Officers of the Commissioner of Taxation, the respondent, conducted an investigation with regard to the tax affairs of the applicant, and sought and obtained certain information from the taxation authorities in the Cayman Islands. The position of the applicant is that those acts of employees of the respondent were unlawful, done in bad faith, and constituted "conscious maladministration" as that term was described in Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 32.
The information obtained has been used by the Commissioner of Taxation in a number of cases. The history of that use is set out in Hua Wang Bank Berhad v Commissioner of Taxation [2014] FCA 1392 by Perram J (a case under Part IVC of the Taxation Administration Act 1953 (Cth) (TAA) where the same documents as are in dispute in the present case were successfully tendered by the Commissioner) and by the Full Federal Court in Gould v Deputy Commissioner of Taxation [2017] FCAFC 1. It is to be noted that in Hua Wang Bank the taxpayer's unsuccessful appeal in the High Court did not complain about the tender of the presently relevant documents in that Part IVC case.
A challenge to the taxation assessments under s 39B of the Judiciary Act 1903 (Cth) based on a pleading of "conscious maladministration" was made in Gould. According to Logan J in the Full Court at [14] in Gould, the pleading of conscious maladministration in Anglo American's case is "materially indistinguishable" from the pleading in Gould. It is to be noted, however, that the taxpayer in Gould filed a cross-claim and the content of the defence was treated as being incorporated in the judicial review challenge contained in the cross-claim: see Deputy Commissioner of Taxation v Leaver [2015] FCA 1454 at [3]. The taxpayer's challenge in Gould was rejected by Pagone J (in the decision reported as Leaver referred to above) and by the Full Federal Court. Whilst Gould was decided on a pleading basis, Robertson J (with whom Gilmour J agreed, contra Logan J) said at [77]:
If it were necessary, I note that in Denlay, the Full Court referred to Futuris, at [60], and said:
Those observations highlight that their Honours were concerned, in their reference to conscious maladministration, with bad faith in the exercise of the decision-making power under challenge and the need for proof of an allegation of bad faith against the Commissioner or his officers. Their Honours were concerned with actual bad faith, not with some form of "constructive" bad faith established by unwitting involvement in an offence.
The passages from the decision of the majority in Futuris set out above are concerned with the state of mind of the officers of the Commissioner involved in the making of the assessment. They emphasise the importance of fidelity on the part of those officers to the purposes of the legislation. If Mr Kieber had merely told the Commissioner's officers of the contents of the documents he had taken from LGT, or had brought the documents into Australia himself and handed them over to the Commissioner's officers here, the taxpayers would have no argument. It is difficult to discern a rational basis for distinguishing these hypothetical examples from the present case in terms of the vice of "conscious maladministration" which is apt to vitiate an assessment.
The observations of the majority in Futuris do not support the proposition that any breach of the law by officers of the Commissioner in the course of processes anterior to, or even in the course of, making an assessment, suffices to establish conscious maladministration which is apt to vitiate the assessment. Conscious maladministration, as explained in Futuris, involves actual bad faith on the part of the Commissioner or his officers. The findings of the primary judge to which we have referred at [49] and [50] of these reasons negative bad faith on the part of the Commissioner's officers.
In my opinion, these dicta provide further support for the conclusion that, in the circumstances presently pleaded, conscious maladministration may not be made out by recourse to the "process of assessment" invoked by the applicants. (italics added)
In any proceedings which examine the merits of the applicant's claim of "conscious maladministration" close consideration would need to be given to the connection between the conclusions in Denlay v Commissioner of Taxation [2011] FCAFC 63 and Gould and the issues in this case.
In the present case, the respondent issued notices of assessment to Anglo American (and the second to sixth applicants). The applicant did not commence review or appeal proceedings relating to the assessments under Part IVC of the TAA in either the Administrative Appeals Tribunal or the Federal Court as it was entitled to do. Nor did it commence proceedings seeking relief under s 75(v) of the Constitution or s 39B of the Judiciary Act as it was also entitled to do.
The respondent subsequently commenced debt recovery proceedings in the Common Law Division of the Supreme Court by statement of claim filed on 19 May 2015. The assessments in relation to Anglo American were tendered in the proceedings before the primary judge. Having done so the respondent relied upon s 175 of the Income Tax Assessment Act 1936 (Cth) (the 1936 Act), which provides as follows:
175 Validity of assessment
The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with.
The respondent further relied on s 350-10(1) in Sch 1 of the TAA, which deals with identical subject matter as the previous s 177 of the 1936 Act. That provision is in a table format that covers a large number of situations, the relevant portions of which can be extracted as follows:
The production of a notice of assessment under a taxation law… is conclusive evidence that the assessment… was properly made… and except in proceedings under Part IVC of this Act on a review or appeal relating to the assessment… the amounts and particulars of the assessment… are correct.
In its amended defence filed on 1 March 2016, Anglo American resisted the debt recovery claim of the respondent. That defence was based upon a denial that the assessments in question are valid because of the alleged "conscious maladministration" of officers of the respondent in obtaining and using documents from the Cayman Islands (under a Tax Information Exchange Agreement between Australia and the Cayman Islands) in making the assessments. The production of documents by the Cayman Islands authorities to the Commissioner was subsequently held to be unlawful under the law of the Cayman Islands by Quin J in the Grand Court of the Cayman Islands on 13 December 2013. That decision was affirmed by the Court of Appeal of the Grand Court of the Cayman Islands on 24 April 2015.
