McDonald v Commissioner of Business Franchises

[1992] HCATrans 79

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M47 of 1991

B e t w e e n -

NQEL WALTER ALEXANDER McDONALD

Applicant

and

COMMISSIONER OF BUSINESS

FRANCHISES

Respondent

Application for special leave

to appeal

MASON CJ
DEANE J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 13 MARCH 1992, AT 10.55 AM

Copyright in the High Court of Australia

McDonald 1 13/3/92

MR R. RICHTER, QC: If the Court pleases, in the matter of

McDonald, I appear with my learned friend,

MR P.K. SEARLE, for the applicant. (instructed by

Andrew Abercrombie)

MRS A. MOSHINSKY, QC: If the Court pleases, I appear with

MR H. REICHER, for the respondent. (instructed by

D.C. White, Solicitor to the Commissioner of

Business Franchises)

MASON CJ: Yes, Mr Richter.

MR RICHTER:  If the Court pleases, we understand that the

Court has a summary of the submissions which is, in

fact, very short and, in fact, tends to encapsulate

a rather fulsome affidavit going to the issues in

this matter which raises a very, very simple issue.

The very simple issue which it raises is the

distinction between the Commissioner of Business

Franchises having a power to determine conditions giving rise to the exercise of a statutory power as against the question of whether the power exists at

all.

The decision of the Court of Appeal in

Victoria appeared to have equated the challenge to

the power of the Commissioner to make an assessment

at all to a challenge to the due making of an

assessment. In our submission that is wrong, and

the consequences of that being wrong and remaining

uncorrected would, of course, be that, in effect,

one could never challenge the making of an

assessment where the assertion is that there is no

power to make it at all, whether it be in

proceedings that are termed "recovery proceedings"
or whether it be in proceedings which are appeal

proceedings provided for in the Business Franchise

(Tobacco) Act itself. And the reason we say that

is that if the challenge to the existence of the

power is to be seen as a challenge to the due

making which is what the judgment of His Honour

Justice Fullagar says, in fact, and in that

judgment Their Honours Mr Justice O'Brien and

Mr Justice Murphy agree, he treats it as a

challenge to the due making of an assessment.

If the view prevails that that is a challenge

to the due making of an assessment, then

section 19E(2), which is, in fact, in the same

terms as section 177 of the Income Tax Assessment

Act and that is why it is a matter of some general

importance and general application, quite apart

from the fact that there are a number of cases

pending which are similar to this one -

section 19E(2) provides:

McDonald 13/3/92

The production of a notice of assessment,

or a document under the hand of the

Commissioner purporting to be a copy of a

notice of assessment is conclusive evidence of

the due making of the assessment and (except

in proceedings on appeal against or review of

the assessment) that the amount and all

particulars of the assessment are correct.

Now, a reading of that section means that the production of a notice of assessment or a document under the hand of the Commissioner purporting to be

a copy .of a notice of assessment is conclusive of

the due making, in all matters, but is not
conclusive of the particulars and the amount - is

conclusive in a recovery court but not conclusive

upon an appeal under the Act.

So the situation then becomes one where one is

simply not able to challenge, when the Commissioner

sues for moneys on the document which a defendant claims to be a complete nullity, he is simply not

able to say, well, where is your source of power?

You have no power to make that document. That document simply does not meet the description of a

notice of assessment or a copy of a document

purporting to be a notice of assessment, because it

cannot.

MASON CJ: Is this provision identical with the provision in

the Income Tax Assessment Act?

MR RICHTER:  Yes, Your Honour. So the complaint really is

that we were shut out, and shut out in a case where

it was really the sole issue; shut out in a case

where, moreover, the Court of Appeal considered

that the argument that there was no power at all

were powerful and, in fact, in our respectful

submission, the argument that there is no power

appears to be unanswerable, unanswerable in this

sense that the only answer is an assertion that

there is some accrued right or that there is some

incurred liability prior to the repeal of the power

of the Commissioner to assess. That cannot be

right because that would conflict with the sort of

reasoning of this Court which says that this is not

an excise under this Act. There is no excise.

