CONSIDERATION
26 It is plain that s 31A of the FCA Act is intended to relax the test imposed by General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 as to the circumstances in which a proceeding may be struck out or summarily dismissed.
27 Section 31A(2) provides that the Court may exercise that power if the Court is satisfied that the applicant has no reasonable prospect of successfully prosecuting the proceeding or the relevant part of the proceeding, and s 31A(3) explains to a degree when a proceeding should be found to have no reasonable prospect of success.
28 Section 31A commenced operation on 1 December 2005. It applies only in relation to "proceedings commenced on or after the commencement day": see item 44 of Sch 1 to the Migration Litigation Reform Act 2005, and item 7 of that Act which inserted s 31A into the FCA Act. The Commissioner has submitted that s 31A applies in this instance because the Amended Application and the Amended Statement of Claim were filed only on 15 August 2006, and that the assertion in this proceeding seeking to invalidate the Notices by reason of improper conduct on the part of officers of the respondent was first made only by the "Statement of Claim" filed on 7 July 2006. The effect of the "Statement of Claim" first filed on 7 July 2006 would appear, by O 13 rr 3(3) and 3A of the Federal Court Rules, to operate from that day as a proceeding commenced on or after that day: see Tepperova v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 1147 at [27]. I do not need, however, to decide that question.
29 In my judgment, the Amended Application and the Amended Statement of Claim should be dismissed, whether one applies the test prescribed by s 31A of the FCA Act, or whether one applies O 20 r 2 of the Federal Court Rules, as explained in General Steel Industries. In my view, there is simply no real question to be tried on the issues raised by the Amended Application and by the Amended Statement of Claim in the circumstances of this matter.
30 It is appropriate first to advert briefly to the statutory background or context in which the assessments came to be made and the Notices issued. Section 166 of the ITAA requires the Commissioner to make an assessment of the taxable income of a taxpayer and of the tax payable thereon. If the Commissioner is not satisfied with the tax information provided by the taxpayer in the tax return furnished by the taxpayer, the Commissioner is empowered by s 167 to make an assessment of the amount upon which, in the Commissioner's judgment, income tax ought to be levied. Section 174(1) then requires that a notice of assessment of the tax to be paid be served on the taxpayer. Section 175 provides that the validity of any assessment shall not be affected by reason that any of the provisions of the ITAA have not been complied with. Relevantly to the District Court proceedings, for the reasons which are referred to above, s 177 provides that the production of the Notices under the hand of the Commissioner is conclusive evidence of the due making of the assessment, and (other than in respect of proceedings under Pt IVC of the TAA by a review or appeal relating to the assessment) is also conclusive evidence of the amount and particulars of the assessments as being correct. The procedure to be followed by a taxpayer dissatisfied with an assessment is the objection and appeal process available under Pt IVC of the TAA.
31 In Briglia v Commissioner of Taxation [2000] FCA 443 at [6], Kenny J pointed out that, although s 177(1) of the ITAA may operate to preclude a Court from examining the validity of an assessment once a notice of assessment is tendered, it can only operate provided there has been a bona fide attempt by the Commissioner to exercise the power of assessment, the attempt to exercise the assessment power relates to the subject matter of the ITAA, and the exercise of the assessment power is reasonably capable of reference to the Commissioner's power of assessment. That expression of the limitations upon the apparent scope of s 177(1) is derived from the observations of Dixon J in R v Hickman; Ex parte Fox (1945) 70 CLR 598 at 614. It is clear from Deputy Commissioner of Taxation (Cth) v Richard Walter Pty Ltd (1995) 183 CLR 168 that s 177(1) does not, and cannot, deprive the High Court of its constitutional jurisdiction, and to the extent to which this Court is conferred with such jurisdiction under s 39B(1) of the Judiciary Act 1903 (Cth) cannot deprive this Court of its jurisdiction under that provision. The so called Hickman principles, based upon the decision in Hickman, and which formed the basis of Kenny J's observations in Briglia, were considered by the High Court in Plaintiff S157/2002 v Commonwealth of Australia (2003) 211 CLR 476. I do not think it is necessary to explore whether the result of the decision in Plaintiff S157/2002 is to explain the application of the Hickman principles in a way which may broaden the capacity of the taxpayer to challenge the due making of an assessment notwithstanding s 177(1). That is simply because, in my view, on any analysis of the allegations made by Mr Jewiss in the Amended Application and in the Amended Statement of Claim, they cannot establish relevantly a failure on the part of the Commissioner in the due making of the assessments.
32 There is a clear parallel between the allegations in the Amended Application and the Amended Statement of Claim and the allegations made in the District Court proceedings.
33 The Amended Application asserts that the Notices were issued for a particular purpose, namely "to close down the accounting practice of the applicant and to make the applicant bankrupt by virtue of a fraudulent excessive assessment".