The terms of Anglo American's defence in the present proceedings set out the relevant history of the document request and pleaded as material facts the decisions of the Cayman Islands courts referred to immediately above. The defence concluded as follows:
In the premises the assessments relied upon by the Plaintiff in these proceedings were not made in good faith.
In the premises the making of the assessments relied upon by the Plaintiff in these proceedings was a deliberate failure to comply with the Income Tax Assessment Act 1936.
The defence then identified seven separate income tax assessments for the years 2001, 2002, 2004, 2005, 2007, 2008 and 2009 and eight separate notices of assessment of a shortfall penalty for the years 2001-2004, 2006 (times two), 2007 and 2009, and pleaded that each were "invalid and of no force and effect" by reason of the matters pleaded above.
Importantly for present purposes, Anglo American did not file a cross-claim or commence separate judicial review proceedings and has not sought any orders in the proceedings to give effect to the claim sought to be advanced in the defence that each of the assessments referred to above was a nullity.
The primary judge struck out the defence on the basis that binding authority of the Full Federal Court in Denlay v Commissioner of Taxation [2011] FCAFC 63 established that the contentions of Anglo American, taken at their highest, could not establish "conscious maladmintration" or contempt of court: [2016] NSWSC 975 at [73]-[74].
[2]
Relevant statutory provisions
Before addressing the arguments advanced by the parties the relevant statutory provisions need to be identified.
Section 38 of the Judiciary Act 1903 (Cth) provides:
Subject to sections 39B and 44, the jurisdiction of the High Court shall be exclusive of the jurisdiction of the several Courts of the States in the following matters:
(a) matters arising directly under any treaty;
(b) suits between States, or between persons suing or being sued on behalf of different States, or between a State and a person suing or being sued on behalf of another State;
(c) suits by the Commonwealth, or any person suing on behalf of the Commonwealth, against a State, or any person being sued on behalf of a State;
(d) suits by a State, or any person suing on behalf of a State, against the Commonwealth or any person being sued on behalf of the Commonwealth;
(e) matters in which a writ of mandamus or prohibition is sought against an officer of the Commonwealth or a federal court.
Section 39(2) of the Judiciary Act provides, relevantly:
(2) The several Courts of the States shall within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise, be invested with federal jurisdiction, in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it, except as provided in section 38 …
Section 39B of the Judiciary Act provides, relevantly, as follows:
(1) Subject to subsections (1B), (1C) and (1EA), the original jurisdiction of the Federal Court of Australia includes jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth.
(1A) The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter:
(a) in which the Commonwealth is seeking an injunction or a declaration; or
(b) arising under the Constitution, or involving its interpretation; or
(c) arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter.
(1B) ….
(1C) ….
(1D) ….
(1E) ….
(1EA) If:
(a) a civil proceeding is before the Family Court of Australia, the Federal Circuit Court of Australia or a court of a State or Territory; or
(b) an appeal arising out of such a proceeding is before the Family Court of Australia or a court of a State or Territory;
the following apply:
(c) the Federal Court of Australia does not have jurisdiction with respect to any matter in which a person who is or was a party to the proceeding seeks a writ of mandamus or prohibition or an injunction against an officer or officers of the Commonwealth in relation to a related civil proceeding decision;
(d) the following court is invested with, or has conferred on it, jurisdiction with respect to any such matter:
(i) if the civil proceeding or appeal is before the Family Court of Australia--that court; or
(ii) if the civil proceeding is before the Federal Circuit Court of Australia--that court; or
(iii) if the civil proceeding or appeal is before a court of a State or Territory--the Supreme Court of the State or Territory.
(1F) Subsections (1B), (1C), (1D), (1E) and (1EA) have effect despite anything in any other law. In particular:
(a) neither the Jurisdiction of Courts (Cross-vesting) Act 1987 , nor any other law, has the effect of giving the Federal Court of Australia jurisdiction contrary to subsection (1B), (1C) or (1EA); and
(b) neither section 9 of the Administrative Decisions (Judicial Review) Act 1977, nor any other law, has the effect of removing from the Supreme Court of a State or Territory the jurisdiction given to that Court by subsection (1B), (1C) or (1EA).
Section 4 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) provides:
(1) Where:
(a) the Federal Court or the Family Court has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and
(b) the Supreme Court of a State or Territory would not, apart from this section, have jurisdiction with respect to that matter;
then:
(c) in the case of the Supreme Court of a State (other than the Supreme Court of the Australian Capital Territory and the Supreme Court of the Northern Territory)--that court is invested with federal jurisdiction with respect to that matter; or
(d) in the case of the Supreme Court of a Territory (including the Australian Capital Territory and the Northern Territory)--jurisdiction is conferred on that court with respect to that matter.
(2) Where:
(a) the Supreme Court of a Territory has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and
(b) the Federal Court, the Family Court or the Supreme Court of a State or of another Territory would not, apart from this section, have jurisdiction with respect to that matter;
jurisdiction is conferred on the court referred to in paragraph (b) with respect to that matter.
