Slade, D.N. v The Commissioner of Taxation

[1993] FCA 708

JUDGMENT No. ...3Q3. ... 1.q.i..,

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY )	NO NG22 of 1993

)

GENERAL DIVISION )

ON APPEAL FROM THE TAXATION APPEALS DIVISION OF THE

ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:  DAVID NELSON SLADE
Applicant

m:  THE COMMISSIONER OF TAXATION
Respondent

CORAM:  HILL J

PLACE	:	SYDNEY
DATED	:	12 AUGUST 1993

EX TEMPORE REASONS FOR JUDGMENT

Mr David Nelson Slade appeals from orders made by the Administrative Appeals Tribunal ( " t h e Tribunal") constituted by a deputy president, Mr McMahon, in relation to objection decisions concerning the years of income ended 30 June 1982 to 1986 respectively. The decision the subject of the revlew concerned assessments made pursuant to s.167 of the Income Tax Assessment Act 1936 ( " t h e A c t " ) . These assessments were made on the basis that Mr Slade in his returns had very considerably understated his income.

by the Commissioner in the assessment, but in essence that	there were a number of amounts which had been double-counted
three of the deposits to accounts made by him represented winnings from gambling and did not constitute assessable income. In this regard Mr Slade gave evidence of entrusting money to a friend in 1980 for the purposes of gambling and subsequently receiving moneys representing the proceeds in cash which had been banked at various times.
The evidence given by Mr Slade on this matter was rejected by Mr McMahon who formed the view ultimately that the story about the friend was an invention. The existence of the friend had been mentioned by Mr Slade for the first time in 1987 and was raised again at a preliminary conference in the Tribunal in 1992 at which time Mr Slade had apparently said that he had been attempting to contact the friend on a daily basis. When asked to produce telephone accounts to verify the making of these telephone calls, Mr Slade said that he called the friend from a public telephone box. He said also that he intended to go to the United States where the friend resided
to find him and bring him back to testify.
Later Mr Slade provided a name and address for the friend but no telephone number. He did not provide a proof of evidence from the proposed witness either as directed. Mr Slade advised that the friend was shortly to be coming to Australia and would arrive some time prior to 30 May 1992. In subsequent evidence he said that the name he had originally given was not completely correct and gave two alternative
versions of that name. Ultimately Mr Slade said that the friend had died in a car accident on the way to the airport where he was to have boarded a plane to come to Australia. The plane in question was said to have been a United States Air Force plane.
From this and other evidence the deputy president indicated he was not impressed with Mr Slade's evidence and that he found him evasive and less than frank. At the end of the day Mr Slade's evldence was not accepted. The Tribunal took the view that the deposits to banking accounts had properly been included as assessable income and that Mr Slade had not discharged the onus of showing that the assessments were excessive.
A slight adjustment was made by Mr McMahon to the additional tax. From this decision Mr Slade appealed to this Court, that appeal being in accordance with s.44(2) of the
Administrative Appeals Tribunal Act 1975, an appeal "on" , that
is to say limited to, a question of law. When the matter came before me for directions the Commissioner moved the Court for orders that the appeal be struck out as not involving a question of law. I dealt with this matter in a judgment delivered on 7 April 1993 (Slade v Commissioner of Taxation, unreported) indicating that as the matter then stood there was arguably a question of law and I declined at that stage to strike out the appeal as incompetent.
I noted in that judgment three matters which could involve questions of law and gave leave to Mr Slade to amend his notice of appeal so that those matters could be properly dealt with. I also gave directions for the filing and serving of affidavits in respect of the matter, having regard to one of the issues which Mr Slade proposed to raise. Mr Slade did not avail himself of the opportunity either to file an amended notice of appeal or to file and serve any affidavit evidence. Before me Mr Slade remained unrepresented as he had been throughout directions hearings.
Although the grounds of appeal had not been the subject of amendment, I indicated that I would permit Mr Slade to argue the matters which had been agitated in the strike-out application as to do so would not present any prejudice to the respondent Commissioner.