34 There are three general categories of allegation.
35 The first overall category of allegation concerns the seizure of materials at Mr Jewiss' premises. It is asserted that certain officers of the Commissioner entered the office of Mr Jewiss without duly authorised written authority and took documents from that office without having or producing a written authority to do so. It asserts that following the search and seizure of material on that occasion, the premises were sealed and the locks were changed, so that Mr Jewiss' staff could not enter the premises and so that clients were intimidated and Mr Jewiss was embarrassed.
36 The second general category of conduct alleged is that the issue of the Notices was an abuse of power because they were constructed from records by a "deliberate series of contrived events designed to place the applicant in an invidious financial position".
37 The third category of allegation is that the subsequent debt recovery was pursued vigorously to the intent of making Mr Jewiss bankrupt, and so denying him the opportunity of presenting his rights of objection and appeal. That third general assertion may be dealt with at this point. It cannot be correct. Mr Jewiss has exercised his rights under Pt IVC of the TAA to challenge the disallowance of the objections to the Notices. Those challenges are listed for hearing commencing on 11 December 2006. Mr Jewiss has not been prevented from exercising those statutory rights. Moreover, that impugned conduct occurred after the Notices were issued, and so cannot lead to the Notices having been issued in bad faith.
38 The Amended Statement of Claim simply expands upon those categories of allegations.
39 It refers again to the search and seizure of documents from Mr Jewiss' office on 29 May 2002 when, he claims, the officers concerned behaved in an aggressive manner and without a duly executed written warrant. Reference is made to a circumstance prompting the investigation, namely the association of Mr Jewiss with a former officer of the Commissioner, but the reason underlying the investigation of Mr Jewiss' records in my view is not a relevant matter at all. Whatever the reason for the investigation, it is the issue of the Notices which is impugned for bad faith. Further assertions are made about the way in which the investigation on the occasion of the search and seizure of documents was carried out, generally asserting aggressive behaviour on the part of the relevant officers. It is said that their aggression was "inexcusable, intimidating and excessive". The Amended Statement of Claim also asserts that access was had to a computer without Mr Jewiss' knowledge, and the computer was unlawfully removed from the office. It asserts that the documents removed from the premises should have been photocopied, and the copies taken. It is then further claimed that neither Mr Jewiss nor any of his clients were given any opportunity to claim legal professional privilege in respect of any of the documents in that office which were then taken. It is further claimed that, during the investigation and seizure over several days, the powers of search and seizure under ss 263 and 264 of the ITAA were exceeded because locks were changed at the premises and doors were taped so as to preclude access for work purposes during the search and seizure. The Amended Statement of Claim is somewhat repetitive, but that is the essential nature of the allegations concerning the search and seizure in the investigation into Mr Jewiss' affairs.
40 The second general category of claim is also expanded in the Amended Statement of Claim. It asserts that the Notices were constructed in a fraudulent way because those who engaged in the assessments were informed of "flaws in the information they were accessing in the records" which had been seized, and the Notices were made without full discussion with Mr Jewiss or members of his staff. It is asserted that the Notices were made upon the basis of officers of the Commissioner knowing that the assessments were being made on flawed records.
41 The Amended Statement of Claim also expands on the third category of allegations in the Amended Application by asserting, perhaps as evidence of the intention to harm Mr Jewiss, that the process of serving the default summonses upon him has been aggressive and "adversarial". Part of that conduct involved a garnishee order that had been placed on Mr Jewiss' bank account; part is the taking advantage of s 177 of the ITAA to enforce recovery; and part by denying him access to certain seized information "on grounds of national security". There is also a general assertion that the Commissioner through an officer tended somehow to interfere with the course of justice by making a threat to Mr Jewiss in an inappropriate way. Whether or not those things are true, they all post-date the issue of the Notices. They are not shown (or suggested) to have been undertaken by the officer or officers who issued the Notices. They are not therefore capable of providing evidence that the Notices themselves were issued in bad faith.
42 As to each of those categories of allegations, including the "raid" on 29 May 2002, those matters (including that the raid was an abuse of power) were specifically raised in the District Court proceedings. In his Defence and Counterclaim in the District Court proceedings, Mr Jewiss asserted that the assessments were made without proper investigation and fraudulently in an attempt to destroy his lawful business activities. He asserted that the assessments were made in reliance upon documentation obtained in the search which were not his reliable business records, but had some other character, and that the officers of the Commissioner who made the assessments were aware of that. That is, he positively asserted that the assessments were made fraudulently, and with the intent of precluding him from carrying on his business. Mr Jewiss specifically made complaint as to the conduct of officers of the Commissioner in the course of the investigation and search. He specifically complained that the Notices were issued by officers who were aware that they were acting upon records which were not reliable. He specifically complained that the officers of the Commissioner involved made threats to Mr Jewiss and his employees. The Commissioner put all those allegations in issue.