(3) Where a proceeding is transferred to the Federal Court, the Family Court or a State Family Court of a State, that court has, by virtue of this subsection, jurisdiction with respect to so many of the matters for determination in the proceeding as that court would not have apart from this subsection.
(4) This section does not apply to a matter arising under:
(a) the Conciliation and Arbitration Act 1904; or
(ab) the Fair Work Act 2009; or
(aba) the Fair Work (Building Industry) Act 2012; or
(ac) the Fair Work (Registered Organisations) Act 2009; or
(ad) the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009; or
(b) the Workplace Relations Act 1996; or
(ba) the Native Title Act 1993; or
(c) section 45D, 45DA, 45DB, 45E, 45EA,46A, 155A or 155B of the Competition and Consumer Act 2010; or
(d) a provision of Part VI or XII of the Competition and Consumer Act 2010 so far as the provision relates to section 46A, 155A or 155B of that Act.
Section 6 of the Jurisdiction of Courts (Cross-vesting) Act provides:
(1) If:
(a) a matter for determination in a proceeding that is pending in the Supreme Court of a State or Territory is a special federal matter; and
(b) the court does not make an order under subsection (3) in respect of the matter;
the court must transfer the proceeding in accordance with this section to the Federal Court or a court mentioned in paragraph (2)(b).
(1A) However, the court must only transfer so much of the proceeding as is, in the opinion of the court, within the jurisdiction (including the accrued jurisdiction) of the Federal Court, or the court mentioned in paragraph (2)(b), as the case may be.
(2) If the court orders that a proceeding or part of a proceeding be transferred, the proceeding or part of the proceeding must be transferred:
(a) if the matter for determination in the proceeding is a matter mentioned in paragraph (a), (b), (c) or (e) of the definition of special federal matter in subsection 3(1)--to the Federal Court; or
(b) if the matter for determination in the proceeding is a matter mentioned in paragraph (ab) of that definition--to whichever of the Family Court, the Family Court of Western Australia or the Supreme Court of the Northern Territory, in the opinion of the court, is appropriate in the circumstances.
(3) The Supreme Court may order that the proceeding be determined by that court if it is satisfied that there are special reasons for doing so in the particular circumstances of the proceeding other than reasons relevant to the convenience of the parties.
(4) Before making an order under subsection (3), the court must be satisfied that:
(a) a written notice specifying the nature of the special federal matter has been given to the Attorney-General of the Commonwealth and the Attorney-General of the State or Territory where the proceeding is pending; and
(b) a reasonable time has elapsed since the giving of the notice for the Attorneys-General to consider whether submissions to the court should be made in relation to the proceeding.
(5) For the purposes of subsection (4), the court:
(a) may adjourn the proceeding for such time as the court thinks necessary and may make such order as to costs in relation to an adjournment as it thinks fit; and
(b) may direct a party to the proceeding to give a notice in accordance with that subsection.
(6) In considering whether there are special reasons for the purposes of subsection (3), the court must:
(a) have regard to the general rule that special federal matters should be heard by the Federal Court or a court mentioned in paragraph (2)(b), whichever is appropriate in the particular case; and
(b) take into account any submission made in relation to the proceeding by an Attorney-General mentioned in subsection (4).
(7) The Attorney-General may authorise the payment by the Commonwealth to a party of an amount in respect of costs arising out of the adjournment of a proceeding under this section, under a corresponding provision of a law of a State or under this section and under such a provision.
(8) Nothing in this section prevents the court granting urgent relief of an interlocutory nature if it is in the interests of justice to do so.
(9) Where, through inadvertence, the Supreme Court of a State or Territory determines a proceeding of the kind mentioned in subsection (1) without:
(a) the court making an order under subsection (3) that the proceeding be determined by that court; or
(b) a notice mentioned in subsection (4) being given;
nothing in this section invalidates the decision of that court.
(10) This section does not apply to an appeal that is instituted in the Full Court of the Supreme Court of a State or Territory if the court whose decision is the subject of the appeal had made an order under subsection (3), or under subsection 6(1) as in force before the commencement of the amendments of this Act made by the Law and Justice Legislation Amendment Act (No. 3) 1992 , in relation to the special federal matter.
Section 9 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) provides:
(1) Notwithstanding anything contained in any Act other than this Act, a court of a State does not have jurisdiction to review:
(a) a decision to which this section applies that is made after the commencement of this Act;
(b) conduct that has been, is being, or is proposed to be, engaged in for the purpose of making a decision to which this section applies;
(c) a failure to make a decision to which this section applies; or
(d) any other decision given, or any order made, by an officer of the Commonwealth or any other conduct that has been, is being, or is proposed to be, engaged in by an officer of the Commonwealth, including a decision, order or conduct given, made or engaged in, as the case may be, in the exercise of judicial power.
(2) In this section:
decision to which this section applies means:
(a) a decision that is a decision to which this Act applies; or
(b) a decision of an administrative character that is included in any of the classes of decisions set out in Schedule 1.
review means review by way of:
(a) the grant of an injunction;
(b) the grant of a prerogative or statutory writ (other than a writ of habeas corpus) or the making of any order of the same nature or having the same effect as, or of a similar nature or having a similar effect to, any such writ; or
(c) the making of a declaratory order.