It is a different situation under the Business

Franchise (Tobacco) Act which imposes licence fees

and the like. A different situation arises under

the Income Tax Assessment where doctrines such as

the emergence of a liability with the generation of

income or, indeed, in excise cases arise where one

can talk about accrued rights and incurred

liabilities at a certain point in time; very different from the situation in the Business

McDonald 3 13/3/92

Franchise (Tobacco) Act where there are no rights

spelt out except upon assessment, upon either

application for a licence when an assessment is

made and payment is made of the licence fee, or in

default of an application for a licence upon an

assessment for wholesale tobacco retailing which

depends on a formula which goes back to a

determination of how much tobacco was sold in a

previous month and a fee is fixed on that sort of

basis for the following - - -

GAUDRON J: But you do not ask this Court to determine that

question of power in any event?

MR RICHTER:  No. We do not. We would say that the Court of

Appeal was wrong in refusing to determine it, that

it is a question that goes to the very heart of

what it ought to have determined - - -

GAUDRON J: Should it have been the Court of Appeal or the

magistrate? Should not the court - - -

MR RICHTER:  Both. Our complaint to the Court of Appeal was

that the magistrate determined the question wrongly
because the way the question first arose was that
when the pieces of paper which purported to be
notices of assessment were tendered, an objection
was taken before the magistrate on the basis that
these were no more than pieces of paper because,

when one looked at the Act, there was a patent

absence of power to assess altogether; a power that

had been removed a year or so - nearly a year

before the assessments were struck. Now, the

magistrate overruled that objection, accepted the

notices, and gave judgment for the complainant.

GAUDRON J:  The notices, of course, do not bear a date, as I

understand.

MR RICHTER:	They do bear a date but it is not the date of the assessment. In other words, at the bottom they
assistance to the Court, we could pass up so that are signed - we have some copies which, if it is of the notice could be seen. There are 15 of them.
They are all the same.  I will pass up to the Court
three of them which are in fact three different
ones, but the words are identical and the form is
identical. These are, in fact, originals, so we will need to retrieve them hereafter but we will
replace them with photocopies if necessary.

If one looks at the document, it is addressed

to Mr McDonald. It is headed "Business Franchise

(Tobacco) Act 1974. Notice of Assessment".

You are hereby notified that an assessment has been made in accordance with section 19A(l) -

McDonald 4 13/3/92

and it is signed by a delegate of the Commissioner

of Business Franchise and is dated 11 September

1989.       Now that, of course, is the date of notice.

It is not, on its face, the date of assessment.

But the magistrate's court was faced with the

situation where the statement of claim, the

particulars of claim, claimed - and indeed it was

common ground in the Court of Appeal and is common

ground here - that the assessment was made on that date, on 11 September. So from a factual point of

view, if one looked at the particulars of demand

which one had to look at in terms of assessing what

it was that the Commissioner was claiming, one

looked at this document, one said, "The assessment

occurs on 11 September 1989, nearly a year after

the removal of the power to make the assessment."

But it goes further than that because if one

looks at the Act itself, the Act itself requires

that the notice of assessment be given as soon as

possible. So that by looking at the document and

seeing its date, 11 September 1989, one has, quite

independently of the agreed state of facts and

independently of the particulars of claim, come to
the conclusion that the assessment was made after

the power to make it was removed. In that sense,

it is a very fundamental issue which goes to the

testability of all of those types of conclusivity

certificates in various situations.

It would not arise in the same way with the

Income Tax Assessment Act because with the Income

Tax Assessment Act the learning, of course, is that reliability arises - or does not become due and payable but arises as the income is generated.

That, of course, is not the case in a fee situation

such as the tobacco franchise situation, the

wholesale of tobacco. Because to consider it as

such would, in fact, make it an excise and, indeed,

the Court of Appeal considered it as such and to
that extent fell into error of treating it as an

excise, in fact, which it is not.

MASON CJ:  Mr Richter, when one looks at pages 19 and 20 in

the judgment, there do seem to be suggestions there
that had this question been ventilated in the

appeal procedure, then the result might have been

different.

MR RICHTER: Yes, but that is where the confusion arises, in

terms of the judgment of His Honour

Mr Justice Fullager because -

MASON CJ: Yes, I am not denying that, but I just wanted to

clarify the situation, that it does seem from

pages 19 and 20 that the Full Court was proceedings

on the footing that their decision would not

McDonald 13/3/92

preclude the taxpayer's ability or capacity to

ventilate the question you seek to agitate in

appeal proceedings.

