No error in the failure to "go behind the summary judgment"
23 At the date of issue of the bankruptcy notice there was no challenge to the summary judgment decision of Kenneth Martin J. The summary judgment matter had been fully argued and, at the date of issue of the bankruptcy notice, no appeal had been brought from that decision. The orders of Kenneth Martin J thus stood as unimpeached orders, obtained after a contested matter (including where Dr Nugawela was legally represented). And, as we have explained, the bankruptcy notice that was issued gave credit to Dr Nugawela for the revised assessments in his favour. The first group of grounds of appeal nevertheless sought to relitigate matters raised before Kenneth Martin J. The primary judge had concluded at [61] that there "was not the slightest doubt" that Kenneth Martin J was required to proceed as he did.
24 It is necessary to proceed with three observations about the manner in which this appeal was argued. First, it was argued on the basis that s 41(5) of the Bankruptcy Act is the source by which a bankruptcy notice might be set aside for misstatements. Section 41(5) is not the source of the power to set aside bankruptcy notices for misdescription. In Re Walsh (1982) 65 FLR 87, 91-92 Lockhart J said, in relation to ss 41(5) and (6) of the Bankruptcy Act:
These subsections are taken from s. 53 of the Bankruptcy Act 1924 which in turn was reproduced from the English Bankruptcy Act, 1914 and its predecessor the Bankruptcy and Deeds of Arrangement Act, 1913. It has been said that these provisions were enacted to overcome the judgment in Re A Debtor, 478 of 1908. Plainly enough, as long ago as 1913 the predecessors of s. 41 (5) and (6) were intended to ensure that, when courts would otherwise hold bankruptcy notices invalid on the ground of overstatement of the amount due, the consequence of invalidity was not to follow unless the debtor gave the requisite notice under s. 41 (5) or its then equivalent.
They are ameliorating provisions. They do not either in terms or in substance themselves invalidate anything. They save some bankruptcy notices from what otherwise would be invalidity, but the subsections are not based on an assumption that overstatement necessarily leads in every case to invalidity of the bankruptcy notice.
This was endorsed by Gummow J in Olivieri v Stafford (1989) 24 FCR 413, 428.
25 Secondly, despite various of Dr Nugawela's submissions it is important to reiterate that the date at which the amount in the bankruptcy notice is determined to be excessive or not is the date of issue of the notice: Walsh v Deputy Commissioner of Taxation [1984] HCA 33; (1984) 156 CLR 337. In that case, Gibbs CJ said (at 340; Mason, Brennan, Deane and Dawson JJ agreeing):
In form the notice speaks as at the date which it bears, that is the date of its issue, and although service is essential to make non-compliance an act of bankruptcy, and although the time fixed for compliance runs from the date of service, the notice must be understood as speaking as at the date of its issue and the requirements of the notice, for the purposes of s. 40(1)(g) of the Bankruptcy Act, must be ascertained in that context. This reinforces the view that the amount which must be correctly stated is the amount of the judgment debt owing at the date of issue.
26 Thirdly, the Commissioner did not dispute on this appeal that it was possible to "go behind" the judgment of Kenneth Martin J and the orders made against Dr Nugawela. As Fullagar J said in Corney v Brien [1951] HCA 31; (1951) 84 CLR 343, 353-354, although a judgment at law for a sum of money creates an obligation of its own force, it has "been well settled for very many years that in a court having jurisdiction in bankruptcy a judgment has no such conclusive effect. The court will in many cases, as it is commonly said, 'go behind' the judgment and inquire into the existence of the debt upon which it is said to be founded".
27 The grounds of appeal concerning a failure to "go behind" the summary judgment orders of Kenneth Martin J fail because there is nothing in the submissions before us that causes us to doubt the correctness of the orders of Martin J.
28 There is no misstatement or misdescription in the bankruptcy notice simply because AAT proceedings are on foot. Section 350-10 in Sch 1 to the Taxation Administration Act 1953 (Cth) provides that the production of a notice of assessment under a taxation law is conclusive evidence that:
(a) the assessment or declaration was properly made, or the notice was properly given; and
(b) except in proceedings under Part IVC of this Act on a review or appeal relating to the assessment, declaration or notice-the amounts and particulars of the assessment, declaration or notice are correct.
29 Section 14ZZM of the Taxation Administration Act provides:
Pending review not to affect implementation of taxation decisions
The fact that a review is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no review were pending.
30 Section 14ZZR of the Taxation Administration Act provides:
Pending appeal not to affect implementation of taxation decisions
The fact that an appeal is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no appeal were pending.
31 Dr Nugawela cannot go behind the summary judgment decision, coupled with the interim conclusive effect of the Commissioner's assessments, merely by asserting that there is a dispute concerning the calculations. Nor can he establish, as he submitted, that this case is anything like the circumstances in Re Deputy Commissioner of Taxation (WA); Ex parte Briggs (1986) 17 ATR 1031. In that case, the Full Court of the Federal Court held that tax assessments had not been validly issued. The Deputy Commissioner of Taxation had conceded that neither he nor his officers had made any attempt to ascertain the taxpayer's taxable income. They conceded that the notices of assessment were issued for the purpose of forcing the taxpayer to consult with the Deputy Commissioner or his officers. There is no basis for any conclusion in this case other than that the Commissioner in this case has made a genuine attempt to calculate Dr Nugawela's assessments. On 7 April 2011, the Commissioner commenced an audit of Dr Nugawela's financial circumstances based on estimates of income. In a letter sent from the Commissioner to Dr Nugawela on 4 April 2011, the Commissioner explained that the audit would initially cover the tax period 1 July 2009 to 30 June 2010, but was not limited to that period. It appears from the Commissioner's response to Dr Nugawela's later objections that an assessment for these years that the audit was substantially expanded to cover the financial years from 30 June 2000 to 30 June 2011 (inclusive). The notices of assessment were issued to Dr Nugawela by the Commissioner on 30 November 2011 and 8 December 2011. Further consideration, following the objections by Dr Nugawela, led the Commissioner to provide the credits described above at [3(5)-(6)].