At the commencement of the hearing counsel for the Commissioner had accepted as good one of the three points that Commissioner advised the Court that, in the meantime, the
had been raised by Mr Slade initially. That matter concerned the 1982 year of income and, in the result, the Commissioner accepts that Mr Slade's appeal in that year should be allowed by reducing the taxable income assessed in that year by the sum of $52,000. That concession carries with it the concession that the additional tax would pro rata rebate in respect of that same year of income.
Although this appeared to represent a victory of a kind for Mr Slade he did not see it quite in that way as it was foreshadowed by the Commissioner that an assessment or amended assessment would issue in respect of the 1981 year of income increasing the assessable income of that year by the same amount of $52,000. Mr Slade submitted that I should deal with that matter too in the course of the appeal as, so he said, the Commissioner's action really amounted to subverting the Court's process by taking the issue away from the Court. That submission fails to appreciate the very limited jurisdiction which this Court has in reviewing decisions of the Tribunal.
The Commissioner's concession, which is in accord with what Mr Slade had initially submitted to me, amounts to saying that the amount of $52,000 had been received in an earlier year and was thus on hand at the commencement of the 1982 year rather than received in that year. From this it
assume it was, the Tribunal had committed an error of law in follows that if that material was before the Tribunal, as I
arriving at a conclusion which was against the evidence before it. But that only has the consequence that I allow the appeal in respect of the 1982 year; it gives me no jurisdiction to deal with the issue whether the amount of $52,000 was or was not income in the 1981 year, a year of income neither before the Tribunal nor before me.
If that is a matter which ultimately will be in dispute between the parties, it is a matter which Mr Slade will have to agitate either in the Tribunal after the assessments have issued, ob~ections have been disallowed and a request has been referred to that Tribunal or in this Court as he is entitled to under the Taxation Administration Act 1953.
That then leaves the remaining two matters which had been noted in the judgment given on 7 April 1993.
In opening Mr Slade indicated that he wished to tender evidence in respect of two additional matters. First he wished to tender evidence in the form of a map of the Unlted States in support of a submlsslon that the Tribunal could not have reached some of the conclusions it reached about the friend. I gave Mr Slade the opportunity of tendering that evidence but rejected the tender on the basis that it went to no matter of law in respect of which thls
Court could have jurisdiction. The issue whether or not the friend existed and where he lived, if anywhere, in the United
States, or where he may have been killed, if he were killed, were all matters of fact for the Tribunal to decide on the evidence before it. They are neither matters for me to decide nor are they matters in respect of which I can now take evidence which might, had it been adduced in the Tribunal, have led the Tribunal to a different conclusion.
Similarly, Mr Slade sought to adduce new evidence in the form of a letter from his mother about a present which featured apparently in the course of the hearing and explained, I assume, one item of income. However I have no jurisdiction to consider, in respect of some issue of fact which the Tribunal decided, whether a different conclusion might have been reached had different evidence been before the Tribunal. If the Tribunal was entitled on the evidence before it to reach a particular conclusion, it does not involve an error of law that a different conclusion mlght have been reached if different evidence had been adduced before it. Accordingly I rejected in due course the tender of that evidence.
Of the two issues remaining the first concerns an argument based upon a letter sald to have been forwarded by Mr Slade to the Commissioner and sald to comply with s.189A of the Act (now repealed). That sectlon provided in sub-sec.(l)
as follows:

Mr Slade's position in the course of the Tribunal
proceedings was that he had derived certain income as
consultancy fees, which he had properly disclosed, and that

"Subject to sub-sectlons (2) and ( 3 ) , if withln 60 days after receiving a request under section 187 in relation to a decision on an objection, the Cornmissloner does not comply with the request, the taxpayer may give notice in writing to the Commissioner requiring the Commissioner to do so and the Commissioner shall, within

60 days after receiving the notice, comply

with the request. "