MR RICHTER:  That is what it seems to be saying, yes. But

when analysed - - -

MASON CJ:  And after all, you have appeal proceedings on

foot.

MR RICHTER: There are appeal proceedings on foot, but as

was said a long time ago in Mooney's case back in

1903 and in other cases, why should one wait?	Why
should one be in a position of having judgment

against one and all the rest of it, why should one

not be able to meet the claim when it is made on

the basis of "Show me where the power is. If you

can show me where the power is, I cannot quarrel

with you about your assessment, whether you have

made the wrong assessment and so on, except on

appeal provisions." But the reason the judgment of

Mr Justice Fullagar needs to be overturned is

because it proceeds on the basis that a challenge

to the very existence of the power, not to its

scope or extent, but the very existence of the

power is a challenge to the due making and is

precluded by 19E, which it is not.

And this is the thrust of the special leave

application. And what makes it special is, first

of all, the general considerations in relation to
all of these sorts of cases which is that it is

wrong to have to suffer a situation where judgment is entered, or where money has to be paid, then to wait for an alternative appeal procedure to try and

demonstrate that the particulars are wrong in a

situation where - - -

MASON CJ:  I follow all that. But I notice from paragraph 1

of your outline of submission that you muster, on

the face of it, a massive array of authority to

support the proposition that "a piece of paper

issued without power is not a 'notice of

assessment'" within the meaning of 19E(2). Now, do

any of those cases really go to the particular

proposition that you are advancing in this case?

MR RICHTER: That the piece of paper is not - - -

MASON CJ: Yes, issued without power. That is, a notice of

assessment issued without power does not satisfy

the - - -

MR RICHTER:  No, they do not really, which is why it is a

novel point and an important one.	They do not
really.

McDonald	6	13/3/92
MASON CJ:	What about due making?	Now, apart from the

decision of the Full Court in this case, is there
any other case that considers the question whether

a matter of power such as this is falls within the

concept of due making?

MR RICHTER:  Not really, Your Honour, because what the

authorities consider is really questions of extent

of power and limits of power when a challenge is

finally mounted. They determine the outer

perimeters of the power and whether or not a
particular exercise falls within or without, but

none of them of them go to the complete absence of

a power which is what the situation that exists in

this case is. That is why it is a very important

case. It is important for that reason, but it

needs to be stressed, as in fact appears from the

judgment of the Court of Appeal, there was another
case which they decided on the same day involving
the very same issue, but there are a number of
other cases involving millions of dollars of tax

still pending, revolving on precisely the same

principle.

GAUDRON J: In one sense, I suppose, if you put it in an

excise Act, which was invalid, and amended your Act in part and amended your Act by this procedure, you would say you could keep recovering - - -

MR RICHTER:  You could recover excise, oh yes, if this was

an excise you could, because the liability arises,

as with an income tax, with the generation of

income.

GAUDRON J: That is right, and you say it could never be

challenged?

MR RICHTER: That recovery?

GAUDRON J: Yes.

MR RICHTER:	You could argue it on a different basis but, for example, in this sort of situation, if there
was a liability that was incurred, the Commissioner
should have sued Mr McDonald and based himself on
the basis that there was a liability that had been
incurred, that a right had accrued, that he had a
right to the recovery and demonstrated that
section 14 of the Interpretation Act in some way kept his claim alive and that therefore Mr McDonald
owed him money. That is what he could have done,
but not by way of an assessment because that power
was removed. That is at the heart of it.

None of the cases, as we say, go to that very

issue. Bloemen's case, which is really relied upon

by the authorities, does not really deal with this

McDonald 13/3/92

question. Bloemen's case is misunderstood and

misapplied to some extent, because in Bloemen's

case the existence of the power is assumed. And in

all the other cases the existence of the power is

assumed, and the question is whether recovery

proceedings or other proceedings of that nature are

an appropriate vehicle with which to test the

limits of that power. And the answer comes, "No",

because the Parliament has said in 19E the

certificate is conclusive, so you can try and

agitate that issue in some other way. But in those

authorities and those cases, the existence of the

power to assist is undisputed. It is there, and

what one is talking about is its limitations.

