Claims for Summary Dismissal and Interlocutory Relief
22 The two points of law which, as I have said, have been fully debated in the course of the interlocutory hearing, each involved the interpretation of s 218(1). That sub-section provides:
"The Commissioner may at any time, or from time to time, by notice in writing (a copy of which shall be forwarded to the taxpayer at his last place of address known to the Commissioner), require:
(a) any person by whom any money is due or accruing or may become due to a taxpayer;
(b) any person who holds or may subsequently hold money for or on account of a taxpayer;
(c) any person who holds or may subsequently hold money on account of some other person for payment to a taxpayer; or
(d) any person having authority from some other person to pay money to a taxpayer;
to pay to the Commissioner, either forthwith upon the money becoming due or being held, or at or within a time specified in the notice (not being a time before the money becomes due or is held):
(e) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of tax or, if the amount of the money is equal to or less than the amount due by the taxpayer in respect of tax, the amount of money; or
(f) such amount as is specified in the notice out of each payment that the person so notified becomes liable from time to time to make to the taxpayer until the amount due by the taxpayer in respect of tax is satisfied;
and may at any time, or from time to time, amend or revoke any such notice, or extend the time for making any payment in pursuance of the notice."
23 Among the definitions in s 218(6B) is the following:
"'person' includes a company, a partnership, the Commonwealth, a State, a Territory and any public authority (whether incorporated or unincorporated) of the Commonwealth or a State or Territory;"
24 It was first submitted on behalf of the applicant that, because the sub-section is predicated on "money" being or becoming due to the recipient of the notice and being paid to the Commissioner it requires a "finite" or liquidated sum to be identifiable at the time when the notice is issued. Accordingly, so it was argued, a notice could not require payment to the Commissioner from salary or wages payable under a contract of employment in respect of a period of employment which had not commenced when the notice was issued. Reference was made to Deputy Commissioner of Taxation v Conley (1998) 158 ALR 229 where a Full Court held that s 218 was not available to require payments to the Commissioner from accounts denominated in United States currency in the Sydney and New York branches of a bank. Emmett J, with whom Wilcox and Tamberlim JJ agreed, traced the history of s 218 and concluded, at 240:
"The difficulties as to the time at which a conversion calculation is to be made in order to determine how much of foreign currency is attached by a notice under s 218 indicates, in my opinion, that foreign currency is not intended to be the subject of such a notice. The absence of any indication in s 218 itself that it was intended to apply to foreign currency and the absence of any mechanism for conversion such as is contained in s 20 reinforces the conclusion that foreign currency is not intended to be the subject of a notice under s 218."
25 However, there is no suggestion that any moneys which may become due to the applicant from Ansett are denominated otherwise than in Australian currency. Moreover, Emmett J expressly acknowledged that a notice under s 218 may attach to moneys becoming payable to the taxpayer in the future. His Honour said, at 237:
"One consequence of the service of a notice under s 218, where money is not yet due by the recipient, is that, as from the time of service, the recipient is bound, as and when money becomes due and payable to the taxpayer, to pay some part of that money to the Commissioner: see DCT (NSW) v Donnelly (1989) 25 FCR 432 at 459-60; 89 ALR 232. A taxpayer is prevented thereafter from assigning money which is the subject of such a notice: Clyne v DCT (1981) 150 CLR 1 at 19; 35 ALR 567. Section 218 requires the recipient to pay to the Commissioner, when it becomes payable, some part of the money owing to the taxpayer at the date of service of the notice. The obligation attaches to the recipient on service of the notice, though it cannot be performed until a future date. The effect of imposing the obligation is to make it unlawful for the recipient, after service of the notice, to pay the money to anyone but the Commissioner: see per Mason J in Clyne (at CLR 23). Further, the service of a notice under s 218 has been held to create a charge over the debt due by the recipient to secure the amount due in respect of tax: see DCT (NSW) v Donnelly (at FCR 436 and 457)."