According to Mr Slade, he wrote a letter to the Commissioner on 11 October 1989 in the following terms:

"I refer to our conference of 20 December last and payment of appeal fees. The dispute does not appear to have been referred to the Administrative Appeals Tribunal. Could this be rectified as soon

as possible. "

Subject to objection as to relevance and having regard to the limited powers of the Court, I permitted Mr Slade to give evidence that he had forwarded this letter to the Commissioner and also as to what happened when the matter was before the Tribunal. As to the former of these matters, I did so because the submission ultimately to be made was in essence that the Tribunal had denied Mr Slade natural justice or had failed to take into account a relevant matter, being delay, and that the Tribunal's default arose out of the request under s.189A.

Thus the letter was a threshold matter to be established. Counsel for the Commissioner called a Mr Dobbie, an officer employed in the Fields and Review Section of the Australian Taxatlon Office, to establish that the files of the Commissioner revealed no sign of the letter and to persuade me to draw the inference that the letter was never sent. Mr Dobbie's evidence, which was tendered without admitting that any of this evidence had any real relevance, also went to explaining the reasons for the delay from 1989, when the letter was purportedly sent, until approximately 1992, when the file finally appears to have been remitted to the Tribunal.

In this respect Mr Dobbie indicated that there had been some difficulties about a cheque for $960 which had related to whether the objections lodged were valid, as well as a further interview with Mr Slade which had taken place in July 1991. Mr Slade agreed that he had at no time in that interview or otherwise ever referred to the failure of the Commissioner to reply to the letter of 11 October 1989, although he said, and this was not denled by Mr Dobbie, that he had raised in the conference of July 1991 as the very first matter the fact of delay in having the matter resolved by the Tribunal. Some part of the delay appears, if it be relevant, to have arisen out of further investigations that Mr Dobbie, or other officers, were making concerning the existence or otherwise of the United States friend.

I also allowed evidence to be admitted in respect of the transcript of the proceedings before the Trlbunal because Mr Slade asserted that in two minor respects the transcript was either incomplete or inaccurate.

The effect of delay in the Commissioner referring a matter to the Tribunal or, for that matter, the Court, has been the subject of only one decision, although it has been mentioned in at least two others. The decision in which it played a substantial part was the case of Galea v Federal Commissioner of Taxation (1990) 90 ATC 5060. That was not a case where the taxpayer had given a notice under s.189A. It was a case, however, of a quite unconscionable delay, a delay which had indeed been commented upon unfavourably by Mr Roach, a senior member, who then constituted the Tribunal.

The submission put for Mr Galea was perhaps not greatly different from that put by Mr Slade in the present case. It was submitted that the Tribunal had failed properly to take into account the delay and the prejudicial consequences of that delay to the taxpayer. The argument was either that there had been a denial of procedural fairness or alternatively the Tribunal had failed to take into account a relevant matter, namely the delay, in coming to its decision adverse to the taxpayer. Ultimately, the taxpayer lost because it had not been shown that the Tribunal had failed to

