SKIBA -v- THE DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA [2009] WADC 40 (23 March 2009)

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

CITATION : SKIBA -v- THE DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA [2009] WADC 40

THE DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

Practice and procedure - Appeal from order of Registrar - Summary judgment - No arguable defence - No question to be tried - Appeal dismissed

District Court of Western Australia Act 1969

Income Tax Assessment Act 1936

Taxation Administration Act 1953

Commissioner of Taxation v Futuris Corp Ltd [2008] HCA 32; (2008) 247 ALR 605

Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18

Deputy Commissioner of Taxation for the Commonwealth of Australia v Cumins [No 3] [2008] WASC 87

1 WAGER DCJ: The appellant appeals against the decision of Registrar Kingsley made on 26 February 2007 ordering summary judgment pursuant to O 14 r 1 Rules of the Supreme Court 1971.

2 Although the appellant relies on a number of grounds of appeal, the grounds fall into the following categories:

1. The decision was wrong in law.
2. The decision was wrong in fact.
3. The respondent and her representatives had submitted false statements to the court.
4. The deponents of affidavits relied on by the respondent in the summary judgment application had perjured themselves.
5. The court did not consider all of the material that the appellant had provided prior to making the determination.

3 An index to the appellant's submissions and a listing of the supporting documents by the volumes that were transmitted was received on 13 February 2009. This document has assisted me to consider the significant quantity of material filed and provided by the appellant prior to the hearing of the appeal.

4 The history of the matter is that on 28 August 2006 the respondent filed a notice of originating motion (CIVO 115) together with an affidavit in support of the application of Aris Zafirou sworn 10 August 2006 seeking leave of the Court to issue and serve a writ, notice of which was to be given out of jurisdiction. Leave to issue and serve the writ was subsequently granted and on 13 October 2006 the District Court transmitted the relevant documentation to effect service on the appellant in Thailand.

5 On 25 January 2007 the appellant filed and served a notice of appearance and a memorandum of challenge to jurisdiction. On 26 January 2007 the appellant filed and served a defence and a counterclaim. On 9 February 2007 the respondent filed a defence to the counterclaim. On 11 February 2007 the appellant filed and served a memorandum of response to the respondent's response to the counterclaim.

6 On 15 February the respondent filed an application for summary judgment or for orders striking out the memorandum of counterclaim supported by the affidavit of Aris Zafirou sworn 15 February 2007.

7 On 2 March 2007 Registrar Kingsley entered summary judgment against the appellant in the sum of $238,816.07 together with additional general interest charge ("GIC") accrued from 15 February 2007 to 2 March 2007 being the date of judgment. The summary judgment was in relation to assessments made pursuant to:

(i) Section 204 Income Tax Assessment Act 1936 ("ITAA 1936") and Part 11A of the Taxation Administration Act 1953 ("TAA 1953") in respect of income tax assessments for the income years ended 30 June 2001 and 30 June 2002, notices of assessment for the two income years having been given to the appellant ("the assessment"). The assessments are annexed to the affidavit of Aris Zafirou dated 10 August 2006 as AZ-1 to AZ-3.

(ii) Section 298-25 in Sch 1 of Part 11A of the TAA 1953 in respect of administrative penalty. The penalty assessment related to an administrative penalty issued to the appellant for having a tax shortfall amount in respect of income tax returns for the income years 30 June 2001 and 30 June 2002. The appellant was given the relevant notices of assessment of penalty ("the penalty assessment"). The penalty assessment is annexed to the affidavit of Aris Zafirou dated 10 August 2006 as AZ-5.

(iii) Section 8AAZF of Part 11A of the TAA 1953 in respect of running balance accounts ("RBA") deficit debt and GIC of $15,894.81 for the period 8 August 2006 to 14 February 2007 and further associated GIC accruing from 15 February 2007 until the date of entering summary judgment being 2 March 2007. The GIC is annexed to the affidavit of Aris Zafirou dated 10 August 2006 as AZ-4.

8 Section 255-5 in Sch 1 of the TAA 1953 sets out that the respondent may recover an amount of tax related liability that remains unpaid after it has become due and payable in a court of competent jurisdiction. Pursuant to s 50 District Court of Western Australia Act 1969 ("DCWA 1969") the District Court is a court of competent jurisdiction. The relevant jurisdictional limit was $500,000 and is currently $750,000. Accordingly, the action for recovery was commenced in the appropriate jurisdiction.

(1) The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, in except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct."

10 Part IVC of the TAA 1953 is not relevant to these proceedings. The proceedings relate to the recovery of a debt and related orders and are not a review or an appeal in relation to the assessments in question. Any review or appeal of the merits in question is a matter for the federal jurisdiction, specifically the Administrative Appeals Tribunal at first instance.