In the present case, the existence of the

power to assess is undisputed in the sense that it

is not there. It was removed. The basal

proposition is this: when the Commissioner comes to the court to recover his money on the basis of

an assessment, the source of his power has to be

looked at in this sense, that a magistrate who sits

with a summons which recites that an assessment was

made, that a copy of the notice of assessment was

served and the like, has to look to the Act. Once

he looks at the Act he says, wherein is the power

to have this notice of assessment. This is a piece

of paper that calls itself a notice of assessment,

but where in the Act is the power to make it so.

Indeed, that objection was taken, because the Act

as it stood at the time the assessment was made, on

the pleadings, specifically revoked the

Commissioner's power to make an assessment for wholesale tobacco fees.

So, in our respectful submission, the judgment

of the Court of Appeal was wrong.	We should have,
in fact, succeeded in the magistrate's court.	The

Court of Appeal never came to rule whether or not

there was power to issue the assessment because it

considered that our argument founded on the rock,

as was expressed by Mr Justice Fullagar, of
section 19E.	We, in our submission, say 19E has

nothing to do with it because the real question is

one of characterization of the document which is

sought to be produced to the court. Can it be

characterized as a notice of assessment or not? If

it cannot be, then it is meaningless. If it can

be, then certain consequences flow from the

conclusivity provisions. So it is a question which

goes to the fundamental ultra vires issues - - -

DEANE J:  Mr Richter, why do you not read subsection (2) as

saying, if there is a document purporting to be a
copy of a notice of assessment under the hand of
the Commissioner, then the only method of

challenging it will be by an appeal in accordance

McDonald 13/3/92

with the Act and on that appeal, what you are

concerned with is whether or not the amount is

owing?

MR RICHTER:  Because if it is considered that - that is the

way I read it. On that appeal, the only question

would be whether or not an amount if owing.

DEANE J:  Which means you do not suggest that on an appeal

under the Act the real issue could be debated and decided, that is whether any amount is owing, and

if so, how much?

MR RICHTER: Whether any amount is owing and, if so, how

much could be dated on an appeal but not whether or

not there was a power to issue the notice at all.

DEANE J: But that is not - I mean, once you concede that

the power to issue the assessment can be contingent

on conditions precedent and that the questioning of

the process of assessment cannot be challenged by

proving those conditions precedent were not

fulfilled, I do not follow what the difference it.

MR RICHTER:  The difference is this, in our respectful

submission. The Court of Appeal decided that by

raising the question of whether or not there could

be a notice of assessment, we were questioning the

due making of the assessment.

DEANE J: But there was no contest that the Commissioner had

power to issue a notice of assessment.

MR RICHTER: There was.

DEANE J:  The contest was whether the Commissioner had power

to issue this notice of assessment in these

circumstances.

MR RICHTER:  No, with respect. The issue was whether he had

the power, after the end of 1988, to issue any

notice of assessment for tobacco wholesaling.

DEANE J: At all?

MR RICHTER:	Yes. Because his power to issue -
DEANE J:	No, you have added the qualification.

MR RICHTER: For tobacco wholesaling, yes.

DEANE J: But what I said to you, there was no contest that

the Commissioner had power to issue a notice of

assessment. What you are saying is he had no power

to issue this notice of assessment because it was
for tobacco wholesaling and was issued after a

period, or after a date.

McDonald 9 13/3/92

MR RICHTER:  And was issued at a time when he did not have

the power to do it, to issue any notice for tobacco

wholesaling.

DEANE J: But you keep adding "for tobacco wholesaling".

MR RICHTER:  Because there are separate categories of things

to which the Business Franchise Acts apply. This

particular Act is for tobacco and one can assess

for tobacco retailing or one could have assessed for tobacco wholesaling, which one can no longer

do. So it is as though the Commissioner is wearing

different hats when he is making different

categories of assessments. It is as though he
were, on the one hand, under the various Franchise

Acts in power to issue an assessment for petroleum

wholesaling or retailing under another, for tobacco

wholesaling or retailing under another, for some

other licence fee type of situation. The fact that

he has a power to issue assessments in some

categories does not mean that he has the power to

issue them in a category where his power as a

category power was removed altogether.