(4) This section does not affect:
(b) the jurisdiction conferred on the Supreme Court of a State by section 32A of the Federal Court of Australia Act 1976; or
(c) the jurisdiction of a court of a State in respect of any matter that is pending before it at the commencement of this Act.
Schedule 1 to the ADJR Act provides, relevantly:
(e) decisions making, or forming part of the process of making, or leading up to the making of, assessments or calculations of tax, charge or duty, or decisions disallowing objections to assessments or calculations of tax, charge or duty, or decisions amending, or refusing to amend, assessments or calculations of tax, charge or duty, under any of the following Acts:
…
Income Tax Assessment Act 1936
Income Tax Assessment Act 1997…
[3]
Submissions of Anglo American
Mr John Hyde Page, who appeared for Anglo American with Mr T Bagley, initially submitted that this Court had jurisdiction to determine the defence of conscious maladministration by reason of s 255-1 of Schedule 1 of the TAA. He accepted that the defence in the proceedings below did not seek constitutional relief under s 75(v) of the Constitution, any of the relief available under s 39B of the Judiciary Act, or any other relief.
It was submitted that it was open to Anglo American to simply raise the question of "conscious maladministration" in its defence in the recovery proceedings rather than seek any order directed to the Commissioner of Taxation quashing the assessments or restraining the Commissioner from acting on them.
It was also submitted that the course adopted in these proceedings was open following the decision of the High Court in Futuris and by reason of an earlier decision of the High Court in F J Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360. It was submitted that F J Bloemen was authority for the proposition that this Court had jurisdiction to make a declaration that the assessments were a nullity.
In subsequent written submissions, Mr Hyde Page contended that this Court had jurisdiction to entertain the present collateral challenge under s 39(2) of the Judiciary Act. Whilst the applicant accepted that the Court had no jurisdiction to make an order of prohibition or mandamus (by reason of ss 38 and 39(2) of the Judiciary Act), it was submitted that the Court had jurisdiction to make an order for certiorari, grant an injunction or make a declaration.
It was contended that although no such order was sought by the applicant, the fact that such an order could have been sought gave this Court jurisdiction to determine that the Commissioner had engaged in "conscious maladministration" and to treat the assessments as a nullity, although they had not otherwise been set aside. The relevant analogy relied upon was the undoubted authority of a State court to set aside a warrant by way of collateral challenge in a criminal case: Ousley v R (1997) 192 CLR 69.
It was said that the decision of Deputy Commissioner of Taxation v Worn (1993) 25 ATR 152 per Hayne J was authority for the proposition that a State court was granted jurisdiction under s 39(2) of the Judiciary Act to grant an injunction preventing the Commissioner from proceeding to recover judgement on an assessment where conscious maladministration was shown.
It was also said that a relevant analogy was provided by Attorney-General v Breckler (1999) 197 CLR 83 at [36] where it was held that, in the absence of legislative prescription to the contrary, a challenge to the validity of an administrative act was permissible where the validity of that act was incidental to the issues in a proceeding:
If [the impugned act] be characterised as activity of an administrative nature, then in the absence of legislative prescription to the contrary, the determination would be open to collateral review by a court in the course of dealing with an issue properly arising as an element in a justiciable controversy of which the court was seized.
Anglo American accepted that a collateral challenge cannot be brought if the possibility of such a challenge is effectively excluded by a conclusive evidence provision, but submitted that Futuris made that conclusion untenable here.
Finally, it was submitted that "if it is necessary for the applicants to apply for a formal order regarding the validity of the tax assessments, the applicants would file a cross-claim seeking declaratory relief and possibly certiorari, but not mandamus or prohibition".
[4]
Submissions of the Commissioner
The Commissioner submitted that the present proceedings were "recovery proceedings" as that term was described by the High Court in Futuris and that upon the tender of the notices of assessment before the primary judge by the Commissioner, the combined effect of s 175 of the 1936 Act and s 350-10(1) in Sch 1 of the TAA was that the assessments were conclusive evidence of the validity of the assessments and the applicant's defence must fail.
It was next submitted that s 9 of the ADJR Act excluded from the jurisdiction of State courts the remedies suggested by the applicants of certiorari and declaration in relation to the validity of the making of income tax assessments.
In any event, the Commissioner submitted that neither certiorari nor declaratory relief had been sought by Anglo American. If Anglo American had sought either remedy it was submitted that the Court would have jurisdiction to consider granting those remedies by reason of s 4 of the Jurisdiction of Courts (Cross-vesting) Act, which provided a grant of jurisdiction to State courts of the Federal Court's s 39B jurisdiction, but that the matter would then be a "special federal matter" which must be transferred to the Federal Court in accordance with s 6 of the Jurisdiction of Courts (Cross-vesting) Act unless the Supreme Court was satisfied that "special reasons" existed for the matter to be determined in the Supreme Court.
