Marijancevic v Mann

Introduction 1 The appellant, William Marijancevic, appeals against orders made by a judge of the Court on 2 November 2007 in each of two proceedings heard by the primary judge together. The appeals have become VID 1085 of 2007 ("the assessment proceeding") and VID 1087 of 2007 ("the recovery proceeding"). In VID 1085 of 2007, Mr Marijancevic appeals against an order dismissing his claims that assessments ("the default assessments") made under s 167 of the Income Tax Assessment Act 1936 (Cth) ("the ITAA36") by a Deputy Commissioner of Taxation ("the Commissioner") were void on the grounds that they were issued in bad faith and for an improper and collateral purpose. In proceeding VID 1087 of 2007, Mr Marijancevic appeals against an order that he pay to the Commissioner the sum of $121,068.01. 2 The parties were in agreement that the outcome of these appeals turns largely on the question whether the Commissioner engaged in deliberate or conscious maladministration of the ITAA36, or deliberately or consciously acted in excess of his powers in making the default assessments to Mr Marijancevic. For the reasons that follow, the appeals should be dismissed.

Background 3 From the summary made by the primary judge (see Marijancevic v Mann [2007] FCA 1648 ("Marijancevic v Mann") at [6] and [7] of his reasons) of the evidence adduced at trial by Mr Marijancevic (also known as John William Henderson) and the Commissioner, and the material to which our attention was drawn, it can be said that there was before his Honour uncontested evidence to the following effect: · On 20 April 2002, Mr Marijancevic was arrested in Queensland in possession of approximately $620,000 in cash and was charged with possession of property reasonably suspected of being tainted and drug related offences. · On about 21 April 2002, without Mr Marijancevic's permission, the Queensland Police placed the money into a bank account nominated by the Police. · On 27 November 2002, the Queensland Police faxed to the Serious Non-Compliance Team of the Australian Tax Office profile information on Mr Marijancevic (referred to in the faxed document as "John William Henderson"). · On 30 November 2002, the Magistrates Court at Cairns dismissed the charges against Mr Marijancevic. · An appeal against the dismissal of the charges was brought in the Cairns District Court. · A file note dated 21 January 2003 over the name of Alan Saunders, a Tax Office employee, noted that, in June/July 2000, Mr Marijancevic's address was changed on bank statements from 84 Hamilton Street Yarraville ("the Yarraville address") to 7 Burton Crescent Maribyrnong ("the Maribyrnong address"). This file note also recorded that the points noted "would suggest the purchase of a house (7 Burton Cres, Maribyong [sic]). Source of funds not known." · Mr Saunders' subsequent file note of 24 January 2003 recorded that he had been advised by his team-leader to "ensure that garnishee action will be taken in respect of the money held by QPol[ice]", and that "[j]udge is to hand down a decision about the money being returned to Henderson on 12 February 2003". · Mr Saunders emailed Ronda Lynch (a Tax Office Accounts Receivable Officer) on 3 February 2003 saying "[a]ssuming all goes well with the keying/processing the debt will be on the system by this Friday" (7 February 2003) and that "[a]ny queries concerning this case should be referred to Gary Wicks … as I will be on leave for a minimum of two weeks and possibly 3 weeks". · On 3 February 2003, the Commissioner requested a property search. · On 5 February 2003, the Commissioner issued a garnishee notice to "The Property Officer Cairns Police Station" requiring the officer, as a person who owes or may owe money to Mr Marijancevic, to pay the sum of $919,051.50 to the Commissioner, or if the money in his hands was less than that, then the whole of the available money. The garnishee notice named Ronda Lynch as contact officer. · On 5 February 2003, the Commissioner sent a letter ("the garnishee notice letter") addressed to "Mr John William Henderson" (that is, Mr Marijancevic) at the Yarraville address informing him that the Commissioner's records "show that an amount of $919,051.50 … remains unpaid on your account with this office" and that, as a consequence, a "notice under section 260-5 of Schedule 1 of the Taxation Administration Act 1953 has been issued". This was, of course, a reference to the garnishee notice that had been issued to the Property Officer at the Cairns Police Station. This letter was signed by an officer in the Tax Office's "SASP Debt Collection" for "Erin Holland Deputy Commissioner of Taxation" and named "Debt & Lodgement" as