26 In my view, the construction of s 218(1) for which the applicant contends ignores the presence in paragraph (a) of the words "may become due" which qualify the word "money". Those words indicate that the Commissioner may make the requirement in respect of money which the recipient of the notice is not presently liable to pay to the taxpayer but which he or she "may become liable", because of some contractual or other legal connection with the taxpayer, to pay in the future. This interpretation is borne out by the legislative history of s 218 which, as Emmett J noted in Deputy Commissioner of Taxation v Conley, is traceable to s 50A inserted in 1918 and from it to s 66 inserted in 1922 which, as his Honour said at 235, is closer in its structure to the current s 218. The debate on the second reading of the Bill which led to the insertion of s 50A included this explanation by the relevant Minister:
"(4) Under clause 32, by an amendment suggested by the Conference of Taxation Commissioners, the Commissioner will be empowered to call upon any employer of a taxpayer, who is in arrears in payment of his tax, to deduct the amount due from any salary, wages, or other payments due to the taxpayer by the employer.
…
As it is, the clause simply requires that the employer, upon receipt of a demand from the Commissioner, shall take this action in regard to future payments."
27 The interpretation which I favour is also supported by the following passage from the judgment of Mason J in Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 23 although the facts of that case, which concerned moneys on deposit with a bank at the date of the s 218 notice which were repayable in the future, led his Honour to confine his remarks to moneys owed to the taxpayer at the date of the notice:
"The section relates to moneys owing to the taxpayer when the notice is given, it imposes an obligation to pay forthwith moneys which are then payable; it imposes an obligation to pay moneys which become payable at a future time when that time arrives. It does not explicitly prescribe as a condition preliminary to the creation of the obligation to pay that the moneys owing to the taxpayer at the date of the notice shall continue to be owing to him when they become payable. It merely requires the recipient to pay to the Commissioner when they become payable moneys owing to the taxpayer at the date of the notice. The obligation attaches to the recipient on service of the notice, though it cannot be performed until a future date." (emphasis added)
28 The second issue of law raised by the applicant was whether s 218 permits the issue of a notice requiring payment to the Commissioner of a specified percentage of a sum of money which may become due to the taxpayer in the future. Mr Bigmore for the applicant contended that to impose the requirement contemplated by s 218(1)(f) to pay "such amount as is specified in the notice" the Commissioner must stipulate an amount in dollars and cents which the recipient of the notice is required to pay to the Commissioner out of moneys from time to time becoming payable to the taxpayer. To stipulate, as the present notice does, "an amount of 20 cents in every dollar of the base salary", it was argued, did not discharge the Commissioner's obligation to specify an amount in the notice.
29 I do not agree. I consider that a notice may "specify an amount" if a precise sum of money is ascertainable by the recipient of the notice by applying its terms to factual circumstances of which that recipient has knowledge. The "base salary" of the applicant was presumably known to Ansett from the terms of the contract of employment. The amount to be remitted to the Commissioner is therefore 20% of the base salary component of each instalment of remuneration which Ansett may become liable to pay to the applicant. In my view, that amount was "specified" in the sense required by s 218; see eg Re Arthur Average Association (1875) 10 Ch 542 where it was suggested by Sir George Jessel MR at 550 that a policy of marine insurance required to "specify" the subscribers or underwriters did so if, by itself, it afforded the means of ascertaining who the insurers were to be. Similarly, in A v B [1969] NZLR 534 Roper J said, at 536:
"In my view persons can be specified without being named, provided they are unambiguously identified..."
30 More recently a Full Court of this Court in TCN Channel Nine Pty Ltd v Australian Mutual Provident Society (1982) 42 ALR 496 said, at 504, of a similar requirement in the Broadcasting and Television Act 1942:
"Whatever the commercial arrangement, the requirement of the section, in our view, is that the certificate must specify the interest in question with sufficient particularity to enable it to be identified as the relevant authorized shareholding interest. This can be done where the interest is already held or where the applicant is a party to a proposed transaction for the acquisition of an interest. It cannot be done where no specific proposal is envisaged.
