Hii v Commissioner of Taxation [2020] FCA 345 | Case summary

LOGAN J: 1 Sir Yii Ann Hii (Sir Hii) is the subject of a series of assessments in respect of income tax, shortfall penalty and non-lodgement penalty for income years which embrace the period from the year ended 30 June 2001 to 30 June 2009. Some of the assessments are amended assessments, others are original assessments. The assessments are more particularly described in an objection decision which the Commissioner made on 20 December 2013, responding to an objection by Sir Hii against those assessments. 2 Sir Hii instituted a taxation appeal against the income tax assessments in this Court pursuant to the right conferred in Pt IVC of the Taxation Administration Act 1953 (Cth) (Taxation Administration Act). He separately instituted administrative review proceedings in the Administrative Appeals Tribunal (Tribunal) in respect of the objection decision insofar as it related to the various penalty assessments. 3 As to the taxation appeal, Collier J was persuaded at an interlocutory stage to make an order for security for costs against Sir Hii: see Hii v Commissioner of Taxation (No 3) (2016) 238 FCR 304. That order was not challenged. Nor was it complied with. Noncompliance resulted in the dismissal of Sir Hii's taxation appeal. In turn, Sir Hii decided to withdraw the review application in the Tribunal. That application was then dismissed by the Tribunal. 4 The foundation for the various assessments was, ultimately, as the material before the Court reveals, an assessing conclusion reached by the Commissioner after audit that, in respect of the income years 2001 to 2009, Sir Hii was a resident of Australia. Some of the background detail on the subject of residence is offered by Edelman J in an application for a constitutional writ made by Sir Hii in the High Court of Australia (High Court): see Hii v Federal Commissioner of Taxation matter number B7 of 2019 (15 May 2019). 5 I can, with respect, see how Sir Hii may have a sense of grievance in relation to an order for security for costs against a non-resident individual seeking to challenge, on the basis that he was never a resident, income tax assessments predicated on the basis that he was. However that may be, such an order was made, was not complied with and had as sequel to noncompliance, dismissal of the taxation appeal. That dismissal of course meant that Sir Hii did not have in the Court's original jurisdiction a trial on the merits as to whether or not he was for the purposes of Australian income tax law, a resident of Australia or whether, as he, I do not doubt, genuinely believes, a resident of Malaysia. 6 Sir Hii also instituted a proceeding under s 39B of the Judiciary Act 1903 (Cth) (Judiciary Act) in this Court in which he sought to challenge collaterally the assessments (the s 39B proceeding). After a trial of no less than four days before Collier J, that particular proceeding was dismissed on 23 April 2015: see Hii v Federal Commissioner of Taxation (2015) 230 FCR 385. 7 The High Court proceeding to which I have referred was another endeavour to challenge collaterally the consequences of the assessments. That too was dismissed on 15 May 2015. 8 The Income Tax Assessment Act 1936 (Cth) (1936 Act), Income Tax Assessment Act 1997 (Cth) and the Taxation Administration Act reveal a scheme in relation to challenges against assessments. It is envisaged that, in the first instance, a taxpayer will object against an assessment: s 175A, 1936 Act. Thereafter, in the event of dissatisfaction with an objection decision, a taxpayer is offered a choice by the Taxation Administration Act in Pt IVC either to seek an exercise of judicial power by this Court in a taxation appeal or an exercise of administrative power by the Tribunal in place of the Commissioner in a review proceeding. 9 The ability to have recourse to an exercise of judicial power to challenge an assessment or an objection decision in respect of an assessment is constitutionally necessary for the validity of a law imposing taxation: Deputy Commissioner of Taxation (NSW) v Brown (1958) 100 CLR 32 at 40; Giris Pty Ltd v Federal Commissioner of Taxation (1969) 119 CLR 365 at 378-379; MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622; Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at [9] - [10] (Futuris). In such proceedings, particular flaws in relation to the making of the assessment are rendered irrelevant by s 175 of the 1936 Act. 10 Supplementing that statutory scheme is, exceptionally, an ability to seek, either in the original jurisdiction of the High Court under s 75(5) of the Constitution or in this Court under s 39B of the Judiciary Act 1903 (Cth), constitutional writs by which an assessment is quashed either on the basis that it is not in truth an assessment because it is tentative (see Federal Commissioner of Taxation v Hoffnung & Co Ltd (1928) 42 CLR 39 (Hoffnung) or because it has been made as a result of conscious maladministration: see Futuris. 11 The present application by Sir Hii is yet another form of collateral challenge by judicial review. It seeks to challenge not the assessments directly, but, rather, an anterior audit decision of 26 June 2012 and the objection decision of 20 December 2013. Such a collateral challenge bears an uncanny resemblance when one looks to the statement of claim to that already disposed of by Edelman J in the High Court in the proceeding mentioned. 