[5]
Consideration: the jurisdiction of this Court in taxation debt recovery proceedings
Before examining the submissions of the parties in detail, the issue should be framed properly. Section 177(1) of the 1936 Act provided that a notice of assessment was conclusive evidence that the assessment was properly made and, except in proceedings under Part IVC of the TAA, that the amounts and particulars of the assessment are correct. Section 177 has since been replaced by s 350-10(1) of Schedule 1 to the TAA. There is no issue that s 350-10(1) has an identical effect to s 177.
The scope of the former s 177(1) was considered by the High Court in Futuris. The plurality (Gummow, Hayne, Heydon and Crennan JJ) said (citations omitted):
[64] The evident policy referred to in the terms of s 177(1) is the facilitation of proceedings for the recovery of tax which are instituted by the Commissioner under s 209 of the Act in a court of competent jurisdiction. Corresponding provision is made elsewhere in the Act for the recovery of other amounts. The action for recovery is facilitated by the "conclusive evidence" provision in s 177(1). That sub-section, as the Commissioner correctly submitted, is not a privative clause in the ordinary use of that term. It does not purport to oust the (necessarily federal) jurisdiction conferred upon any other court in matters arising under the Act. To the contrary, it recognises that there may be Pt IVC proceedings and in those proceedings the "conclusive evidence" provision does not apply.
[65] In recovery proceedings, s 177(1) operates to change what otherwise would be the operation of the relevant laws of evidence. But, given the presence of Pt IVC, s 177(1) does not operate to impose an incontestable tax or otherwise fall foul of the principles which were considered in Nicholas v The Queen and which respect usurpation of the federal judicial power by deeming to exist an ultimate fact.
[66] What of the operation of s 177(1) as a limitation upon the evidence which may be received in an application for judicial review under s 75(v) of the Constitution or s 39B of the Judiciary Act? What will be in issue there, as explained earlier in these reasons, are allegations of corruption and other deliberate maladministration. The attribution "correct" given by the concluding word of s 177(1) is inapt to describe the situation which would arise were such allegations (properly pleaded) made good in the judicial review proceeding. Considerations applied above in the construction of s 175 apply here also. The result is that, on its proper construction and its application to the present s 39B case, s 177(1) did not conclude against Futuris curial consideration of alleged deliberate maladministration of the Act with respect to the Second Amended Assessment.
[67] It follows from what has been said respecting s 177(1) that not only is it not a privative clause, but there is not the conflict or inconsistency between s 177(1), s 175 and the requirements of the Act governing assessment which calls for reconciliation of the nature identified in Plaintiff S157/2002 v The Commonwealth. The point sought to be made here respecting the relationship between ss 175 and 177(1) and those requirements was expressed in Deputy Federal Commissioner of Taxation v Richard Walter Pty Ltd:
The requirements of the Act which govern the making of an assessment do not produce any inconsistency with the provision that a notice of assessment constitutes conclusive evidence in recovery proceedings. That is because s 175 provides that the validity of any assessment shall not be affected by reason of the fact that any of the provisions of the Act have not been complied with…Having regard to s 175, there is no inconsistency, apparent or otherwise, between the requirements of the Act relating to the making of an assessment and s 177(1), and no reconciliation is called for. Indeed, as I have said, s 177(1) does no more than give evidentiary effect to s 175.
The question in Futuris, as these passages make clear, was the effect of ss 175 and 177 of the 1936 Act (and thus s 350-10(1) of Schedule 1 to the TAA) in, on the one hand "recovery proceedings" and on the other "an application for judicial review under s 75(v) of the Constitution or s 39B of the Judiciary Act."
The principle that emerges from the passages referred to above is that s 177 (and thus s 350-10(1)) applies according to its terms as "conclusive evidence" in recovery proceedings.
Where, as in the present case, a notice of assessment is admitted in evidence in recovery proceedings, it will conclusively be established that the assessment was "properly made" and "except in proceedings under Part IVC of this Act on a review or appeal relating to the assessment… the amounts and particulars of the assessment… are correct".
This is to be contrasted with the operation of s 350-10(1) on a notice of assessment tendered in "judicial review proceedings". "Judicial review proceedings", in the context in which the High Court was using that term in Futuris, are proceedings in which constitutional relief under s 75(v) or relief of the kind permitted by s 39B of the Judiciary Act is sought. So much is clear from the discussion of the plurality in Futuris at [4], [47]-[48] and [66].
The question in the present case is whether, in taxation debt recovery proceedings being conducted in a State court where a notice of assessment has been admitted into evidence, it is open to a defendant to resist judgment for the sum identified in the notice of assessment on the basis of a defence filed which asserts "conscious maladministration", but does not seek any relief treating the assessment as a nullity.
That question was squarely addressed by Futuris. The present proceedings are "recovery proceedings" as that term was being used by the High Court in Futuris. The assessments in the present case were admitted in evidence. This Court is bound to conclude that it was thus conclusively established that the assessment was "properly made" and "the amounts and particulars of the assessment… are correct".
The present proceedings were not framed as "judicial review proceedings" of the kind described in Futuris in which the tender of the notices of assessment did not have that effect and the question before the Court was whether the assessments were the product of "conscious maladministration": cf Futuris at [66].
I do not accept that, following Futuris, F J Bloemen is authority for the proposition that this Court has jurisdiction to make a declaration in debt recovery proceedings that the assessments were a nullity, and then proceed to treat them as such in those proceedings. That conclusion would be inconsistent with the essential distinction the High Court was drawing in Futuris between the effect of s 177 in "recovery proceedings" on the one hand and "judicial review proceedings" on the other.
