Re Tripp, Alan Terence Ex Parte Deputy Commissior of Taxation v Barnes, John Craven

[1987] FCA 796

IN THE FEDERAL COURT OF AUSTRALIA

1

GENERAL DIVISION

1 No. 194 of 1985

BANKRUPTCY DISTRICT OF THE STATE

OF VICTORIA

RE: ALAN TERENCE TRIPP

A Bankrupt

EX PARTE: DEPUTY COMMISSIONER OF

TAXATION

Applicant

AND: JOHN CRAV2N BARNES

Respondent

CORAM : Jenkinson J.

Melbourne	PLACE:
DATE : 1 September, 1987

REASONS FOR JUDGMENT

In my opinion the reasoning of Lush J. in The

Commonwealth v. Duncan 81 A.T.C. 4228 answers the questions which

have been raised and discussed in this case. The circumstance

that Lush J. was concerned with the significance of s.177 of the

Income Tax Assessment Act 1936 in relation to proofs of debt under

the Companies Act 1961, a State Act, whereas I am concerned of

course with the application f s.177 in relation to a Commonwealth

Act, the Bankruptcy Act 1966, and one expressed, as Mr. Barnes has

pointed out, to bind the Crown, is not for these purposes a

material distinction, in my opinion. In any legal proceeding in

this country in which the liability of a person to a debt arising

2 .

by way of assessment under the Income Tax Assessment Act is in

issue proof of the liability will be governed by the provisions of

5.177 of the Income Tax Assessment Act 1936 if the CDmmissioner

chooses to make use of that provision, and it matters not whether

the question of the liability arises under State law or Federal

law. The question before me is just such a question and I follow respectfully the reasoning of Lush J. in The Commonwealth v.

Duncan to hold that the adduction f evidence before the Court of

certified extracts of the relevant notices of assessment compel me

to uphold the appeal and to accept the pro'of of debt. It is

unnecessary for me to decide whether or not a trustee exercising

the function conferred by s.102 of the Bankruptcy Act 1966 to

determine whether or not to admit a proof of debt is also

constrained by the operation of 5.177, but I point out for what it

is worth that Lush J. specifically dealt with that question i his reasons for judgment, and I have no reason whatever to doubt that

what he said in that case would apply equally and without any

distinction of substance to a trustee exercising the function

conferred by s.102.

The orders that I make disposing of the appeal are that

the decision of the trustee upon the proof of debt lodged by the Deputy Commissioner of Taxation of the Commonwealth of Australia which was notified by notice of rejection of proof of debt dated

10 December 1966 be reversed, and that the said proof of debt be

admitted in whole.

As to costs, I think that the Commissioner should pay

all the costs of the appeal. I am not to be taken as accepting as

3 .

correct by any means all of the criticisms which Mr. Barnes very

properly in discharge of his role advanced against he

Commissioner, and in particular I am not to be taken as accepting

his submissions that the circumstances suggest an irresponsible

process of assessment and variation of assessment. Leaving aside

circumstances in which in cases involving asset betterment

assessment the Commissioner may quite properly compromise w th the

taxpayer in the interests of the efficient discharge of his

- functions, there are no doubt often circumstances in which after

an assets betterment assessment has been made the Commissioner

receives further information or, a5 perhaps in this case, has the

benefit of sworn testimony by the taxpayer which he decides it

would be proper f o r him to accept, vhereas he was not prepared to

accept the unsworn assertions of the taxpayer. “here are all

sorts of circumstances in addition to those I have mentioned as

possible Circumstances in which the Commissioner may no doubt with

entire propriety vary his assessment of income tax liability.

But in this case, as has been admitted in Mr. Smooker‘s affidavit,

there was an error on the face of a notice of assessment.

What has been said during the course of the hearing of

this case makes it obvious how very, very important it is that

notices of assessment should not contain errors. Furthermore, perhaps as a result of that error, the hearing of this case has had to be extended over several days because those assisting and instructing became, I think, probably confused when questions were

asked on the first hearing day, perhaps confused because they were

conscious of some inconsistency in the figures that they were

referring to, connected with the error that is to be found on one

4.

of the notices of assessment. matever the cause, the appellant

has been responsible for the extension of the hearing and is by

reason of that error in a position where he simply cannot be heard

to say that if the trustee had acted with complete and God-like

mastery of the facts and the law upon his consideration of the

prcwf of debt, he must have come to admit the proof. He cannot

say that because of his own confession of the error in one af the

figures. In those circumstances it seems to be that the proper

crder to make is that the applicant, the Deputy Commissioner of

Taxation of the Commonwealth of Australia pay’ the costs of - what

is this proceeding called; it is called an appeal, is it? No, it

is an applicatipn to review. What was the originating - - -

MR. BOADEN: It is an application, your Honour, pursuant to s.184.

HIS HONOUR: The application instituted by written application

filed 23 December 1986.

I will make an order that the costs of the trustee of

the application instituted by the written application filed 23

December 1986 be taxed and paid by the applicant, the Deputy

Commissioner of Taxation of the Commonwealth of Australia.

I certify that this and the 3

preceding pages are a true copy

of the Reasons f o r Judgment	of
Mr. Justice Jenkinson
Dated: 1 September, 1987