12 Further, if this were not reason enough to regard the originating application as an abuse of process having no reasonable prospect of success, the following is also applicable. The audit decision was overtaken wholly by the assessments. Whatever flaw there may have been in the audit decision the author's conception of how the law of residence applied in this case is nothing more than an historic fact. In turn, whatever flaws administratively, there was in the assessments was, subject to considerations of the kind mentioned in Hoffnung and Futuris, rendered utterly irrelevant by s 175 of the 1936 Act. In turn, the objection decision was wholly overtaken by the institution of the taxation appeal and the administrative review proceeding mentioned. 13 Sir Hii made particular complaint in lengthy submissions about a denial of natural justice. Of course it is a feature of an exercise of judicial power and, for that matter, administrative power, that an applicant must be afforded natural justice. Relevantly, however, that aspect of natural justice which is pertinent is the extension of an opportunity to be heard. That opportunity was extended in this Court following the institution of a tax appeal and in the Tribunal following the institution of an administrative review proceeding. But it is a misconception of the requirements of natural justice that there is a requirement that the person affected avail him or herself of the opportunity extended. 14 What occurred here is that Sir Hii made particular choices, choices perhaps which he has come to regret, either not to challenge the security for costs order in relation to the taxation appeal or not to comply with them. But those choices do not mean he was denied natural justice by this Court. In the same way, whilst it may well have been a logical decision in light of the dismissal of the tax appeal to withdraw the administrative review proceedings, there is no denial of natural justice entailed in the consequential dismissal of those administrative review proceedings. In that case also, the Tribunal has extended an opportunity, it is just that it was not fully taken up by Sir Hii. 15 There is nothing in the present originating application that either was not, or could not have been, advanced either in the s 39B proceeding in this Court or, for that matter, in the later proceeding in the High Court. In these circumstances, the consequence is that all such issues are already determined as between Sir Hii and the Commissioner of Taxation. A shorthand way of describing why that is so is by reference to what is known as Anshun estoppel: Port of Melbourne Authority v Anshun Pty Ltd (1980) 147 CLR 35. 16 It is neither necessary nor desirable to make any determination at all as to the application of the law of residence for income tax purposes in order to dispose of the present application. It is, though, by no means patent that there ever was a clear injustice, even on those merits, to Sir Hii in relation to the circumstances, if they be those as described by Edelman J, in light of considerations concerning taxation residence very recently canvassed by the Full Court in Harding v Commissioner of Taxation (2019) 365 ALR 286. I emphasise that that is nothing more than a passing observation. It would be completely subversive of the finality which has attended not just the dismissal of the taxation appeal but also of earlier judicial review proceedings to embark in any way in the present collateral challenge upon a consideration of the taxation law merits as to whether Sir Hii was or was not a resident in the income years in question. 17 There is also pellucid to the point of demonstration, an absence of any evidence which would show any prospect, reasonable or otherwise, of any fraud, bad faith or conscious maladministration by the Commissioner in relation to assessing. 18 The inevitable consequence of the foregoing is that the present proceedings must be characterised as an abuse of process or vexatious, if that be any different. They have no reasonable prospect of success, taking into account what is said on the subject by the High Court in Spencer v Commonwealth (2010) 241 CLR 118. 19 In turn that means, having regard to the earlier proceedings on judicial review both in this Court and in the High Court, that the case is one where proceedings have been instituted by Sir Hii in Australian courts frequently and without reasonable cause: see, as to what may constitute "frequently", the Full Court's judgment in Fuller v Toms (2015) 234 FCR 535. So the case is not just one where the Commissioner's interlocutory application for summary dismissal should be upheld, but also one in which there is a need for the making of, pursuant to s 37AO of the Federal Court of Australia Act 1976 (Cth), a vexatious proceedings order. That order, though, should be confined in its application to challenges to the assessments concerned or anterior audit or posterior objection decisions. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Hii v Commissioner of Taxation

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