11 In Commissioner of Taxation v Futuris Corp Ltd [2008] HCA 32; (2008) 247 ALR 605 Gummow CJ, Hayne, Heydon and Crennan JJ said that:

[64] The evidence policy reflected 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 subsection, 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."

12 The production of notices of assessment that were annexed to the affidavit of Aris Zafirou sworn 10 August 2006 are conclusive evidence that the assessments were duly made and that all of the particulars of each of the assessments was correct.

"298-30 Assessment of penalties under Division 284

(1) The Commissioner must make an assessment of the amount of an administrative penalty under Division 284.

(2) An entity that is dissatisfied with such an assessment made about the entity may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

(3) The production of a notice of such an assessment, or of a copy of it certified by or on behalf of the Commissioner, is conclusive evidence of the making of the assessment and of the particulars in it.

(4) Subsection (3) does not apply to proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment."

14 Part IVC of the TAA 1953 does not apply in any way to these proceedings. Any review or appeal relating to the assessment including the merits of the assessment must be dealt with federally pursuant to Part IVC (see Commissioner of Taxation v Futuris Corp Ltd [2008] HCA 32; (2008) 247 ALR 605).

15 Pursuant to s 14ZZM and s 14ZZN TAA 1953 the fact that a review or appeal is pending in relation to a taxation decision does not interfere or affect the Court's decision. Recovery of any tax, additional tax or other amount may proceed as if no appeal is pending. I am advised that the appellant commenced proceedings in the Administrative Appeals Tribunal ("AAT"), however the outcome of the appeal and the prospect of any future applications is not relevant to the issue to be considered.

16 The assessments and penalty assessments themselves are therefore conclusive evidence of the debt due and payable to the Commonwealth of Australia. The appellant cannot use this appeal process to revisit the assessments or the merit of the assessments that were made.

17 Order 14 Rules of the Supreme Court sets out the procedure for a summary judgment application. Order 14 r 3(1) states:

"3**. Judgment may be given for plaintiff**

(1) On the hearing of an application under Rule 1 unless the Court dismisses the application, or the defendant satisfies the Court with respect to the claim, or the part of the claim, to which the application relates that there is an issue or question in dispute which ought to be tried, or that there ought for some other reason to be a trial of that claim or part, the Court may give such judgment for the plaintiff against the defendant on that claim or part thereof as may be just, having regard to the nature of the remedy or relief claimed."

18 An order for summary judgment should only be made after exercising great caution and should be reserved for cases which are not arguable or where it is clear that there is no question to be tried. The applicant for summary judgment assumes the burden of persuading the court that the claim made is a good one, that there is no defence to it and that therefore leave to defend should not be granted and that judgment should be given (Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18 at 23).

19 In Deputy Commissioner of Taxation for the Commonwealth of Australia v Cumins [No 3] [2008] WASC 87, a case in which the defendant sought to set aside summary judgment after judgment had been granted unopposed to the plaintiff in relation to a sum that was subsequently conceded by the defendant to have been calculated in error, the application to set aside judgment was dismissed. Newnes J held that the fact that the certificate under s 255-45 in Sch 1 of the TAA 1953 certified that the sum (that was subsequently found to be incorrect) was due and payable did not provide any grounds on which the judgment in respect of the sum certified should be set aside. His Honour said at [39]:

"That certificate is prima facie evidence of that indebtedness. On the material before me there is nothing to suggest that the defendant is capable of overcoming the effect of the certificate."

"The present judgment was not, of course, a default judgment, but what I think does emerge from these cases is that where a default judgment has been entered for an excessive amount the court will not ordinarily set aside if the defendant has no arguable defence to the claim."

"I consider that in order to succeed in this application the defendant must show that he has an arguable defence to the claim (after the deduction of the admitted error) or that there is some other reason the action should go to trial."

22 The appellant's grounds include that the appellant does not admit the debt because the amount claimed is wrong. The appellant submits that the penalties imposed are also wrongly imposed and for that reason the claim is not admitted. The GIC levy is pleaded as being excessive and inappropriately imposed. Further, the information on which the assessments were made and the information placed before the Court by the respondent is alleged to be deliberately false having been obtained in part by abuse of power, false statements, threats and intimidation. The appellant submits that the conduct of the respondent is persecution and abuse of legal process.

23 The provisions of s 177 ITAA 1936 and s 298-30 in Sch 1 TAA 1953 are conclusive evidence of the debt due to the Commonwealth of Australia. This jurisdiction cannot consider the correctness of the assessments and is bound by statute from doing so. Any consideration of the correctness of the amounts ordered must be brought under Part IVC of the TAA 1953.

24 The appellant pleads that the order for summary judgment was wrong in fact. The appellant particularises the factual errors and fraudulent foundation that he alleges was relied upon by Registrar Kingsley in making the order for summary judgment including allegations that factual material was fraudulently obtained and obtained by threats and intimidation. The appellant also argues that all relevant documents were not considered by the Registrar prior to making the order and that there are gaps in the factual material that provides the foundation for the assessments. The background to the factual foundation is not relevant to considerations that the debt must be paid. The notices of assessment and amended assessment for the income years ended 30 June 2001 and 30 June 2002 and the notice of assessment of penalty relevant to the same periods and the GIC are assessments that were given to the appellant and that, by statute, are deemed to be conclusive evidence that the assessment was duly made and that the particulars in it are correct. The Registrar was precluded by statute from considering the substance of the assessments, the merit of the assessments and the reason why the assessments were made. The Registrar was bound to consider the assessments as conclusive evidence that the assessment was duly made and that the particulars in the assessments were correct.

3. The respondent and her representatives submitted false statements to the Court

25 The appellant asserts that the respondent and her representatives have submitted false statements to the Court. The notices of assessment under consideration are not false notices. The Registrar was precluded from considering the substance of the material and the merits of the material and was bound to accept the assessments as conclusive evidence that the assessment was duly made and that the particulars in the assessments were correct. In Commissioner of Taxation v Futuris Corp Ltd [2008] HCA 32; (2008) 247 ALR 605 at 619 Gummow CJ, Hayne, Heydon and Crennan JJ said:

"[60] Allegations that statutory powers have been exercised corruptly or with deliberate disregard to the scope of those powers are not likely to be made or upheld."

26 In the present case, however, the Registrar was precluded from even considering allegations of corruption, fraud and perjury because he was bound by s 177 ITAA 1936 and s 298-30 in Sch 1 TAA 1953. The relevant assessment was conclusive evidence that the assessment was duly made and that the particulars in it were correct.

4. The deponents of affidavits relied on by the respondent in the summary judgment application had perjured themselves

27 The appellant submitted that the deponents of affidavits relied on by the respondent for the summary judgment application had perjured themselves. The Registrar was bound by s 177 ITAA 1936 and s 298-30, Sch 1 TAA 1953. The Registrar properly held that the relevant assessments were conclusive evidence that the assessments were duly made and that the particulars in them were correct.

5. The Court did not consider all of the material that the appellant had provided prior to making the determination

28 The appellant asserted that the Court did not consider all of the material that the appellant had provided prior to making the determination. The Registrar considered the relevant assessment documents and held that s 177 ITAA 1936 and s 298-30, Sch 1 TAA 1953 applied. The Registrar correctly determined that the assessments were conclusive evidence that the assessment was duly made and that the particulars in it were correct. Accordingly the Registrar's order for summary judgment was appropriate.

29 There is no arguable defence to the respondent's claim and there is no reason why the action should go to trial.

30 Prior to the hearing of this matter the respondent advised that the respondent is seeking a reduced judgment amount. In written submissions counsel for the respondent stated:

"The RBA Deficit Debt and Reduction of Judgment Amount

1. The Appellant in his Defence and affidavit sworn 7 July 2008 contends he had permanently left the jurisdiction, and accordingly could not have derived any income within Australia which could be subject to the PAYG regime, and accordingly which could be allocated to a Running Balance Account.
2. Pursuant to s 8AAZJ of the TAA 1953, the certificate exhibited as 'AZ-11' to the Affidavit of Aris Zafirou sworn 19 January 2009 is prima facie evidence that the sum of $9,013.73 was an RBA deficit debt due and payable by the Appellant to the Commonwealth of Australia as at 14 February 2007.
3. Notwithstanding that, the Respondent has decided not to pursue in this proceeding the claim for the RBA deficit debt comprising PAYG income tax instalments in respect of the period from 1 July 2004 to 30 June 2006 and GIC. The Appellant is prepared to consent to orders recalling the perfected summary judgment so that it may be reduced by the sum of the RBA deficit debt, being the amount of $9,013.73."

31 In oral submissions counsel for the respondent reiterated that the RBA debt had not been remitted, however the respondent has elected not to pursue it in these recovery proceedings.

32 In written submissions counsel for the respondent also stated:

"43. Upon reviewing the calculation of the judgment debt for the purpose of the appeal, the Respondent has identified that in calculating the amount of the income tax liability, a 4 cent rounding credit contained in the income tax Notice of Assessment for the income year ended 30 June 2002 dated 12 June 2003 was omitted in error. The Respondent has also calculated that as a result of the omission of the rounding credit, an additional amount of GIC of 3 cents was included in the amount for which judgment was given. Accordingly, the Respondent is also prepared to consent to an order reducing the judgment debt by a further 7 cents."

34 The summary judgment entered against the appellant on 2 March 2007 by Registrar Kingsley is upheld save that the amount of the judgment has been reduced by an amount of $9,013.80 from $238,816.07 plus GIC as particularised to $229,802.27 plus GIC as particularised to reflect the reduced amount sought by the respondent.