DEANE J:	I follow the point.
MR RICHTER:	The reason we say we are shut out, and that is really a fall-back position, we say the point of
great importance is not so much whether or not we
are, in fact, altogether shut out but we say this
is a matter of fundamental importance going to the standing of a notice of assessment altogether, and
that is why special leave ought to be given.

The second reason, a fall-back position, is to

say that on the reasoning of the Court of Appeal we

are in fact shut out from having a remedy anywhere

because, if the Court of Appeal is correct when it

says that by challenging the power to issue an

assessment for tobacco wholesaling, what is being

challenged is the due making, then a challenge to

the due making is precluded, not only in a recovery

court but, by the section itself, is precluded in

an appeal court as well.	So it is a point of
fundamental importance.

The most recent discussion of these sorts of

jurisdictional challenges is in David Jones, which

we have referred to in our list of authorities.

That was a jurisdictional challenge on a different

basis, as it were, the basis being that the

assertion was made in the statement of claim that

the assessment was issued in bad faith, for an

ulterior purpose, and therefore was beyond the

jurisdiction of the Commissioner to issue it. It

was held in the Full Federal Court, two to one,

that that was a proper challenge, albeit that there

McDonald 10 13/3/92

were conclusivity proceedings, because the question

of whether or not a notice is completely ultra

vires and has no validity at all is not shut out by

section 177 of the Income Tax Assessment Act.

This Court, on a special leave application by

the Commissioner, refused special leave and it

refused it on the basis that the matter had in fact

been settled. But as we set out in a quote in the

affidavit in support of the application, the fact

is the issue was seen as an important issue of the

principle for the appropriate vehicle and we would

say that this, of all vehicles, is the most

appropriate vehicle to raise that issue because it

is raised in its most pristine form, with no

complicating features, with no issues of fact
attaching, and it requires an authoritative ruling

by the Court of highest authority in this land.

Those are our submissions, if the Court

pleases.

MASON CJ: Thank you, Mr Richter. Yes, Mrs Moshinsky.

MRS MOSHINSKY:  If the Court pleases, the only ground for

special leave my learned friend makes is that this

is an appropriate vehicle to test the David Jones'

issue. We submit that that is not the case. There

is significant difference between this case and the

David Jones' case. Although section 177 and

section 19E(2) are in the same terms, they must be

construed in the light of the Acts. The Acts

themselves are substantially different.

The second thing is that in David Jones the

jurisdictional issue was fundamentally dependent on

the interrelationship between the section in the

Constitution and section 39B of the Judiciary Act

and section 177. No such question arises here. We

are in the State legislation - different

legislation.

Further, David Jones was not a recovery

proceeding. David Jones was a proceeding under

section 39B and the question of a judicial review.

Fundamental to David Jones was the review of the

Commissioner's decision to raise an assessment. In

David Jones it could be said, arguably, that the

parties were shut out because the assessment was

valid. It was the practice of the Commissioner

that had changed and the Court held that

section 177 could not preclude them reviewing that

decision.

So, it is particularly noteworthy that

His Honour Justice Fullagar, at page 10 in the

McDonald 11 13/3/92

application book, stated that the present

proceedings before him:

are not original proceedings for relief in the
nature of certiorari or prohibition ..... or
otherwise for relief by invocation of the

supervisory power of the superior Court.

Further, fundamental to David Jones was the challenge based on mala fides. It was not a

challenge as in this case that there was no

assessment but a challenge that the assessment duly

made ought to be set aside. The authorities, we

say, are clear that the only method of challenging

the assessment in this case is by way of appeal.

MASON CJ:  Now, do you concede that this point could be

raised and determined in appeal proceedings?

MRS MOSHINSKY:  We do, and have always argued that this was

a point open to be argued under the second limb and

that consistent with the authorities this is a

matter that goes to the question of whether the

assessment is excessive. We have always said that

the argument by my learned friend on the basis that

it is no assessment was misconceived. We say that

the decision of the Full Court is correct in saying

that on an examination of the face of the document,

the document purports to be an assessment. We say the authorities are clear that the due making goes only to the procedural steps and we say that the

present challenge as to whether the liability under

the assessment arises - - -

GAUDRON J: But on that view, Mrs Moshinsky, the

Commissioner could obtain judgment for a debt that

never existed. That must be the consequence of

what you put.