take the delay into account. Indeed, in that particular case	the Tribunal had, at the commencement of its judgment, spent
quite a deal of time being critical of the delay in the case.
I did in that case (at 5064) accept, at least for the purposes of that case, the principle stated by Brennan J in Jaao v The District Court of New South Wales (1989) 168 CLR
23, in which his Honour had said that a Court had power to
prevent an abuse of its process which would result in a trial which is unfair and could mould its procedures accordingly.
It may well be, and I do not find need to decide it in the present case, that in an administrative hearing it may be necessary for the Tribunal to minimise prejudice caused by delay by one of the parties to the proceedings. What steps the Tribunal might take, if there is an obligation to take any steps at all, must obviously depend upon the circumstances of the particular case, the degree of prejudice and the issue before the Court or the Tribunal.
Even without a notice under s.109A of the Act, it is clear that the Commissioner cannot properly sit upon a request to refer an objection decision to the Court or the Tribunal and, as I said in Galea, it would be intolerable if the Commissioner were to do so. This is so because witnesses may die, memories may fade, records may be lost and considerable
prejudice might be suffered in a particular case by a taxpayer by virtue of the delay. Where a notice under s.189A is given
it is of course abundantly clear that the Commissioner has an obligation to comply with the law and refer the matter to the Tribunal, unless there are outstanding inquiries. In the present case it is somewhat debatable whether the letter, assuming it was sent, complies with s.189AI but I am prepared both to assume the letter was sent and to accept that it complied with s.189A for the purposes of the proceedings.
But for the matter to constitute an abuse of process or otherwise for there to have been a denial of procedural fairness to Mr Slade brought about by the delay, the first prerequisite would be that Mr Slade must have made known to the Tribunal not only the fact of delay but the consequences to him of that delay, so that the Tribunal may then take the delay into account. Just how it may do so is a more difficult question.
What happened in the present case occupies less than one page of the transcript. The deputy president asked Mr Slade to outline the issues of the case and how he intended to proceed with it. The following conversation then ensued. Mr
Slade :
"Mr Slade:

Sir, I find that the Australian Taxation Office is in breach of its administrative dutles in the - actually forwarding the appeal to the Appeals Tribunal, that there

have been other administrative breaches.	The fact that I have had difficulty in
getting evidence of my winnings in the US
1 s a problem, that - - -

The Deputy President:

Well, let us take this one by one. You wrote to the AT0 in 1988 after your objections to the assessments were refused and you asked the AT0 to refer thes [sic]

matter to this tribunal.

Mr Slade:

The Deputy President:

Well , i t has now arrived and we have now got the appeal and we are now golng t o hear why you say that the assessments were excessive, and I would i n v i t e you t o t e l l me why you think that i s so and i n what particular respects and how you intend t o prove that they were excessive.

Mr Slade:

Yes, I underwent a number o f conferences with the AT0 i n Newcastle and I attended a conference with a Michael Worthington - I th lnk - and a M r Grahame Nash i n that period o f 87/88 and I understood that it

w a s going t o be forwarded within the due

90 days o f that conference, and that d i d

not proceed i n that manner.

The Deputy President:

Well , we are here today t o hear the appeal.

Mr Slade:

Yes.

The Deputy President:

You want t o proceed with the appeal, do you?

Mr Slade: 

I want t o proceed w i t h the appeal. I l u s t

want my objections t o the delay noted."

I n reporting the discussion I have amended t h e

t ranscr ip t i n accordance with the evidence which Mr Slade gave

t o me as t o h i s recollect ion o f what he i n fac t said, which evidence was not contradicted. I t w i l l be noted t h a t Mr Slade

d i d not r e f e r t o the provisions o f s.189A and h i s l e t t e r i n

t h a t exchange. His comments were made, it would seem, i n

connection with the letter referred to by the deputy president of 1988, which was the orlginal letter referring the matter to the Tribunal. There was no attempt to indicate the cause of the delay but more significantly there was no indication directly given by Mr Slade as to what preludice he had suffered other than his reference to having difficulty in gettlng evidence of his winnings in the United States.

So far as appears, there was never any submission made by Mr Slade as to what effect the delay had had upon him or what the Tribunal should seek to do about it. As indicated earlier, if there is anythlng that a Tribunal can do about the issue of delay, a matter which I find no need to decide, the scope for its actions are limited, having regard to the statutory issue which is tendered for decision in the Tribunal, namely, whether the assessment made by the Tribunal is excessive: s.l90(b) of the Act and see Federal Commissioner of Taxatlon v Dalco (1989-90) 168 CLR 614. Fairness may, in a