Even assuming that in describing an application for "judicial review" as being one under s 75(v) of the Constitution or s 39B of the Judiciary Act, the plurality at [66] were not intending to describe the full extent of permissible "judicial review" proceedings and intended to leave open the prospect that there were other means to engage the jurisdiction to conduct a "judicial review", at the very least in order to treat the notice of assessment as a nullity in the present case, the applicant needed to seek some order having that effect from a court of competent jurisdiction. I will address below the jurisdiction of this Court to make such an order were one to be sought by Anglo American . For present purposes, however, it is in my view clearly laid down in Futuris that unless "judicial review" proceedings are successfully conducted, a court in "recovery proceedings" must give full effect to the conclusive evidence provision in s 350-10(1).
The appeals to the principles of collateral review in Ousley are not to the point. The Listening Devices Act 1969 (Vic) warrants the subject of that case were not protected by a conclusive evidence provision of the type here engaged. Nor was there a separate and specific administrative and judicial review and appeal system designed to address the correctness of the warrants as exists in Part IVC of the TAA.
So far as Anglo American's submission based on Breckler is concerned, s 350-10(1) provides a "legislative prescription to the contrary" of the kind identified in that case. The effect of Futuris is that a collateral challenge cannot be brought in recovery proceedings.
Anglo American submitted in writing that "it may be accepted that, in a tax recovery proceeding, (emphasis added) a large number of collateral challenges to the validity of tax assessments are excluded by ss 175 and 177 (now s 350-10). A type of collateral challenge that is not so excluded is a collateral challenge where it is alleged that the officers of the respondent have perpetrated a deliberate illegality in bad faith in the course of making assessment".
That submission must be rejected. In a tax recovery proceeding, this Court is bound by Futuris to conclude that the conclusive evidence provision in s 350-10(1) of the TAA should be given full effect and that the assessment was "properly made" and "the amounts and particulars of the assessment… are correct".
Finally on this issue, mention must be made of a submission made by Senior Counsel then appearing for Anglo American before the primary judge and repeated in this Court by Mr Hyde Page that "if required" Anglo American would file a cross-claim seeking relief under s 39B (or s 39(2)) of the Judiciary Act. Despite this submission being advanced orally and in writing, no application was made to file a cross-claim. Counsel for Anglo American on this application for leave to appeal did however submit that this Court should grant leave to appeal and remit the matter to the primary judge to permit such a cross-claim to be filed.
It is not a matter of the Court indicating to the parties what course they should take but, rather, as here, the Court proceeding on the basis of the issues presented by the parties for determination. These proceedings were framed as, and remain, proceedings for the recovery of tax as so described in Futuris.
There is no occasion to grant leave and set aside the decision of the primary judge to permit a cross-claim (of an indeterminate nature) to be filed by Anglo American.
Further, Anglo American still has available to it Part IVC proceedings and proceedings under s 75(v) and s 39B, subject to obvious time limit and discretionary problems which would attend the grant of any relief. The applicant ultimately accepted that there would be no issue estoppel or Anshun estoppel arising in the present case. That concession was correctly made for at least two reasons. First, the present is an interlocutory proceeding. The doctrine of issue estoppel does not apply to interlocutory proceedings. Secondly, the High Court in Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332; [1990] HCA 8 held that Anshun estoppel does not apply to a failure to pursue a cross-claim.
Senior Counsel for the Commissioner, Mr McGovern SC, who appeared with Dr Jacques, accepted the possibility that where, after summary judgment had been obtained in recovery proceedings, new facts having come to light, a s 39B challenge to an assessment may be successfully conducted. Whether this case is capable of meeting that description is not a matter which needs be determined.
[6]
The remaining issues on this application for leave to appeal
Although the conclusion I have reached about what Futuris requires in the present case is sufficient to determine this application for leave to appeal, it is appropriate that I say a little more about the remaining issues of jurisdiction which were addressed by the parties.
[7]
The limits of this Court's federal jurisdiction under s 39(2) of the Judiciary Act
Section 39(2) of the Judiciary Act invests federal jurisdiction in the several courts of the States "in all matters in which the High Court has original jurisdiction …except as provided in s 38".
Section 38(e) of the Judiciary Act provides that the jurisdiction of the High Court "shall be exclusive of the jurisdiction of the several Courts of the States in …(e) matters in which a writ of mandamus or prohibition is sought against an officer of the Commonwealth or a federal court."
Thus, the Supreme Court does not have jurisdiction in matters in which a writ of mandamus or prohibition is sought against an officer of the Commonwealth, of whom the Commissioner is one.
It will be recalled that no order of this kind was sought by the applicant.
[8]
Further limits of this Court's federal jurisdiction under s 9 of the ADJR Act
Assuming that a State court nonetheless would have jurisdiction under s 39(2) of the Judiciary Act to grant certiorari or make a declaration in taxation debt recovery proceedings, such jurisdiction is affected by s 9(1) of the ADJR Act (which is set out at [26]-[27] above) in relation to decisions making, or forming part of the process of making, or leading up to the making of, income tax assessments. In particular it provides:
9 Limitation of jurisdiction of State courts
(1) Notwithstanding anything contained in any Act other than this Act, a court of a State does not have jurisdiction to review:
(a) a decision to which this section applies…
A "decision to which this section applies" is defined in s 9(2) of the ADJR Act to include "a decision of an administrative character that is included in any of the classes of decisions set out in Schedule 1". Schedule 1 includes, at item (e), all decisions involved in making assessments of tax under, inter alia, the 1936 Act.
"Review" is defined in s 9(2) of the ADJR Act as follows:
review means review by way of:
(a) the grant of an injunction;
(b) the grant of a prerogative or statutory writ (other than a writ of habeas corpus) or the making of any order of the same nature or having the same effect as, or of a similar nature of having a similar effect to, any such writ; or
(c) the making of a declaratory order.
Section 9(1) of the ADJR Act was addressed by the Full Federal Court (Wilcox, Tamberlin and Sackville JJ) in Papazoglou v Republic of the Philippines (1997) 74 FCR 108 as follows:
…the importance of s 9 of the ADJR Act for present purposes is that it demonstrates that there is no general jurisdiction on the part of State Supreme Courts to review (in any of the ways specified in s 9(2)) decisions of an administrative character made under Commonwealth legislation. On the contrary, the Supreme Courts are excluded from any such role, regardless of whether or not the decisions are amenable to review under the ADJR Act. The exclusion of the State Supreme Courts from the field of judicial review of administrative decisions is reinforced by s 38(e) of the Judiciary Act, which makes the jurisdiction of the High Court exclusive of the jurisdiction of State courts in matters in which a writ of mandamus or prohibition is sought against an officer of the Commonwealth. By contrast, the Federal Court has jurisdiction in such matters under s 39B of the Judiciary Act.
That s 9(1) of the ADJR Act affects the jurisdiction of this Court otherwise available under s 39(2) was recognised by Basten JA in ML v Australian Securities and Investments Commissioner and Another [2013] NSWCA 109; (2013) 300 ALR 764; 93 ACSR 23 at [5],[12]-[13]. This was because that later inconsistent provision should be taken to be an implied amendment of the earlier provision. His Honour said:
[5] Pursuant to s 9 of the ADJR Act, a State court does not have jurisdiction to "review" a decision to which s 9 applies, which is, relevantly, a decision to which the Act applies. That preclusion of jurisdiction is said to operate "notwithstanding anything contained in any Act other than this Act", and would, in its terms, appear to prevent a vesting of jurisdiction pursuant to s 39(2) of the Judiciary Act 1903 (Cth). However, a note to s 9(1) states that the subsection has effect, relevantly, subject to s 1337B(3) of the Corporations Act.
…
[12] The conferral effected by s 39(2) of the Judiciary Act, has been described as "expressed in terms of perfectly general application": Adams v Cleeve [1935] HCA 12; 53 CLR 185 at 190 (Rich, Dixon and Evatt JJ). Nevertheless, a later statute "disclosing an intention at variance with the full operation of sec 39" must be given effect: ibid. The effect of s 9 is to prevent the conferral on this Court of any jurisdiction of the kind exercisable by the High Court under s 75(v) of the Constitution to control the activities of a Commonwealth officer or entity.
I agree with Basten JA. Nothing in the subsequent decision of this Court in Hopkins v Governor General of Australia [2013] NSWCA 365 at [26] which pointed out that the Cross-vesting Act (addressed below) was not relied upon in ML affects this conclusion.
Gray J in P1 v Australian Crime Commissioner [2012] SASC 229; 274 FLR 50 at [55] expressed a different view. He said that "judicial review forms part of the core Constitutional function of the Supreme Court and should not be removed by implication". For the reasons given by Basten JA I disagree. There is a further textual indication contained in the Judiciary Act itself tending against the view expressed by Gray J.
A later section of the Judiciary Act, s 39B(1F), recognises that s 9 of the ADJR Act otherwise has the effect of removing jurisdiction given by that Act from the Supreme Court of a State or Territory. That section (a saving provision) provides:
(1F) Subsections (1B), (1C), (1D), (1E) and (1EA) have effect despite anything in any other law. In particular:
(a) neither the Jurisdiction of Courts (Cross-vesting) Act 1987 , nor any other law, has the effect of giving the Federal Court of Australia jurisdiction contrary to subsection (1B), (1C) or (1EA); and
(b) neither section 9 of the Administrative Decisions (Judicial Review) Act 1977 , nor any other law, has the effect of removing from the Supreme Court of a State or Territory the jurisdiction given to that Court by subsection (1B), (1C) or (1EA).
In written submissions in reply the applicant placed great reliance upon the decision of Hayne J in Deputy Commissioner of Taxation v Worn, where his Honour dealt with a recovery case in which the respondent had counterclaimed for an injunction restraining the Commissioner from taking further action to collect the tax which was due. Hayne J held that the State Court had jurisdiction to entertain the application for an injunction under s 39(2) of the Judiciary Act. The decision preceded Futuris. In addition, his Honour's attention was not drawn to s 9 of the ADJR Act and the case contains no mention of the provision. It is distinguishable for those reasons.