MRS MOSHINSKY: But, with respect, that is always the case.

GAUDRON J: Not just a debt, the amount of which is in

dispute, but a debt that never existed.

MRS MOSHINSKY:  We would say the debt exists until the

assessment is quashed.	Now, we would say one
cannot say the debt did	not exist. The law is
clear.

GAUDRON J: But if it is without power - if it turns out to

be without power, it never was?

MRS MOSHINSKY:  Yes. We would adopt what His Honour

Justice Deane said, the proper construction of the section is that once a copy of a notice of assessment or, sorry, a document purporting to be a

copy of a notice of assessment, is conclusive

McDonald 12 13/3/92

evidence in recovery proceedings.	The authorities
are quite clear.	And we would say that the analogy

with a pre-condition is correct, in the same way

that where a court, on an appeal, challenges an

assessment and says the Commissioner had no power

to raise, for example, the amended assessment

because there was no power, that assessment is then

set aside.	But we do not take away the court's
powers.	We are only saying that this cannot
be - - -

GAUDRON J: But you do. It does convert them into something

a little odd in a situation where there is complete

absence of power.

MRS MOSHINSKY:  Your Honour, in recovery proceedings, what

happens is that under the Tax Act and under this

Act, if there is a challenge of this kind, the
court is precluded from denying the Commissioner

judgment but the court is not precluded from giving

a stay of execution. Now, in the same way, the

court was not precluded, as the Full Federal Court

found in David Jones, to give relief. We do not

question the powers of the court. It is not

relevant to the matter before Your Honours. When

David Jones is considered, that is another issue.

It is not the Court's powers to give an

injunction that are in question here, it is not the

Court's power to give a stay of execution that is

in question here. The question before this Court

is whether the notice is a notice of assessment and

the Act clearly provides that production of a
notice of assessment or production of a document
purporting to be a notice of assessment is to be

taken as such, unless, on its face, it is clearly

to the contrary. And that is why in those

authorities, where, on the face of the document it

was sent, it was tentative or provisional, it was

held that it was not an assessment.

His Honour Justice Fullagar goes into that in

some detail and finds that there was nothing that

would give rise - an examination of this document

that would suggest that the Commissioner did not

make an assessment or that it was not a notice of

assessment.

Again, as His Honour Justice Deane said, there

is not a total absence of power here. It was not

that there is no power to raise an assessment. It

is, as His Honour put it, that this taxpayer or

this tobacco wholesaler objects to this assessment.

He objects to this assessment and he has the right

to do so under the second limb - - -

McDonald	13	13/3/92
GAUDRON J:	He says it is not an assessment.	He does not

object to this assessment.	He says it is not an
assessment.

MRS MOSHINSKY: 

Yes, but it is more correct to say it is the

lack of power to raise this assessment, not a
lack - - -

GAUDRON J: Yes. Well, it is the old, "Do you have apples?

Do you have some apples?	Do you have an apple?", a
problem of logic.

MRS MOSHINSKY: Again, if I can reiterate, due making is

confined to procedural steps. The document on its

face does not suggest that it is not an assessment,

and the question of power is, as a question of

pre-condition, a matter that goes to the liability

and that is a matter for proceedings on appeal.

In respect of the power, we would also say -

as my learned friend has raised the question of

power, I should answer it - that in reliance on the

decision in Philip Morris and a subsequent decision

by His Honour Justice Kaye in the Victorian Supreme

Court, the criterion for liability is, in this case, under this Act, the carrying on of the business and that liability did arise after the

business had been carried on and we would say that

it is quite clear that by the Interpretation of

Legislation Act that there is power.

Now, we firmly say that there is power. What

we say is that that is not an issue to be

considered because you cannot go behind the

assessment in recovery proceedings. But, if I

could return to the main point:  we say there is no

ground here for special leave because my learned

friend has relied on David Jones as a substantive

argument of why he should get special leave and we

say he cannot say that this is an appropriate case

for David Jones to be canvassed. Thank you.

MASON CJ: Yes, thank you, Mrs Moshinsky. Yes, Mr Richter?