43 During the voir dire hearing, as the reasons of the learned judge indicate, Mr Jewiss' assertions included the assertion of conduct engaged in relation to him by reason of his association with a former officer of the Commissioner, a threat to his life, and the conduct engaged in during the search at his offices. Evidence was given by Mr Jewiss as well as by one of his employees about the circumstances of that search. She also gave evidence about the garnishee order in relation to Mr Jewiss' bank account.
44 As noted earlier, the learned judge, having reviewed the whole of the evidence, rejected the assertion of bad faith. His Honour said (as quoted above):
"I find that the far-ranging complaints contain no evidence of conduct that could be treated as 'bad faith' on the part of the Deputy Commissioner of Taxation. I find that there is no evidence that the relevant assessments were made in 'bad faith'.
Accordingly, it is unnecessary to decide whether the assessments should be excluded because they were made in 'bad faith' because there is no evidence of 'bad faith' on the part of the Deputy Commissioner."
45 His Honour specifically rejected the complaints that the assessments were made on the basis of information (obtained during the search of his premises) which the Commissioner or the Commissioner's officers knew to be unreliable. His Honour observed that there was simply no evidence to support the claim that that information was unreliable.
46 Having rejected those contentions, and having admitted into evidence the Notices s 177 of the ITAA precluded the challenge to their accuracy or to their status. As set out above, his Honour concluded in respect of the more general allegations of "bad faith" in the defence and counterclaim:
"Without descending to deal with each ground seriatim I reject the grounds of the Defence. The allegations are far reaching, but there is simply no evidence which supports the Defence. I also dismiss the counterclaim which is unsupported by evidence. Both defence and counterclaim were effectively abandoned by the defendant after I ruled that the issue of bad faith had already been resolved by the decision on the voir dire.
I have already given reasons which explain my ruling that the assessments were not made in bad faith."
47 It is apparent that his Honour's ruling on the allegations of bad faith on the voir dire hearing were incorporated into and formed part of the reasons for the final judgment. It is also apparent that the appeal to the Full Court of the Supreme Court concerned both the final judgment and the voir dire hearing. It is not necessary to refer to the grounds of appeal. As Duggan J recorded in his reasons at [7], on the hearing of the appeal the Commissioner was content to allow the appeal to proceed on the assumption that there was a limited right to challenge the admission of the notices of assessment on the ground that the assessments were an abuse of power and were made for improper purposes. It is clear from the reasons of Duggan J that the complaints made by Mr Jewiss in the District Court proceedings, and maintained on appeal, included complaints about the conduct of officers of the Commissioner during searches of his premises, the use or mis-use of flawed information, and inappropriate motivation for the making and issuing of the Notices. Duggan J recorded the complaints about the conduct of ATO officers as including irregularities in the course of the searches of Mr Jewiss' premises, the wrongful seizure of documents to which legal professional privilege attached, the seizing of documents knowing that they were not related to Mr Jewiss' financial affairs, the use of that information, the refusal by officers to return documents, the issuing of the Notices knowing that they were calculated on the basis of income wrongfully attributed to Mr Jewiss, the imposition of penalties on the basis that Mr Jewiss was a non-cooperative taxpayer when this was not the case, publication of a record of conversation with Mr Jewiss, the making of threats to carry out unlawful acts against Mr Jewiss, and oppressive conduct including applying for garnishee orders and other orders restricting Mr Jewiss' movements. His Honour concluded that those matters, apart from having been rejected at the hearing, did not establish a connection between the alleged conduct and the conduct of the officers who made the relevant assessments and issued the Notices. There remained complaints relating to the merits of the Notices, and which s 177 of the ITAA precluded the District Court judge from reviewing (and which can be reviewed in the extant part of these proceedings).
48 In my judgment, the matters which Mr Jewiss now raises in the Amended Application and in the Amended Statement of Claim correspond with the allegations made in the District Court proceedings, including on his appeal to the Full Court of the Supreme Court of South Australia. It would be an abuse of the Court's processes to permit Mr Jewiss to re-litigate in this proceeding the same matters that have previously been determined by the District Court: cf Shumack v Commissioner, Australian Federal Police [2005] FCA 1476 at [4]. There is no prospect of Mr Jewiss now succeeding on those claims because they have already been decided adversely to him.
49 The parties in the District Court proceedings and in this proceeding are the same. The allegations generally under the umbrella of bad faith are the same. They relate to the circumstances of and conduct at the search of Mr Jewiss' premises, conduct subsequent to the raid in respect of Mr Jewiss, and use of documents which are allegedly known to be false in making the assessments and issuing the Notices. Those issues were all raised by Mr Jewiss in the District Court proceedings. They have been resolved adversely to him. There is no reason why he should be permitted to re-litigate those matters. It is in precisely such circumstances that the Court in other matters has found there to have been an abuse of process of the Court and to have exercised the power to have dismissed the proceedings: see e.g. Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers appointed - in Liquidation) (1993) 115 ALR 377 at 398. As Dixon J observed in Blair v Curran (1939) 62 CLR 464 at 531: