to make the corporate acquisitions in question. Some of those acquisitions might have been successful and some might have failed. In hindsight, some may have been doomed to failure. However there would be little doubt as to the deductibility of interest on all of those borrowings.
[128]The same principle does not apply to purely intra-group arrangements with no external aspect. All of the relevant arrangements were between companies with the same beneficial ownership. Many of the companies involved, including Spassked, had no external role at all. The arrangements involving those companies were inherently variable at the will of the ultimate board of directors. They do not reflect the exercise of business judgment in the relevant sense. Thus, the requisite connection or relationship between the outgoing and the earning of assessable income is not to be inferred but must be positively established. The trial judge found that that had not been done. I agree. Further, the inherently variable nature of the arrangements explains why the one error by the trial judge was of no consequence in the result.’
As I have foreshadowed, each of the taxpayer applicants in the Part IVC proceedings the subject of the Commissioner’s present application for summary judgment was at all material times a wholly owned subsidiary of IEL, as were a large number of other subsidiary companies, IEL being at one time a listed public company. If I may be repetitive by reason of the complexity of the context to the present strike‑out proceedings, those earlier Spassked proceedings, which concluded in consequence of Spassked’s unsuccessful application for special leave to appeal to the High Court, related solely to the fiscal year ended 30 June 1992, whereas the issues the subject of the present proceedings concern the other fiscal years prior and following 1992 which I have identified. Taking as a starting point my outline of the substance of the present proceedings earlier described, the implications of that outline may be further described in the following terms:
(i)whether IEF and QTH are entitled to deductions under s 80G of the Income Tax Assessment Act 1936 (Cth) (as amended) (‘the Tax Act’) for losses transferred by Spassked in relation to the years of income ended 30 June 1991, 1993 and 1996;
(ii)whether the Spassked is entitled to deductions under s 51(1) of the Tax Act for interest incurred by it in favour of IEF in relation to the years of income ended 30 June 1991, 1993 and 1994; and
(iii)the liability of each of those three applicants to penalties by way of additional tax under Part VII of the Tax Act, in the context of the Commissioner’s negative decision as to remission of those penalties.
From the outset of the present strike‑out proceedings, the Commissioner emphasised that the test of deductibility in each year of income, at least of present relevance, turned on the purpose of the borrowings and the use to which the borrowed funds were put, the decisions in Spassked at first instance and on appeal being summarised by the Commissioner to the effect that the borrowings were not made at any time material to Spassked for the purpose of deriving assessable income, and further that in none of the successive fiscal years in which it incurred an interest expense did Spassked use the borrowed funds in any activity carried on in the course of gaining or producing assessable income.
In broad summary, the Commissioner described the complex bases for the present application for summary judgment as follows:
(i)between 1 December 1987 and 28 June 1990, Spassked borrowed substantial funds from IEF at interest, and as a consequence of the interest thereby incurred during the fiscal years 1988 to 1994, Spassked incurred losses which it claimed as deductions for income tax purposes pursuant to s 51(1) of the Tax Act;
(ii)the losses for taxation purposes so allegedly incurred by Spassked were progressively transferred by Spassked in particular to IEF and QTH (and also to further members of the IEL corporate group in circumstances not apparently here falling specifically for consideration);
(iii)the Commissioner issued in due course assessments of income tax against Spassked, and correspondingly against the corporate group transferees of the losses, which involved the disallowance to Spassked of deductions for the interest incurred by Spassked on its relevant borrowings, and hence the reduction of such tax losses as were transferred to nil;
(iv)the Federal Court at first instance and on appeal resolved in favour of the Commissioner the issue as to deductibility of interest in respect of the 1992 fiscal year sought by Spassked, on the basis that interest on the relevant loans made to Spassked was not incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.
In that regard, it was emphasised that in the course of the earlier concluded Spassked proceedings, there was adduced extensive evidentiary material, both testamentary and documentary, in relation to the events and activities concerning the entirety of those fiscal years 1988 to 1994 inclusive, the relationship between the incurrence of the interest and the business activities of Spassked and its derivation of any assessable income, and the transfer of the tax losses by Spassked to other corporate group members between 1990 and 1998 including IEF and QTH, and that therefore the Commissioner should not be vexed with having to undertake the expense and effort, and suffer the loss of time, involved in what would be repetition of the conduct of the earlier concluded Spassked proceedings.
The contextual circumstances established in the earlier concluded Spassked proceedings and the Commissioner’s response in outline to the present Part IVC proceedings of the applicant taxpayers
At first instance in the earlier Spassked proceedings relating to the 1992 fiscal year, Lindgren J made comprehensive findings which may be summarised as follows:
(i)by late 1986, the shareholding and debt lines within the IEL Group were complex, partly because of a group policy adopted as from 1978 that any new investment should be acquired by a specific subsidiary dedicated to that purpose; this practice led to a proliferation of IEL subsidiaries which was exacerbated by the IEL takeover of other corporate groups having already complex structures;
(ii)there was created so-called ‘dividend traps’ within the IEL Group, arising from the circumstances that intermediate holding companies within the Group had substantial interest commitments in relation to borrowings, against which dividends receivable had to be applied before the amount of any profit or loss for that subsidiary could be determined; one so-called ‘potentially damaging’ consequence for the IEL Group arising from the corporate structure thus in place was that the free flow of dividends from subsidiaries up to IEL (being then a listed public holding company) was adversely affected; hence if the taxable income otherwise of any such recipient subsidiary company would be less than the amount of the dividend receivable, the remaining part thereof otherwise available for rebate under s 46 of the Tax Act would be ‘lost’, and that amount of dividend would be ‘trapped’ within the recipient company and its qualification for a s 46 rebate in tax foregone;
(iii)by late 1987, a new corporate structure was created within the IEL Group in which Spassked became centrally involved as a Group member; changes were made in order to obviate the fiscal disadvantage involved in the group corporate restructure whereby two IEL subsidiaries, one being Spassked and the other GIH, were interposed between IEL and IEF on the one hand, and the relevant investment subsidiaries (so-called Subcos) on the other; Spassked became the borrowing member of the Group, and GIH an intermediate parent company within the Group;
(iii)IEL moreover became the owner of the issued shares in Spassked as well as in IEF, and IEL and Spassked became the owners of the following issued shares in GIH with the following consequences; Spassked held the A class shares, which entitled it to franked and unfranked dividends, full voting rights and participation in any surplus on a winding up; IEL held the B class shares, which entitled it to franked dividends only, limited voting rights and no right to participate in any surplus on a winding up;
(v)between 30 December 1987 and 28 June 1990, Spassked borrowed principal moneys from IEF at interest, and claimed that as a result of the interest incurred by it on the IEF loans, at least during the 1988 to 1994 years of income inclusively, it sustained losses for tax purposes during those years of income; those losses were progressively transferred by Spassked to other members of the IEL Group, pursuant to s 80G of the Tax Act, up to and including the 1998 fiscal year;
(iv)Spassked used the loan funds from IEF to capitalise GIH, and in the meantime deposited funds with IEF at interest; GIH in turn subscribed for shares in the Subcos which, in turn, acquired further investment group subsidiaries.
Those inter-company movements were diagrammatically represented in the reasons for judgment of the Full Court by annexure ‘A’ thereto (headed ‘Pre-Spassked Structure’) and annexure ‘B’ thereto (headed ‘Post-Spassked Structure’).
Lindgren J summarised the Spassked structure as ‘tax neutral’, because the interest claimed by Spassked as a deduction was shown as assessable income in the hands of IEF, and if that had not been so, IEF would have suffered losses which it, instead of Spassked, could have transferred to other members of the Industrial Equity Group. His Honour concluded however that the interest expense incurred by Spassked in respect of the year ended 30 June 1992 was not a loss or outgoing incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for any such purpose, and was thus not deductible under s 51(1) of the Tax Act, and as I have already further recorded, Spassked’s appeal to a Full Federal Court from his Honour’s decision at first instance was dismissed, as was the subsequent application made by Spassked to the High Court for special leave to appeal. Following the resolution of the earlier Spassked proceedings by the Federal Court in 2003 in relation to the 1992 income year, the Commissioner determined, by way of disallowance, the objections to tax of the other IEL Group companies involved in the corporate restructure and other inter‑company arrangements, being partly the present taxpayer applicants, and hence did so in relation to years of income additional to the 1992 income year. It is in the context of the present proceedings that the taxpayer companies IEF, QTH and Spassked have sought to propound distinctions from the concluded Spassked proceedings, and to do so by reference to the circumstance that the latter related to the determination of assessable income concerning Spassked in relation to the 1992 fiscal year, whereas the present proceedings relate to the determination of assessable income in relation to different fiscal years.

At the forefront of the Commissioner’s present case is the proposition that there exists sufficient commonality between the issues raised and determined in the earlier Spassked proceedings and the issues arising for determination in the present proceedings. The Commissioner’s contention is that in the case of each fiscal year presently in issue, as well as in the case of the 1992 fiscal year, interest was incurred on the same set of borrowings, and the Federal Court has determined, at first instance and on appeal in relation to the 1992 fiscal year, that those borrowings were not made in the course or for the purpose of derivation of assessable income, and further that in none of the subject fiscal years presently in dispute did Spassked use the borrowed funds in any activity undertaken in the course or for the purpose of gaining or producing assessable income. As a consequence, the Commissioner submitted that the taxpayer applicants (being of course respondents to the present strike‑out proceedings brought at the instance of the Commissioner) cannot succeed unless they are able to persuade the Court that the conclusions of the Federal Court in the earlier concluded Spassked proceedings were incorrect.
I should also record that the Commissioner provided, by way of annexures to written submissions in chief, first an eight page summary setting out facts pleaded in the taxpayer applicants’ amended statements of facts, issues and contentions that were asserted to be at least largely the subject of findings of the primary judge and of the Full Court in the context of the earlier Spassked proceedings, and secondly, a seven page summary comprising what was described as facts pleaded by each taxpayer applicant inconsistently with or contrary to facts already found by the Federal Court in the earlier Spassked proceedings. The taxpayer applicants have not exposed any material misstatement in respect of that restatement of facts and findings. The Commissioner pointed out that each taxpayer applicant has pleaded that it was the intention of the Adsteam Group (and thus of course the IEL Group) that GIH would pay dividends to Spassked at the earliest possible time after the dividend trap affecting Spassked would be removed, but the Commissioner emphasised that the contention that there was an intention and expectation that GIH would ever pay dividends to Spassked was rejected ‘squarely’ by both the primary judge and by the Full Federal Court. Instead it was found, as a fact, so the Commissioner emphasised, that there was no plan or intention to remove the dividend trap in relation to Spassked. The Commissioner emphasised moreover that the explanation provided by Mr Ryan, an executive of Bankers Trust, for the non‑payment of dividends to Spassked, as to ‘potential and threatened tax liabilities’, was rejected by this Court in the earlier Spassked proceedings, and further that nowhere did Mr Ryan allege in his affidavit that the intentions and expectations of the controllers of the Adsteam Group should be attributed to IEL, Spassked and GIH. Nor did that allegation, so the Commissioner further pointed out, appear in the affidavits of Mr Daniels (whom I have earlier identified), filed in the earlier concluded Spassked proceedings. Moreover the Commissioner emphasised that the primary judge found that so long as Spassked was incurring an interest liability to IEF, or had undistributed profits attributable to it, Spassked would not receive dividends from GIH. Yet those losses, his Honour further found, continued to be utilized within the IEL group until 1998.
In the result, the taxpayer applicants as respondents to the present strike-out proceedings were required to address a number of findings at first instance, and confirmed by the Full Court on appeal, made in the context of resolution of the evidentiary issues the subject of the earlier concluded Spassked proceedings, being findings which bore directly as well as indirectly on the case raised and pleaded by the taxpayer applicants in the present proceedings. The taxpayer applicants were thus confronted with the present case for summary judgment framed on the basis of the doctrines as to issue estoppel, Anshun estoppel and abuse of process. To meet that case, the taxpayer applicants undertook extensive recourse in particular to authority of the Privy Council and the House of Lords for what was contended to constitute a long established exclusion of those doctrines operation in circumstances such as here involved. Unavoidably these reasons have rendered it to be expedient to extract a great deal of judicial dicta in order to adequately portray the thrust of the authorities respectively relied upon by both parties.
Some threshold principles submitted by the respective parties to be applicable to the Commissioner’s present application for summary dismissal or permanent stay of proceedings
The taxpayer applicants drew attention to the principle that any summary dismissal or permanent stay of proceedings must be exercised with ‘exceptional caution’ and only in ‘exceptional circumstances’. So much may be readily accepted. I was referred to the re‑statement of principles appearing in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, and in particular to what Barwick CJ emphasised at 129, as follows:
‘… the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action – if that be the ground on which the court is invited … to exercise its powers of summary dismissal – is clearly demonstrated. … [S]ome of these expressions [of the test] occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same.’
The taxpayer applicants emphasised the operation of those principles where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact, thereby referring to the earlier authority of Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62 at 91, where Dixon J (as he then was) explained the operation of relevant principles in the following terms:
‘A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner … The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.’
The question here arises as to whether those long established principles are satisfied by the Commissioner’s present application for summary judgment, where the Commissioner has already established in the earlier concluded Spassked litigation, both at first instance and on appeal to a Full Federal Court, that interest payable by Spassked on the IEF loans was not deductible, with adverse consequences as to transfer of purported tax losses, and where the High Court has refused the grant of special leave to appeal from the Full Federal Court’s decision, thereby leaving intact the decisions of this Court below, but nevertheless where that outcome was established in context of an appeal related only to the 1992 fiscal year, whereas the present proceedings commenced by IEF, QTH and Spassked relate of course to the different, albeit proximate, fiscal years I have identified.
Upon that footing as to differing fiscal years presently in dispute, being fiscal years exclusive of the 1992 fiscal year the subject of the earlier concluded Spassked proceedings, the taxpayer applicants have sought in the context of the present Part IVC proceedings the resolution in their favour of what they describe as ‘a question which has not, and could not have been resolved in any earlier proceedings’, for the reason that:
(i)the issues for determination raised in each of the present proceedings involve the correctness of the Commissioner’s decisions to disallow the objections of the taxpayer applicants, in the case of QTH in relation to the years of income ended 30 June 1991, in the case of IEF in relation to the years of income ended 30 June 1993 and 1996, and in the case of Spassked in relation to the year of income ended 30 June 1994, involving thereby questions never previously in issue;
(ii)when the previous Spassked proceedings were contested and resolved by this Court, both at first instance and on appeal, in relation to the year of income ended 30 June 1992, those decisions of the Commissioner here under challenge had not been made;
(iii)the underlying issue presently in contest relates to the deductibility of the interest expense of Spassked incurred in respect of the 1991, 1993 and 1994 fiscal years, whereas the only previous contest as to deductibility of the interest had been that incurred by Spassked in the 1992 fiscal year;
(iv)the deductibility by Spassked of interest incurred in respect of the 1991, 1993 and 1994 income years could not previously have been in issue or decided.
It may be seen, from that explanation of questions arising, that losses transferred from Spassked to IEF had implications extending forward to the year 1996 as well as backwards to 1991, but that what I might describe as the central focus of the present proceedings was upon Spassked in relation to the 1991, 1993 and 1994 fiscal years, whereas of course that fiscal year of central focus the subject of the earlier concluded Spassked proceedings was 1992. The Commissioner’s case was however that the previous proceedings, contested ‘all the way’ by Spassked in relation to the 1992 year income year to the stage of its unsuccessful application for special leave to appeal to the High Court, were mutually understood to resolve all outstanding tax disputes such as the foregoing involving IEL subsidiaries, as evident from the context thereto, and hence the Commissioner’s present strike‑out application upon the footing of abuse of process.
The taxpayer applicants therefore asserted a ‘right to have the issues tendered for resolution in the present proceedings determined by a hearing on the merits of their case’, and that they were ‘not to be denied that right on the basis of an estoppel in respect of a similar but essentially different question’, and further that the pursuit of that right ‘… does not and cannot raise any question of abuse of process’. Implicitly, so the taxpayer applicants’ case ran, such merits would or may well produce a different result to that sustained by Spassked (along with IEL and Stanley Park Pty Ltd as co-applicants), in the earlier Spassked proceedings in respect of the 1992 fiscal year. However, precisely what constituted such ‘merits’ was never seemingly identified in substance or at all, much less particularised in detail, by way of resistance to the Commissioner’s present strike-out application, other than bottom line of the taxpayer applicants as to different fiscal years of income to the 1992 year of income.
At the outset of their submissions in opposition to the present strike‑out application, the taxpayer applicants cited Coke upon Littleton, (at s 365(b)), for the threshold observation that estoppels may be characterised as ‘odious’, being an authority described by the Commissioner understandably as ‘ancient’. The taxpayer applicants also cited Jackson v Goldsmith (1950) 81 CLR 446 at 458 (per McTiernan J) for the proposition that, estoppels are viewed ‘unfavourably by the Courts, as having the effect of excluding the truth’, though in a context where his Honour was seeking only to establish the need for an asserted estoppel to be based on very clear and precise evidentiary material. The taxpayer applicants asserted moreover that the Court’s power to strike out is discretionary in its exercise, and is to be undertaken with ‘great caution’, citing Effem Foods Pty Ltd v Trawl Industries of Australia Pty Limited (1993) 43 FCR 510 at 532 (per Burchett J as a member of a Full Court), where his Honour was speaking of the exercise of ‘discretion to stay proceedings as an abuse of the process of the Court, whether on the ground of [res judicata] or on any other ground’. Reference was also made to what Dixon J (as he then was) described as the distinction between res judicata and issue estoppel, in the context of his Honour’s reasons for judgment in Blair v Curran (1939) 62 CLR 464, as follows (at 532):
‘The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order’.
The applicant taxpayers explained, in a context involving purported reference to those authoritative statements, that in England, res judicata and estoppel per rem judicatam are used generically to include ‘cause of action estoppel’ and ‘issue estoppel’, whereas the use in Australia of the former does not encompass issue estoppel, but refers only to cause of action estoppel, being cases where a cause of action has merged in a judgment; that distinction is therefore to be borne in mind when considering the operation of English authorities. In the present strike‑out application of the Commissioner, the Commissioner did not, to my understanding, place reliance on the operation of res judicata in the context of Australian general law.
Attention was further drawn by both parties to Rogers v The Queen (1994) 181 CLR 251 at 261, where Brennan J observed that:
‘Although merger provides a distinction between res judicata and issue estoppel, both doctrines bind the parties and their privies to accept a final judicial decision of a question between the parties as correct’.
The juridical notion of ‘privies’, or more perhaps precisely, privity in interest, was examined in Effem at first instance by Gummow J (Trawl Industries of Australia Pty Limited (in liquidation) v Effem Foods Pty Limited (1992) 36 FCR 406). At 413-414, his Honour made the threshold observation that ‘… the doctrine of privity in interest… operates in the same way upon the doctrines of cause of action estoppel and issue estoppel… [t]he basic requirement of a privy in interest [being] that the privy must claim “under or through” the person to whom he is said to be a privy… [t[he necessary identity in interest may arise from a successive relationship in a temporal sense…, when finding the necessary privity, in a succussive or mutual relationship, the courts have looked to legal rather than economic indicia as the criterion of operation of the privity doctrine’. One example to which his Honour referred (at 414) was of holders of successive interests in the same fund, notwithstanding that they had become members of the fund subsequent to dismissal of proceedings brought by other beneficiaries. His Honour found that the applicant for relief in Effem ‘… was not claiming under or in virtue of any legal right of the other applicants in the present proceedings’. The taxpayer applicants’ contended that there was an absence of satisfaction in the circumstances of this case of the requirement of privity of interest in relation to the respective claims of IEF and QTH on the one hand and that of Spassked on the other, implicitly notwithstanding that each was a wholly owned subsidiary of IEL, and moreover traced their ultimate corporate membership to the Adsteam Group. In any event, the taxpayer applicants contended in written submissions in reply as ‘not disputed’ that ‘[i]f Spassked and IEL are not estopped from pursuing appeals in other years that their privies cannot be estopped’, but whether the converse of that proposition is true may be another matter, depending upon the scope of the doctrinal notions of privy and privity of interest.
The Commissioner contended that for the taxpayer applicants to seek to have the Court redetermine the complex issues concerning the purpose of the subject borrowings, and as to whether the borrowed funds were used in an activity or activities carried on by the taxpayer applicants in the course of gaining or producing assessable income, being issues said by the Commissioner to be already resolved adversely to Spassked in the now concluded proceedings brought by Spassked against the Commissioner, albeit resolved specifically in the context of proceedings related to the 1992 fiscal year, exemplified an abuse of process. The Commissioner moreover ‘demurred’ to what was described as the taxpayer applicants ‘… seeking impermissibly to relitigate the issue’ as to deductibility of the interest expenses incurred by Spassked on the IEF loans in relation to years of income additional to 1992, contending that issue as having been ‘decided against Spassked and in favour of the [Commissioner] in the earlier Spassked proceedings …’, in the context specifically of the 1992 year of income.
Primary reliance was placed by the Commissioner, in support of the strike‑out application, upon the broad basis of breach or abuse of process. I was referred to a number of well known authorities, in particular to what appears more recently from Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699, especially at [66]-[67], where French J discussed that broader doctrinal basis for obviating attempts to re‑litigate in the following terms:
‘66The doctrines of res judicata, issue estoppel and Anshun do not exhaust the circumstances in which a proceeding may be regarded as amounting to an abuse of process by way of attempted relitigation of a dispute already judicially determined. As another Full Court said in Coffey v Secretary, Department of Social Security (1999) 86 FCR 434 (at 443): “An attempt to litigate in the Court a dispute or issue which has been resolved in earlier litigation in another court or tribunal may constitute an abuse of process even though the earlier proceeding did not give rise to a res judicata or issue estoppel …”
67The considerations of public policy which underline res judicata and issue estoppel help to define the scope of abuse of process by relitigation generally. As Lord Hoffman said in Arthur JS Hall & Co v Simons [2000] 3 WLR 543 at 572, the underlying policies are that a defendant should not be troubled twice for the same reason and that there is “a general public interest in the same issue not being litigated over again”. Lord Hoffman observed that the second rationale could be used to justify the extension of the rules of issue estoppel to cases in which the parties are not the same but the circumstances are such as to bring the parties within the spirit of the rule…
…
69The public interest considerations underlying the power of courts to stay or dismiss the proceedings for abuse of process extend to preventing the waste of judicial resources and their use for purposes unrelated to the determination of genuine disputes.’
Earlier in Walton v Gardiner (1993) 177 CLR 378, the doctrine was outlined by Mason CJ, Deane and Dawson JJ at 393 as follows:
‘… proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings.’
Yet earlier still, French J in Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279 said:
‘Underlying the power that the courts have assumed to stay or dismiss proceedings for abuse of process is a policy of preventing waste of judicial resources and their use for purposes unrelated to the determination of genuine disputes.’

On the footing of abuse of process, the Commissioner emphasised that in the earlier concluded Spassked proceedings, the circumstances surrounding and relating to the making of the IEF loans to Spassked, the incurrence of interest by Spassked on those loans between the fiscal years 1988 and 1994 inclusive, the relationship between that incurrence of interest and the business activities of Spassked and any derivation of assessable income by Spassked, and the transfer of the losses by Spassked to other members of the corporate group (including IEF and QTH) between 1990 and 1998, were each the subject of extensive evidence, cross‑examination, submissions, and consideration, as well as the ultimate determinations by the Federal Court at first instance and on appeal. The Commissioner further asserted that Spassked had represented to the Full Federal Court, in the course of the Spassked appeal, that the issue there involved the subject of whether interest incurred by Spassked on its borrowings from IEF in the period of time between 1988 and 1994 was deductible.
Moreover in upholding the decision of Lindgren J in Spassked at first instance, the Commissioner also emphasised that the joint reasons for judgment of Hill and Lander JJ in the Full Court had concluded at [113] that the occasion of each outgoing of interest was to be found in those shares being deliberately non income producing. If I may be repetitive, their Honours there explained that ‘… the evidence … makes it clear that far from there being an “expectation” or even hope that the shares in Spassked would be income producing, the proposal was designed to ensure and its implementation did ensure that at no relevant time could it be said that Spassked incurred in the years of income interest on moneys used by it to acquire shares in the course of any activity carried on by it in the course of gaining or producing assessable income’. In his brief reasons in the Full Court for reaching consistently the same conclusion as Hill and Lander JJ, Gyles J identified the absence, in the circumstances of the earlier concluded Spassked proceedings, of the existence there of ‘a bona fide business expense having a connection with or relation to potential assessable income, even if the outcome is uncertain or even speculative…’
It was asserted accordingly by the Commissioner that if the taxpayer applicants were to be permitted to raise for determination in the present proceedings what the Commissioner described as ‘the same issues that were raised, considered and determined in the earlier Spassked proceedings (namely what was the purpose of the borrowings and whether the borrowed funds were used in an activity carried on in the course of gaining or producing assessable income) and the [taxpayer] applicants are successful, there will then be on record inconsistent judgments of the Federal Court.’
By way of demonstration of that broadly framed contention of the Commissioner, I was referred to the following findings made by the primary judge, being findings in essence or substance acknowledged by the Full Court:
(i)Spassked was a dividend trap and a tax loss repository;
(ii)whilst operating as a dividend trap and repository of tax losses, Spassked would not receive dividend income;
(iii)it was not part of the plan, purpose or expectation of the Spassked structure that GIH would pay dividends to Spassked;
(iv)there was no plan, mechanism or time‑frame according to which Spassked would cease to be a ‘dividend trap’, and cease to be a repository of tax losses, and instead would begin to receive dividend income from GIH;
(v)the receipt of dividend income by Spassked was inimical to the objectives and operation of the Spassked structure; GIH was committed instead to a course of not paying dividends to Spassked;
(vi)the receipt by Spassked of dividends from GIH formed no part of the motivation, subjective purpose or impetus underpinning the Spassked structure;
(vii)it was the intention of the directors of Spassked that the Spassked structure should remain in place indefinitely;
(viii)the so‑called miniscule dividends Spassked did receive were nominal or cosmetic, and whatever the precise reasons were for the payment of the two dividends declared, those payments arose spontaneously and may have been an attempt to create an appearance;
(ix)at no relevant time between 1988 to 1994 did Spassked incur interest on moneys used by it to acquire shares in the course of any activity carried on by it in gaining or producing assessable income;
(x)there was no expectation or even hope that the shares in GIH would be income producing;
(xi)the occasion of each outgoing of interest (as I have already foreshadowed) was to be found in the shares acquired in GIH deliberately being non income producing.
Upon the footing of those outlined findings of the primary judge and explicitly or implicitly of the Full Court, the Commissioner’s case was that the taxpayer applicants could not conceivably succeed in the present proceedings, and the strike‑out application should therefore be granted.
The Commissioner’s case for summary judgment in more detail
The Commissioner’s case the subject of its present application for summary judgment, as I have foreshadowed, purportedly related to the Commissioner’s disputed primary tax assessments, and not to the additional or penalty tax assessments which also issued to IEF and QTH, which involve issues falling to be resolved on a later occasion. Those primary tax assessments disallowed any entitlement of IEF and QTH to deductions under s 80G of the Tax Act for losses transferred to each of them by Spassked in relation to the years of income ended 30 June 1991, 1993 and 1996, and thereby disallowed any entitlement of Spassked to deductions under s 51(1) of the Tax Act in relation to the respective years of income ended 30 June 1991, 1993 and 1994, and in so doing imposed substantial penalties.
Notwithstanding the confinement of the earlier Spassked litigation at first instance and in the Full Court to the deductibility of interest on Spassked’s borrowings from IEF in relation to the fiscal year ended 30 June 1992, the Commissioner advanced the present strike‑out application related to the remaining fiscal years in dispute, as I have foreshadowed, upon the footing that such preceding litigation was resolved against Spassked, and thus of course in favour in favour of the Commissioner, in relation to the so‑called broader issue as to deductibility of interest on Spassked’s loans from IEF for the fiscal years 1988 to 1994 inclusively, and that as a consequence, the taxpayer applicants were by their amended statement of facts issues and contentions seeking impermissibly to relitigate that comprehensive issue. The basis for that case of the Commissioner was asserted to be, as I have foreshadowed, that ‘[i]n the earlier Spassked proceedings, Spassked, IEL and Stanley Park presented their case before the Full Court and before the primary judge on the basis that the resolution of the proceedings would determine the deductibility of the interest incurred by Spassked on the IEF loans for each of the 1988 to 1994 years of income’, and further that in the context of those earlier proceedings ‘Spassked sought findings that the interest was so deductible’.
The Commissioner laid emphasis at this juncture upon the following matters in particular established in the earlier concluded Spassked proceedings, which I have already identified, as follows:
(i)the annual interest expense incurred by Spassked involved an aggregate sum of $3,272,751,109 in respect of each of the fiscal years ended 30 June 1988 to 30 June 1994;
(ii)Spassked’s written submissions provided to the Full Court asserted that what was in issue ‘in this appeal’ was ‘whether a deduction is allowable to Spassked under section 51(1) of [the Tax Act] for interest incurred by it to IEF in the years of income ended 30 June 1988 to 1994’, and that those fiscal years were ‘…each of the years in dispute’;
(iii)what otherwise appears in the reasons of the primary judge in the concluded Spassked litigation at first instance and of the Full Court on appeal, which I have earlier extracted or to which I have otherwise referred.
Lindgren J recorded in his reasons for judgment at [2] that ‘… I was informed that similar circumstances also prevailed in each of the six years ended 30 June 1988, 1989, 1990, 1991, 1993 and 1994’, and further at [193] that ‘[t]he parties proceeded on the basis that no distinction was to be drawn between Spassked’s various borrowings from IEF and investments in GIH, or between the various investments by GIH in the Subcos, all over the years 1988-1990 or between the seven annual amounts of capitalised interest for the years 1988-1994…’, and further that ‘[a]ccordingly, I need not distinguish between the various sums borrowed on which the interest accrued, or between the uses to which those sums were put’. The reference to ‘Subcos’ was to investment subsidiaries, as I have earlier indicated, the involvement of which is more conveniently illustrated in the diagram to the reasons for judgment of the Full Federal Court. To not dissimilar effect were the observations made in the course of the joint judgment of Hill and Lander JJ of the Full Court in Spassked, at [4] and subsequently at [77], each of which I have already extracted in these reasons. Those observations were reflected in the conclusions of the joint judgment in the Full Court which I have also earlier extracted, which may be seen to focus upon expressions such as ‘in any year of income’, and ‘in all the years of income in question’, and further upon the theme for instance in [113], which I have also extracted but which bears repetition, that ‘the proposal was designed to ensure and its implementation did ensure that at no relevant time could it be said that Spassked incurred in the years of income interest on moneys used by it to acquire shares in the course of any activity carried on by it in the course of gaining or producing assessable income [but that] [r]ather the occasion of each outgoing of interest was to be found in those shares deliberately being non income producing’.
What I have thus far recorded or addressed may be described as embracing the broadly asserted foundations for the Commissioner’s strike‑out application. Apart from abuse of process, and in relation to the further case of the Commissioner based on issue estoppel, I was referred (indeed by both parties) to the following additional passages in the reasons for judgment of Dixon J in Blair v Curran at 532-533:
‘Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue‑estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order … the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue. Matters cardinal to the latter claim or contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous …
In the phraseology of Lord Shaw (in the course of his Lordship’s dictum in Hoysted in the Privy Council hereafter referred to and discussed), “a fact fundamental to the decision arrived at” in the former proceedings and “the legal quality of the fact” must be taken as finally and conclusively established (Hoysted v Commissioner of Taxation [1926] AC 155). But matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings, however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion. Decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties if the same matters of law arise in subsequent litigation’.
It is difficult to conceive of room in principle for excluding the operation of the doctrine of issue estoppel in relation to findings upon the nature and purpose of business activity undertaken for a period of time by a corporation relevantly to the decision falling for resolution irrespective of a context as here of annual income tax assessment. In fiscal contexts such as those arising for resolution in the present principal proceedings, the facts the subject of those findings to my understanding were fundamental to the decision in the earlier concluded Spassked proceedings. Nevertheless the taxpayer applicants referred at length to authoritative dicta submitted to be inconsistent with that preliminary observation on my part, and which I will later review. I should record, at this threshold stage of examination of authority, that the theme of the doctrine of issue estoppel lies in the public interest in the finality of litigation, and the concern with injustice inherent in permitting a litigant to be twice vexed with the same claim. The present circumstances tend to reflect a factor of public interest here conceivably involved, given the considerable length of time and therefore the amount of cost as to what would eventuate by way of largely repetitive proceedings of similar length and factual complexity to that of the earlier concluded Spassked litigation, where the substance of the proceedings would be likely to be essentially the same. So much may be reasonably said of the IEF/QTH/Spassked proceedings presently on foot, in the light of the context of the earlier concluded Spassked proceedings, albeit in the present case in relation to different, though nevertheless closely proximate, fiscal years, and perhaps the additional factor of taxpayer applicants additional to Spassked. Moreover in the light of what I have already recorded from dictum of Lindgren J at first instance and subsequently from dicta of the Full Court joint judgment of Hill and Lander JJ, in the context of course of the earlier concluded Spassked litigation, the thrust of the Commissioner’s strike‑out case gains significant momentum.
The doctrine of issue estoppel has been applied in what has been described as a revenue context, as the Commissioner rightly contended. In Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290 (to which reference appears by way of the English authorised report in the dictum I have extracted above from Blair v Curran), and upon which the Commissioner placed reliance here, the Commissioner was found by the Privy Council to be estopped from asserting that trustees of a deceased estate comprising mainly realty were disentitled to certain concessional deductions as joint owners of that realty under certain land tax legislation. The High Court had earlier held by majority (Knox CJ and Starke J, Higgins J dissenting) that the Commissioner was not estopped from contending that certain beneficiaries of that estate had not become joint owners of the realty for land tax purposes, thereby adding significantly to the land tax concessional entitlements of the deceased estate taxpayer. Prior to that finding, there had been several appellate proceedings which need not be recorded. Lord Shaw in Hoysted provided the following opinion of the Privy Council at 299 in relation to the operation of estoppel in that fiscal context:
‘In the opinion of their Lordships it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which has not been taken. The same principle of setting parties' rights to rest applies, and estoppel occurs.’
In reaching that opinion, it was further stated that their Lordships were ‘entirely in accord with the judgment of Higgins J’, who had earlier expressed the following principle in the High Court (Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537 at 562), being a principle appearing within the scope of the dictum of Dixon J in Blair v Curran at 532 (which I have already extracted at some length):
‘My view is that the point as to joint ownership was, by virtue of the formal objections, and from the nature of the judgment thereon, “actually litigated and determined” in the former proceedings; and that whether the judgment in its actual form was due to the Commissioner’s consent or admission or to his neglect, he is bound by the finding of joint ownership which the judgment necessarily involves.’
That passage was subsequently cited with approval by the High Court in Rogers v The Queen by Brennan J at 263, in the following context:
‘But a court, in ascertaining whether a finding has been made on which an estoppel is raised, is entitled to look not only at the record… but also at any material that shows what issues were raised and decided.’
And further at 268, his Honour added:
‘If a formal record is unnecessary to raise a plea of res judicata in the strict sense, a fortiori a record is not needed to raise an issue estoppel on a finding not expressed in the ultimate decision in the trial.’
At 283 in Rogers, McHugh J observed that issue estoppel relates to ‘an ultimate issue in the litigation’, and further that ‘[n]o estoppel can arise in respect of evidentiary issues even when they are the building blocks in the proof of an ultimate issue’. The difficulty arising in the context of complex fiscal litigation such as the present is isolating what may be merely ‘building blocks’.
It is appropriate to record for completeness, in relation at least to the operation of the principle of res judicata, that the Privy Council subsequently observed in Hoysted (at 303) that ‘… if in any Court of competent jurisdiction a decision is reached, a party is estopped from questioning it in a new legal proceeding’, and added that ‘… the principle also extends to any point, whether of assumption or admission, which was in substance the ratio of and fundamental to the decision …’. Translating to annual revenue assessments where an evidentiary finding is made in relation to conduct or events antecedent to a fiscal year the subject of an assessment in dispute, it may be asked when that finding would be considered fundamental to decision-making in relation to that fiscal year. The Privy Council described at 303 as ‘settled law’ the following rule concerning res judicata described in the leading case of Henderson v Henderson (1843) 3 Ha 100 at 114‑115 by Wigram VC as follows:
‘I believe I state the rule of the Court correctly, when I say that where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.’

Further as to the operation in Australia of both issue and Anshun estoppels, the latter having been described by Gleeson CJ in Murphy at 286 as ‘a wider form of estoppel’, the Commissioner contended that the critical findings of the earlier concluded Spassked proceedings I have extracted also related to or involved ‘ultimate facts which form ingredients in the cause of action’ (Blair v Curran at 532), and which were so closely connected with the subject matter of the earlier concluded Spassked proceedings that it was to be expected that the same would be subsequently relied on by the Commissioner in relation to fiscal years additional to 1992 (see again the full context of the dicta I have earlier cited from Anshun and Henderson). I further bear in mind that issue estoppel operates in relation not just to the prior litigating parties but also to their respective privies (Rogers), and hence persons or entities claiming under or through or by virtue of the legal rights of such parties (Effem). I think that it should be concluded that each of the taxpayer applicants qualify as privies of each other, and of their common wholly owning parent IEL, for the purposes of the operation of doctrines as to issue estoppel and Anshun estoppel, being a qualification in any event not seemingly required to be fulfilled in the case of the wider and more comprehensive notion of abuse of process. Each of IEL and its wholly owned subsidiaries here involved, being of course each of the taxpayer applicants, was subjected to the evident decision-making corporate mind of IEL as parent company.
At least the primary case of the taxpayer applicants, in relation to the principal income tax issue raised by them, was as I have recounted, to the effect that the earlier concluded Spassked proceedings involved an ‘essentially different question’ for instance to the issues falling for resolution at the instance of the Commissioner, because the issue there falling for determination concerned a different fiscal year, that being of course 1992, and further that what occurred in those earlier proceedings could not ‘elevate the decision to cover matters that were not before the Court as part of the proceedings’. The matters so referred to as ‘not before the Court’ in the earlier concluded Spassked proceedings were submitted by the taxpayer applicants to be the matters concerning income tax deductibility related to losses sustained by Spassked in respect of the 1991, 1993 and 1994 fiscal years (and subsequently as to the 1991 and 1993 years as to losses transferred to IEF and QTH), and the 1996 fiscal year to the extent that the same related to losses also sustained earlier by Spassked and transferred to IEF. In that context, the taxpayer applicants submitted that judicial findings made in the context of income tax or other annual revenue disputes could not lawfully create estoppels in relation to the resolution of fiscal disputes arising between the same revenue authority and the same taxpayer(s), or its or their privies, in respect of any fiscal year subsequent to that earlier fiscal year in relation to which any such prior resolution originally occurred. No distinction was drawn by the taxpayer applicants between a dispute involving an earlier fiscal year falling for resolution and a dispute involving a subsequent fiscal year falling for resolution. Both of those situations were here involved by reason of the estoppel relied upon arising in respect of the 1992 fiscal year by reference on the one hand to the 1991 fiscal year and on the other hand by reference to the 1993 and 1994 fiscal years (and also the varying circumstance of the 1996 fiscal year). The taxpayer applicants sought to invoke reliance for those propositions primarily of course upon the ratio of the Privy Council decisions in Broken Hill and Caffoor and of the House of Lords decision in Hope, and what it contended to be the limits of the doctrine as to privity in relation to estoppels.
As I have earlier pointed out, the controversy the subject of each of those three English decisions had its origin in the findings of an administrative tribunal, or otherwise relatively speaking inferior forum, in either case which exercised a decision-making function not comparable here with that of a superior court of record, such as the Federal Court of Australian in the case of the earlier concluded Spassked proceedings at first instance as well as on appeal, or such as a Supreme Court of any of the States of Australia. There would be moreover a measure of unreality and illogicality in any juridical contrast being made (as the taxpayers sought to do), in the context of disputed income tax proceedings such as was involved in relation to Spassked for the 1992 fiscal year, by reference to the resolution of a fiscal dispute related to a prior fiscal year in contrast to a subsequent fiscal year, in circumstances where the dispute is litigated in respect of fiscal years both prior and subsequent to that of the fiscal year of precedent relied upon as reflective of the conduct the subject of alleged estoppel. I should refer in that regard additionally to the finding appearing in the joint reasons for judgment of Hill and Lander JJ in the Full Federal Court in Spassked at [113] that ‘… the proposal was designed to ensure, and its implementation did ensure, that at no relevant time could it be said that Spassked incurred in the years of income interest on moneys used by it to acquire shares in the course of any activity carried on… in the course of gaining or producing assessable income…’.
Other considerations and findings of the Full Court in Spassked, referrable implicitly and explicitly to circumstances prevailing both prior, during and subsequent to the circumstantial scope of the 1992 fiscal year, serve to demonstrate the unreality, as well as the misconception, inherent in the taxpayer applicants’ case for the exclusion in principle of the operation of the doctrines of issue estoppel and Anshun estoppel (additionally of course to abuse of process) from consideration in relation to the Commissioner’s present application for summary judgment. The complex processes of judicial consideration and findings, undertaken by Lindgren J in his reasons for judgment in Spassked at first instance, and subsequently by the Full Court on the appeal upholding his Honour’s decision, demonstrate the inherent inapplicability, in relation to circumstances such as here present, of the reasoning in, and the ratios of, Broken Hill, Caffoor and Hope in the Privy Council and House of Lords respectively, based as each decision was of course on the principle there enunciated as to each new or successive fiscal year of rating or taxing in dispute constituting an inherently new or different question or issue from that the subject of any preceding (or for that matter following) fiscal year. If I may be repetitious, the rating authority in Broken Hill failed in the Privy Council upon the footing that the prior majority decision of the High Court made in its favour had related ‘… to a new question, namely, the valuation for a different year and the liability for that year’.
The incidence of assessments to income tax, in contrast at least to some other revenues, is referable to activity or activities which may occur or extend over an entire fiscal year, but the life of such business activity would normally extend over more than one fiscal year, that is to say, for the duration of the conduct of relevant business operations. More frequently than not would that in fact be the case. In those contexts, an estoppel may be seen to crystallise by reference to fiscal consequences flowing from the nature or incidences of the operation or conduct of a business over the life thereof or over the life of aspects thereof. Hence the conceptual difficulty in equating the circumstances, for instance, of a valuation of property having an operation for the ensuing annual period of time with the circumstances of business activity or activities in operation over a period of time which embraces a particular fiscal year. A valuation of a property for annual rating purposes, whatever be the criteria therefore, understandably would obviously tend to involve distinguishable or different implications for the exaction of revenue then the conduct of business operations for the gaining immediately or ultimately for the derivation of assessable income. Those factors further tend to demonstrate the inherent validity in reasoning pursued by the Commissioner in support of the case for estoppel in circumstances such as here postulated, being circumstances of six fiscal years of continued operation of business activity.
The predication of the taxpayer applicants’ case boiled down to or at least involved the proposition that although the circumstances of business operations of the 1992 fiscal year, in relation to which the previous Spassked proceedings were determined, remained essentially unchanged in scope in the course of the subsequent fiscal year or years the subject of ongoing dispute, and moreover remained unchanged from the circumstances of the prior fiscal year or years, any purported findings in line with such subsequent or prior circumstances cannot govern or control that taxpayer’s entitlement to fiscal determination de novo in respect of the later fiscal year, freed from the constraints of estoppel. The reasoning of Lord Keith in Hope at 567, which appears within the context of what was one of the only two speeches of the House of Lords on that appeal in relation to which reasons were also provided, reflects the following unresolved dilemma of significance appearing after his Lordship’s reference to Hoysted:
‘… Any objection, therefore, which was based on difference of subject-matter between the taxes for the respective years, would have to meet the puzzling question whether for the purposes of estoppel the jurisdiction of the High Court in adjudicating upon points of law arising in tax proceedings is not wider and more comprehensive than the jurisdiction of the original assessing tribunal. It is true that that aspect does not seem to have had any weight attached to it in the other decision of the Judicial Committee of the same year, the Broken Hill case. But there the point did not call for, or receive, any full attention. I say nothing more about this. It is not the point before us and, if it even arises, it will need separate consideration.’
As I have foreshadowed, the taxpayer applicants’ case seemingly boils down to an entitlement per se to a full hearing in respect of each of the fiscal years asserted by the taxpayer applicants to remain in dispute, following upon, and notwithstanding the basis, nature and scope of resolution of, the earlier concluded Spassked proceedings, yet without the need for the taxpayer applicants to demonstrate the existence any material distinction from the circumstances the subject of the ratio decidendi of the earlier concluded Spassked proceedings. The factor merely as to the existence of different fiscal years of income in contest to that of 1992 is said by the taxpayer applicants to be enough to constitute in law a new issue or dispute required to be determined, freed from the restraints of operation of the doctrine of estoppel, and by reason of the ratios of the Privy Council and House of Lords decisions respectively in Broken Hill, Caffoor and Hope. The consequences of that proposition of the taxpayer applicants being correct in principle for the purposes of the law of income tax have radical implications in relation to issues arising in litigious circumstances such as the present, involving as they would the further hearing and determination of the same substantial scope of evidence, or virtually so, as was adduced in the context of the earlier concluded Spassked proceedings.
I have reached the conclusion that the Commissioner has established a viable case for summary judgment upon the basis of estoppel arising upon or out of the circumstances falling within the scope of the findings of this Court made at first instance, and subsequently by way of confirmation on appeal, in the context of resolution of the earlier concluded Spassked proceedings, that is to say of course, the circumstances the subject of the Federal Court’s findings at first instance and on appeal relevantly to the period of six fiscal years from 1988 to 1994, and the fiscal implications and consequences of those circumstances. Unlike fiscal litigation involving or relating for instance merely to quantifications of value of realty or personalty, or of losses and outgoings otherwise uncontroversial in character, the resolution of the earlier concluded Spassked proceedings required the Federal Court’s consideration of a spectrum of circumstances relating to the business operations of Spassked which had taken place in substantial commercial contexts, being circumstances which extended in scope beyond the duration of the 1992 fiscal year, antecedently as well as subsequently. It makes no sense, nor is there justification moreover for the consequential requirement, that the Commissioner submit to what doubtless would be a further lengthy and costly Federal Court hearing, and further curial decision-making, in relation to what would require and involve the tender and judicial consideration once more of a significant amount of viva voce and documentary evidence based on, or arising out of, events which occurred and matters which were undertaken in relation to fiscal years both prior and subsequent to 1992, when that scope of evidentiary material has been already afforded the Court’s extensive scrutiny and findings both at first instance and subsequently on appeal. I refer of course in that regard to the entire six fiscal years from 1988 to 1994 (inclusive). Further would that be so in the present context of events, if the inference reasonably open to be drawn is that the previously concluded Spassked proceedings in relation to the 1992 fiscal year were in substance and reality in the nature of a test case implicitly intended to resolve all of the outstanding objections to assessments lodged by the applicant taxpayers with the Commissioner, being an issue strictly speaking unnecessary for me to resolve.
My primary juridical basis for granting or upholding the Commissioner’s application for summary judgment is that of abuse of process. The principles for the operation of that doctrine, outlined in the dicta I have earlier cited from Walton and Spalla, are in my opinion satisfied in relation to the complexity of circumstances I have earlier recorded in these conclusions and which are based upon the findings of the Federal Court at first instance and appeal in the earlier concluded Spassked litigation. If I may be repetitive, the case which the taxpayer applicants would seek to pursue by their amended statement of claim constitutes and involves in substance and reality an endeavour to re-litigate issues and disputes which have been already addressed and resolved by this Court in and by the findings made in the earlier concluded Spassked proceedings, at first instance and on appeal. Yet the taxpayer applicants would seek by the presently structured proceedings, once again of course in the Federal Court, to trouble the Commissioner twice, and to do so for essentially the same reasons and on essentially the same evidentiary structure, albeit involving differing fiscal years to 1992. Those issues or disputes would boil down to the deductibility or otherwise of interest payable on the borrowings of Spassked obtained from a corporately related entity or entities, being borrowings undertaken during the period of time from 1 July 1988 to 30 June 1994, and aggregating (as I have earlier detailed) the sum of $6,527,082,709.00. Those issues and disputes were indeed raised and resolved in the context of the earlier concluded Spassked proceedings, which ultimately boiled down to the issue whether or not interest on such borrowings were deductible within the scope of operation of s 51(1) of the Tax Act in relation to the fiscal year 1992.
If I may be once more repetitive, the Federal Court has already addressed essentially the same circumstances in the context of the earlier concluded Spassked proceedings, being circumstances which prevailed throughout the six fiscal years embracing 1991, 1993 and 1994, as well as of course the critical fiscal year 1992. Those circumstances were resolved at first instance and on appeal, being the circumstances falling within the further scope of the six consecutive fiscal years addressed by the comprehensive evidence tendered and findings made in those proceedings. Hence as the Commissioner has emphasised and as I have earlier recorded, if the present summary proceedings at the instance of the Commissioner were to be dismissed, the Commissioner would thereafter be vexed twice by a continued involvement in the further lengthy proceedings in this Court which the taxpayer applicants have set in train, and there could conceivably occur outcomes involving inconsistent judgments.
Apart from what I would conclude in favour of the Commissioner to have been an abuse of process, I would further find that at least the ground of Anshun estoppel has been additionally established by the Commissioner in the circumstances I have already recorded and established in these reasons. The inference is rightly open to be drawn, from the conduct and events of the earlier concluded Spassked proceedings, that it was necessary or at least appropriate for the Commissioner to require the Federal Court to decide, and indeed the Federal Court did decide, the issue as to deductibility sought by Spassked in respect of the fiscal year 1992. To paraphrase the language of Anshun, for the present proceedings to be allowed to proceed to trial would necessarily and inherently involve, as well as require, the raising once more for consideration and determination by this Court of issues and related matters cardinal to the claims and contentions which attended the earlier concluded Spassked proceedings, and in particular the claim at least inherently that the decisions the subject of those proceedings made at first instance and on appeal were erroneous. What was so resolved and determined by the earlier concluded Spassked proceedings, in relation to the context specifically of at least the six fiscal years I have identified and discussed, did not relate merely to ultimate facts. To determine and resolve income tax deductibility in respect of a single fiscal year, such as previously occurred in relation to the 1992 fiscal year in respect of Spassked, in the context of continuing business operations and activities of a given taxpayer, particularly business operations and activities conducted on a substantial scale, would normally require, necessarily as well as expediently, a broad analytical sweep of those operations and activities, and in the case of continuing businesses in particular, such as were here apparently involved, of operations and activities undertaken both prior and subsequent to that fiscal year. In the circumstances of modern business and commercial undertakings involving corporate groups which conduct continuing or repetitive business transactions inter se, that sphere of curial considerations may necessarily well require the consideration of transactions, not just of individual corporate taxpayer’s activities, but also the transactions of its wholly related group companies or so-called privies.
It follows further of course from the foregoing conclusions I have reached in these reasons adversely, in the first place, to Spassked in relation to the fiscal years I have considered and addressed, being fiscal years apart from but placed both prior and subsequently to that of 1992, that IEF and QTH would not be entitled to deductions pursuant to s 80G of the Tax Act in respect of losses transferred to each of them respectively from Spassked in respect of any of those fiscal years the subject of my review.

In the result in my opinion, the Commissioner’s application for summary judgment should be granted with costs. I will direct that the Commissioner bring in draft short minutes of order so framed as to give effect to these reasons, and to do so on a date to be fixed by arrangement with the parties and the Court. The Commissioner must have the costs of the proceedings to date, inclusive of the costs related to the present summary application.

I certify that the preceding one hundred and thirty (130) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.
Associate:
Dated: 21 March 2006

Counsel for the Applicant: BJ Shaw QC, AH Slater QC with PM Fraser

Solicitor for the Applicant: Blake Dawson Waldron

Counsel for the Respondent: G Davies QC with SHP Steward

Solicitor for the Respondent: Australian Government Solicitor

Dates of Hearing: 22 September 2005

Date of Judgment: 21 March 2006

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 539 OF 2004 NSD 543 OF 2004 NSD 540 OF 2004 NSD 94 OF 2005

BETWEEN:	IEL FINANCE LIMITED, QUEENSLAND TRADING & HOLDING COMPANY LIMITED AND SPASSKED PTY LIMITED APPLICANTS
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	CONTI J
DATE OF ORDER:	21 MARCH 2006
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 539 OF 2004 NSD 543 OF 2004 NSD 540 OF 2004 NSD 94 OF 2005

JUDGE:	CONTI J
DATE:	21 MARCH 2006
PLACE:	SYDNEY

Year Ended	Interest ($)
30 June 1998	113,184,428
30 June 1989	293,220,636
30 June 1990	658,487,229
30 June 1991	774,746,526
30 June 1992	888,165,526
30 June 1993	465,626,741
30 June 1994	79,284,023
TOTAL	3,272,715,109

Counsel for the Applicant:	BJ Shaw QC, AH Slater QC with PM Fraser
Solicitor for the Applicant:	Blake Dawson Waldron
Counsel for the Respondent:	G Davies QC with SHP Steward
Solicitor for the Respondent:	Australian Government Solicitor
Dates of Hearing:	22 September 2005
Date of Judgment:	21 March 2006