Section 9(1) of the ADJR Act has the effect that a State court has no jurisdiction under s 39(2) of the Judiciary Act to grant certiorari or make a declaration in relation to the making of a taxation assessment under the 1936 Act.
[9]
The Court's jurisdiction under the Cross-vesting Act
This Court does, however, have jurisdiction to grant the remedies available to the Federal Court under s 39B by reason of s 4 of the Jurisdiction of Courts (Cross-vesting) Act 1987. As explained by this Court in Hopkins at [24] the Cross-vesting Act grant of jurisdiction prevails over the restriction of jurisdiction in s 9 of the ADJR Act.
This Court does not otherwise have jurisdiction to grant relief in the nature of certiorari or a declaration in relation to the making of a tax assessment under the 1936 Act. Proceedings of that kind, had they been commenced by Anglo American, would be a "special federal matter" (as one which is within the original jurisdiction of the Federal Court by virtue of s 39B of the Judiciary Act) and the provisions of s 6 of the Jurisdiction of Courts (Cross-vesting) Act would need to be complied with.
It is unnecessary to say any more about how such an application may be treated in a case like the present (assuming a separate proceeding or a cross-claim seeking the relief suggested by the applicant were to be filed).
[10]
Conclusion and orders
These proceedings are not "judicial review" proceedings of the kind contemplated by the High Court in Futuris. These were taxation debt recovery proceedings being conducted in a State court. The amended defence that was filed in these proceedings was bound to fail, because a claim of conscious maladministration can have no reasonable prospect of succeeding in debt recovery proceedings where no application for judicial review is made and notices of assessment have been admitted in evidence. That is the import of Futuris at [64]-[67], cited above.
Leave to appeal should be refused. I propose the following orders:
1. application for leave to appeal refused;
2. the applicant pay the respondents costs as agreed or assessed.
[11]
Amendments
15 February 2017 - Typographical errors corrected
15 February 2017 - Typographical error corrected: [15]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 15 February 2017
Solicitors:
Mark J Ord, Lawyer & Consultant (applicants)
Louise Vardenega; Australian Government Solicitor (respondent)
File Number(s): 2016/00229097
Decision under appeal Court or tribunal: Supreme Court of New South Wales
Jurisdiction: Common Law Division
Citation: [2016] NSWSC 975
Date of Decision: 14 July 2016
Before: Button J
File Number(s): 15/149240; 15/149448; 15/166051; 15/241288; 15/247161; 15/247564
headnote
[This headnote is not to be read as part of the judgment]
Officers of the Commissioner of Taxation conducted an investigation with regard to the tax affairs of Anglo American Investments Pty Ltd (Anglo American) and its related entities, and sought and obtained certain information from the taxation authorities in the Cayman Islands. Anglo American contends that those acts of employees of the respondent were unlawful, done in bad faith, and constituted "conscious maladministration" as that term was described in Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 32.
The Deputy Commissioner of Taxation (the Commissioner) issued notices of tax assessment to Anglo American. Anglo American did not commence review or appeal proceedings in relation to those assessments (as they are entitled to do under Part IVC of the Taxation Administration Act 1953 (Cth)), nor did it seek relief under s 75(v) of the Constitution or s 39B of the Judiciary Act 1903 (Cth).
The Commissioner commenced debt recovery proceedings in the Supreme Court. The tax assessments in relation to Anglo American were received in evidence in those proceedings.
Anglo American resisted the debt recovery claim in its amended defence. That defence pleaded that the assessments in question are not valid because of the alleged "conscious maladministration" of the officers of the Commissioner in obtaining and using the documents from the Cayman Islands. Anglo American did not file a cross-claim (nor, as noted above, commence any review proceedings) to give effect to its allegations of "conscious maladministration".
The primary judge struck out the defence on the basis that the contentions of Anglo American, taken at their highest, could not establish "conscious maladministration". Anglo American sought leave to appeal from this decision.
The Court of Appeal, dismissing the application for leave to appeal, held, per Payne JA (McColl and Meagher JJA agreeing):
The amended defence that was filed in these proceedings was bound to fail, because a claim of conscious maladministration can have no reasonable prospect of succeeding in debt recovery proceedings where no application for judicial review is made and notices of assessment have been admitted in evidence: at [78]
Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 32 applied; F J Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 considered.
If (as did not occur in this case) Anglo American had sought a declaration, certiorari or an injunction about the making of the income tax assessment:
(a) The effect of s 9 of the Administrative Decisions (Judicial) Review Act 1977 (Cth) was that State courts do not have jurisdiction otherwise granted under s39(2) of the Judiciary Act to make such orders in a 'review' of the making of an income tax assessment: at [65] - [74]
ML v Australian Securities Investments Commissioner and Another [2013] NSWCA 109 applied; Hopkins v Governor General of Australia [2013] NSWCA 365 considered.
(b) State Courts do have jurisdiction to grant the remedies available to the Federal Court under s 39B by reason of s 4 of the Jurisdiction of Courts (Cross-vesting) Act 1987: at [75]
(c) Proceedings seeking a declaration or injunction in relation to the making of an income tax assessment would be a "special federal matter" and the provisions of s 6 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) would have to be complied with: at [75].