particular case, suggest that where a considerable delay has	occurred, while the onus of proof will still be upon a
taxpayer to show that the assessment is excessive, the manner in which that onus might be satisfied could be affected.
In the present case Mr Slade submits that he was prejudiced in two ways. First by the fact that bank documents were not available to him as a result of the delay occurring between 1989 and 1992. However, where a taxpayer has
requested the Commissioner to refer a matter to the Tribunal it behoves the taxpayer, at least at the time of reference, to go about collecting his evidence then rather than waiting for the day when the matter actually comes before the Tribunal. In that way he is able to ensure that evidence of records can be properly put before the Tribunal. Mr Slade apparently did not do that.
The second matter was the inability of Mr Slade to call the friend. I can only speculate as to what Mr McMahon would have done had the matter been put to him. Given that Mr McMahon formed the view that a friend dld not exist in reality, it is difficult to see how it could have affected the outcome. However, it is unnecessary to consider that issue in detail. The point is that Mr Slade neither indicated to Mr McMahon the ways in which he was prejudiced, nor did he indicate to Mr McMahon by way of submission or otherwise how Mr McMahon should deal with any preludice. It is difficult in
those circumstances to see why Mr McMahon can be said to have
denied to Mr Slade any natural justice or, for that matter,
how he failed to take into account the issue of delay which was not raised before him. It is not self-evident that delay of itself requires any special treatment by the Tribunal.
There will be some cases where this Court on appeal might, subject to terms as to costs, deal wlth matters that were not raised in the Tribunal. But these cases will be
limited to cases such as Minister for Health v Charvid Pty Limited (1986) 10 ALD 124, where the construction of a statute adopted by a Tribunal involved an error of law, although in the course of the proceedings before the Tribunal no attention had been given to the matter of how the particular statute should be construed.
That leaves the remaining matter. Mr Slade submits that the Tribunal in finding against him double-counted various amounts of deposits, thereby wrongly inflating his assessable income. Mr Slade was only able to point to one example of this, an example reflected in a bank statement from Westpac Banking Corporation which was in evidence before the Tribunal. In that statement there appears the entry on 30 November 1984 of a credit of $2900 and a debit of $3000. It was Mr Slade's submission that the Tribunal should have found that he had withdrawn $3000, changed his mind and then deposited $2900 and not have treated the deposit of $3000 as
representing income.
I should say that it does not appear that Mr Slade actually gave evidence that this is what happened. The problem is for Mr Slade that he must show that there has been an error of law. That requires in a case such as this that Mr Slade demonstrate that it was not open to the Tribunal to conclude that the $3000 deposit was income and that in so concluding it made an error of law. Clearly, in the circumstances of the case where Mr Slade's own evidence had been relected on credit, it was open to the Tribunal to find that he had not satisfled the onus of showlng that that $3000 was not income. The mere fact that on the same day $2,900 had been withdrawn hardly demonstrates an error of law.
For these reasons I would dismiss the appeal and order Mr Slade to pay the Commissioner's costs of it. I do not need specifically to deal with the objection to competency. Clearly there was no issue of law so far as the deposit and withdrawal of 30 November 1984. Mr Slade did ralse an issue of law so far as the question of natural justice is concerned, although ultimately it turned out on the facts that that issue was not available to him.
On the question of costs I should say that I would not order Mr Slade to pay the Commissioner's costs so far as it concerns the strikeout application made in April 1993. As
the matter stood at that time, that application was made prematurely and it could not have been said that it was clear
that no question of law could arise. I might say that it is generally preferable for applications of that kind, particularly where matters of fact may be in dispute, to await the ultimate hearing.
Other than in respect of the 1982 year of income when I would allow the appeal by consent and remit the matter back to the Commissioner for the assessment to be amended by deletlng the amount of $52,000 from the taxable income of that year and consequently reducing addltlonal tax, I would dismiss the applications. There will be no order as to costs with respect to the 1982 year of income but Mr Slade must pay the Commissioner's costs of the applications in respect of all other years of income before the Court.
I certify that this and the
preceding seventeen (17) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Hill.
Associate:
Date :

zti %PT q 3

Mr Slade appeared for himself.

Counsel and Solicitors	Mr JW Durack instructed by the
for Respondent:	Australian Government Solicitor
Date of Hearing:	12 August 1993