the contact officer. · On 5 February 2003, the Commissioner sent a letter ("the default assessments letter") to Mr Marijancevic at the Maribyrnong address notifying him of the preparation of assessments under s 167 of the ITAA36 for years ended 1998, 2000, 2001 and 2002. This letter was headed "RE AUDIT: Years ended 30 June 1998 to 2002" and attached the calculation statements for each year. The letter was sent over the name "N Mann Deputy Commissioner of Taxation Small Business", naming as contact officer the "Special Audit Manager". The letter did not mention any garnishee notice. · On 6 February 2003, the result of the property search showed that Mr Marijancevic had transferred his interest in the property at the Yarraville address to his wife in August 1999, the consideration for the sale being "natural love and affection". · On 10 February 2003, the Queensland Director of Public Prosecutions made a successful ex parte application to restrain any dealings with the $620,000. · On 11 February 2003, at 10:30 am, Mr Marijancevic spoke to Gary Wicks (a Tax Office employee filling in for Mr Saunders who was on leave). Mr Wicks said that he would chase up the file and ring back. According to a file note also dated 11 February 2003, Mr Wicks telephoned Mr Marijancevic at 3:20 pm that day, but Mr Marijancevic was unavailable and Mr Wicks left a message. · Also on 11 February 2003, the Commissioner issued notices of assessment of income tax to Mr Marijancevic in respect of each of the years of income ended 30 June 1998, 2000, 2001 and 2002. A certified extract of each notice of assessment was in evidence before the primary judge. The assessments in question were the default assessments, for an amount totalling $919,051.50. This was comprised of: (1) year ended 30 June 1998 - $173,373.73; (2) year ended 30 June 2000 - $272,722.06; (3) year ended 30 June 2001 - $441,059.70; and (4) year ended 30 June 2002 - $959,287.00. · On 12 February 2003, the District Court allowed the appeal against the judgment of the Cairns Magistrates Court dismissing the charges against Mr Marijancevic. · On 3 March 2003, Mr Saunders signed a document headed "Serious Non-Compliance Team Audit Case Plan Update - Review Points" ("the audit report"). The audit report is discussed below. · On 6 March 2003, Mr Marijancevic objected to the assessments. · On 25 July 2003, the Commissioner issued a writ in the Supreme Court of Victoria claiming recovery of $1,008,564.95 with respect to the default assessments. This began the recovery proceeding. In his defence, Mr Marijancevic claimed that the Commissioner had not made a bona fide assessment of his taxable income. The action was transferred (on 7 June 2006) by consent to this Court. · On 4 March 2004, Mr Marijancevic's objections were allowed in part ("the objection decisions") and, on 14 April 2004, notices of amended assessments were issued to Mr Marijancevic for each of the relevant income years. · On 29 April 2004, Mr Marijancevic applied to the Administrative Appeals Tribunal ("the Tribunal") for review of the objection decisions under Part IVC of the Taxation Administration Act 1953 (Cth) (" the TAA"). · By an application and statement of claim filed in this Court on 9 June 2004, Mr Marijancevic applied under s 39B of the Judiciary Act 1903 (Cth) ("the Judiciary Act"), seeking, amongst other things, a declaration that the default assessments were void. This began the assessment proceeding. · On 27 June 2005, the Tribunal varied the objection decisions by allowing them to the following extent: (1) year ended 30 June 1998 - taxable income reduced to nil; (2) year ended 30 June 2000 - taxable income reduced to $52,780; (3) year ended 30 June 2001 - taxable income reduced to $34,731; and (4) year ended 30 June 2002 - taxable income reduced to $100,578. · On 25 August 2005, further notices of amended assessments were issued to Mr Marijancevic, to give effect to the decision of the Tribunal. A certified extract of each notice of amended assessment was in evidence before the primary judge. 4 In the recovery proceeding, the Commissioner sought judgment in the amount of $121,068.01, being the amount certified under s 255-45 of Schedule 1 of the TAA as a debt due and payable by Mr Marijancevic as at 28 August 2007. This was the amount of the further amended assessments. It was common ground between the parties that, if Mr Marijancevic failed in the assessment proceeding, then the Commissioner was entitled to judgment in the recovery proceeding. In conformity with this understanding, the primary judge delivered judgments for Mr Marijancevic to pay the Commissioner the sum of $121,068.01 and dismissing the assessment proceeding.