MR RICHTER: With respect, we are not relying on David Jones

as the reason why we should get special leave.	We
are seeking special leave in this case because a
fundamental question is raised about which David Jones has had something to pronounce and about
which this Court has pronounced something with

respect to David Jones, leaving the question open.

This is not the appropriate vehicle to

traverse David Jones as a case, but it is an

entirely appropriate vehicle to traverse the

question of the jurisdicational basis for the power

to make assessments at all. Nor is it a case where

McDonald 14 13/3/92

one is examining preconditions for the exercise of

power. One is simply examining whether there is

power or a complete absence of power.

The notices that are said to be notices of

assessment, on their face, refer to wholesale

tobacco merchants' licence, so it is not a question

of how many apples - is it all the apples; some

apples or one apple. The document itself refers to

the carrying on of business of wholesale tobacco

merchants, so it is question of if somebody has the

power to issue assessments for dealing in apples

and it happens by accident to be the same person who has the power to issue an assessment for the

carrying on of business in the sale of pears, and

the ability to issue an assessment for the sale of

apples is altogether abrogated by the legislature,

and the person purports to assess for the sale of apples, he cannot, because he has got no basis of

power. That is the issue.

It is not that we seek to use this case

because of David Jones. It is, we say, the

appropriate vehicle to agitate some of the issues

that were agitated in David Jones, the

jurisdictional issues, which go to the extent to

which the conclusivity provisions, such as

section 19E or 177, can shut out a claim of, "This

is simply not an assessment." David Jones involved

an attack that was slightly broader. It involved

an attack not on the piece of paper itself, but on

the power to make it in the sense that it was

alleged to have been made in bad faith.

Our attack goes even further and says the

piece of paper is simply not a copy of a notice of
assessment because it cannot be, on its face,

because there is no such power.

As to the question of liability, it is

interesting to note that the Court of Appeal

itself, although it said it was not going to look

at it, found that the argument in terms of any

preservation of right under section 14 of the

Interpretation Act, whilst it was not absurd and

was tenable, the Court of Appeal's own view would

have been, had it been required to rule, that we

were probably right. Indeed, at the bottom of

page 19, Mr Justice Fullagar says:

It was forcefully argued by

Mr Richter QC, who with Mr Searle appeared for

the appellant, that the Franchise Act did not

at any time prior to the assessments create

any "liability" in a person who carried on

tobacco licensing without either holding or

applying for a licence to do so. Liability to

McDonald 15 13/3/92

pay any money could arise only in the event of
the wholesaler applying for a licence before

1st December 1988 or in the event of the

Commissioner prior to 1st December 1988 making

a default assessment directed to the

wholesaler.

I think this is a forceful argument of

Mr Richter and he may very well convince an

"appeal" tribunal that it is correct.

So, on the issue liability, we would have said that

we would have had to win that because it is pretty

clear, in our respectful submission, especially

because of Philip Morris, because this is not an

excise.

On the question of whether or not we ought to get special leave, we would say this, that if this

judgment stands and we were to go to an appeal

court and to appear before a single judge,

following this decision by Mr Justice Fullagar,

supported as he was by Mr Justice Murphy and

Mr Justice O'Bryan, the single judge would be

obliged to apply it and he would be obliged to

apply some parts of it notwithstanding the rest

appears to be open, because what

Mr Justice Fullagar says at the top of page 18,

line 6 is this:

In my opinion mere absence of power

appearing after the recovery court's perusal

of the statute relied upon is not enough to

show that the assessments are bad upon their

face.

We would say, on the contrary. A mere absence

of power appearing after the recovery court's

perusal of the statute relied upon ought to be a

situation where one says, "Well, this is not a

notice of assessment unless you can persuade me

otherwise.

MASON CJ:  I think we follow the argument, Mr Richter.

MR RICHTER: If the Court pleases.

MASON CJ:  The Court will take a short adjournment to

consider the course it will take in this matter.

AT 11.10 AM SHORT ADJOURNMENT

McDonald 16 13/3/92

UPON RESUMING AT 11.18 AM:

MASON CJ: There will be a grant of special leave to appeal

in this case.

AT 11.18 AM THE MATTER WAS ADJOURNED SINE DIE

McDonald 17 13/3/92