There is an additional requirement of sub-s (2) namely, that the specification of the interest in the licensee company must be shown as 'amounting to a specified amount'. In the case of shareholding interests this can be expressed as a percentage of the paid up capital of the licensee company. Under s 91D(9) a person shall not be taken, by reason only of the application of s 91(2)(c), (d) or (e), to have a prescribed interest in a licence so long as he holds interests in the licensee company as authorized by a s 91D certificate and does not otherwise hold any interest in the company. Section 91(2)(e) (paras (c) and (d) not being relevant for this purpose) provides that for the purposes of Div 3 of Pt IV a person has a prescribed interest in a licence if he is:-
'(e) the holder of shareholding interests in the company holding the licence exceeding in amount 5% of the total of the amounts paid on all shares in that company.'
Thus s 91(2)(e) itself speaks of an amount in terms of a percentage of the total of the paid up capital of the licensee company whose shareholding interests are concerned. This provides strong support for our view that shareholding interests can be expressed as a percentage of paid up capital. However, even if s 91(2)(e) were not so expressed we would have come to the same conclusion because 'amount' is a word of wide import. We see no reason why it cannot be expressed or measured as a percentage."
31 It is also significant in this context that in Edelsten v Wilcox and Federal Commissioner of Taxation (1988) 19 ATR 1370 Burchett J had to consider the efficacy of a notice under s 218 requiring the Health Insurance Commission to pay to the Commissioner the whole of any money due by it to the applicant until an amount of $1,183,583.10 tax due should be satisfied. No point was taken that the notice did not comply with s 218 because it failed to "specify" in dollars and cents the amount of any instalment to be paid to the Commissioner.
32 For these reasons the two issues of law in relation to the scope and form of the Commissioner's notice must each be resolved adversely to the applicant.
33 The other attack made on the Commissioner's decision to issue the current s 218 notice in respect of the applicant I take to be based on s 5(1)(e) of the AD (JR) Act which affords as a ground for review of an administrative decision:
"that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made."
34 Section 5(2) of the AD (JR) Act provides, so far as is relevant:
"The reference in paragraph (1)(e) to an improper exercise of a power shall be construed as including a reference to-
(a) taking an irrelevant consideration into account in the exercise of a power;
(b) failing to take a relevant consideration into account in the exercise of a power;
(c) an exercise of a power for a purpose other than a purpose for which the power is conferred;
(d) an exercise of a discretionary power in bad faith;
…
(f) an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case;
(g) an exercise of a power that is so unreasonable that no reasonable person could have so exercised the power;
…
(j) any other exercise of a power in a way that constitutes abuse of the power."
35 I do not consider that the evidence, as it stands, supports a case that the Commissioner has issued the present notice for an ulterior purpose, in bad faith or otherwise in abuse of his statutory power. However, not having the benefit of a statement of the Commissioner's reasons in accordance with s 13 of the AD (JR) Act, I consider that it remains arguable on the present state of the evidence that the framer of the notice fixing on an amount of 20% of the applicant's base salary to be paid to the Commissioner in addition to amounts which Ansett was already required to deduct as instalments of PAYE tax, failed to take into account all of the applicant's relevant circumstances. I accept Ms Richards' submission that the Commissioner is only required to take account of the best information available to him at the time of issuing the s 218 notice and is under no obligation to make enquiries before issuing the notice. However, the best information available includes, as the Commissioner seems to acknowledge, facts deducible from recent taxation returns filed by the taxpayer. I am not able to find, on the present state of the evidence, what matters led the Commissioner to reduce the amount specified in respect of the applicant from 38% to 20%, rather than any other percentage, of his base salary. The possibility remains that the Commissioner applied particular parts of the Debt Collection Policy without paying any, or any sufficient, regard to financial or other circumstances peculiar to the applicant. I do not consider that possibility to be excluded by the elliptical statement in paragraph 9 of Mr Zafiriou's affidavit that "the Respondents did have regard to the financial circumstances of the Applicant as detailed in the affidavit sworn by the Applicant in proceeding No VG 79 of 1999 … That was the reason for deciding that an amount of twenty cents in every dollar cents should be remitted." As I have already pointed out, the Commissioner apparently had regard also to information gleaned from a taxation return of the applicant which was earlier in time than his affidavit in proceeding No VG 79 of 1999. Moreover, the possibility of the ground afforded by s 5(1)(e) of the AD (JR) Act as amplified by s 5(2) of that Act being made out is increased if, as I consider they should be, the remaining seven pilots in respect of whom s 218 notices have been issued are added as applicants. For each of those taxpayers, it will be recalled, the amount specified to be paid by the employer was 38% of base salary which was apparently equated by the Commissioner with the maximum of 30% of gross salary or wages allowable under cl 12.5.3(x) of the Debt Collection Policy.
36 For these reasons, I have been unable to accede to the Commissioner's motion for summary dismissal of the application. However, the recognition of an arguable question to be tried which that conclusion implies does not entail that the applicant should obtain the interlocutory relief which he seeks. In the first place, there is at present no more than a possibility that the applicant will obtain final relief. Secondly, by contrast with Edelsten v Wilcox (supra), the present applicant does not appear to have pending an appeal against the amended assessment in respect of the "ASEAN Books" investment. That difficulty, it is true, may be overcome if any relevant time limits which have not been observed can be extended. However, the Court is at present in no position to assess the prospects of success for any appeal of that kind.
37 Another consideration which has influenced me to exercise my discretion against the grant of interlocutory relief has been the fact that, if the Commissioner's issue of the current s 218 notices stemmed from his lacking the best available information about the applicant's circumstances, that deficiency was due in large measure to the applicant's failure before the commencement of this litigation to communicate with the Commissioner or make any proposal for payment of the debt. If there is further information not contained in the applicant's affidavit in proceedings No VG 79 of 1999, it can still be provided and the Commissioner, as he has acknowledged, is under a continuing duty to evaluate it in considering whether to withdraw or amend the current s 218 notice. As well, other avenues are available under the Act, eg through s 206 or s 265, by which the applicant can seek to be relieved of the burden of paying immediately and in full the tax debt to which the present certificate is related.
38 The evidence which the applicant has adduced in these proceedings indicates that he is insolvent in the sense that his present average monthly earnings are not sufficient to discharge his financial commitments. That suggests that the moneys attached by the s 218 notice would cease to be available to the Commissioner if the present application should ultimately be dismissed. For the same reason, the applicant is unable to proffer any enforceable undertaking as to damages. On the other hand, the applicant has not convincingly demonstrated that he will suffer any irreparable loss or damage if Ansett complies with the present s 218 notice for one or two months before his substantive application can be heard and determined. Instalments paid to the Commissioner during that period will, at worst for the applicant, be applied in reduction of a debt which, until the amended assessment is set aside or varied, by ss 204 and 207 of the Act is conclusively due to the Commonwealth.
39 For these reasons, I have not been able to accede to the applicant's motion for interlocutory relief. However, subject to any submissions which the Commissioner may be advised to make in respect of paragraphs 2 and 3 I shall make the following orders to expedite the final hearing of the application:
- BY CONSENT that the applicant have leave to discontinue the application against the second respondent, Frank Linsdell and that the application be amended accordingly.
- That each of the following persons be added as applicants herein:
Thomas Joseph Raniere
Peter Tanfani Cecil
Roger Lee Duncan
Ronnie Joe Coleman
Eric Lee Rooth
Daryl Marcellus Petersen
Maxwell Charles Knight
- That within 21 days of the supply to him by the respondent of a statement pursuant to s 13 of the Administrative Decisions (Judicial Review) Act 1977 of reasons for the decision to issue a notice under s 218 of the Income Tax Assessment Act 1936 each applicant file and serve a statement of contentions of fact and law and any further affidavit or affidavits on which he intends to rely in support of the application herein.
- That within 14 days of the filing and service of the last of the statements of contentions of fact and law and affidavits referred to in paragraph 3 of this order, the respondent file and serve an answering statement of contentions of fact and law and any further affidavit or affidavits on which he intends to rely in opposition to the application herein.
- That the applicants file and serve within 7 days of the filing and service of the respondent's contentions of fact and law and further affidavits referred to in paragraph 4 of this order any contentions of fact and law and affidavits in reply.
- That the application be fixed for final hearing by Ryan J on 2 August and, if necessary, 3 August 1999.
- That the costs of all parties of the respondent's motion on notice dated 28 May 1999 and the hearing on 2 and 3 June 1999 be reserved.
- That liberty be reserved to any party to apply to Ryan J on not less than 48 hours notice in writing to the other parties.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.