2 Pursuant to a notice of appeal filed on 21 December 2004, the defendant now appeals against the allowance of the amendment and the orders for summary judgment and costs.

3 The further amended statement of claim is in two parts. In the first part it is alleged that the defendant was assessed to income tax for the years of income ended 30 June 1993 to 2000 inclusive, and that notices of assessment in respect of those years were served on the defendant on or about the issue dates of the notices. It is then alleged that the defendant was required to pay provisional tax in respect of the above years of income and that notices of provisional tax in respect of those years were served upon the defendant on or about the issue dates of the notices. It is alleged that the defendant failed to pay income tax and provisional tax in respect of those years on or before the relevant due dates. As a result the defendant became liable to pay, in respect of both income tax and provisional tax, additional tax by way of penalty, interest and the general interest charge under several specified provisions of the tax legislation. The product was the amount claimed. Then follow particulars which set out the relevant items and amounts. The format is to state in respect of each year the amount of each provisional tax liability and income tax liability and, as to each, the amount of additional tax, interest and general interest charge less "payments and/or credits". In no instance do the payments or credits equal the amount of the liability.

4 In the second part it is alleged that the Commissioner established an RBA in respect of primary tax debts under the BAS provisions and allocated the primary tax debts and payments and other credits to the RBA. From time to time the balance of the RBA was in favour of the Commissioner and there was accordingly an RBA deficit debt in respect of which the defendant became liable to pay the general interest charge for each such day. As a result the defendant was liable for the amount claimed.

5 The application for summary judgment was supported by affidavits affirmed by Bee- Ling Loh, an employee of the Australian Taxation Office ("ATO"), and an affidavit sworn by Darren Lane, an employee in the Legal Services Branch of the ATO. Mr Lane's affidavit explained and put in context certain matters that had occurred in the conduct of the proceeding.

6 Ms Loh's evidence verified the claim both by her own evidence of certain matters and the production of a number of certificates of the plaintiff. I refer more specifically to the certificates below. For the moment I note that the certificates were made and produced under several provisions of the taxation legislation. It is not necessary to identify the several legislative provisions under the authority of which the various certificates were produced; extracts of the provisions were produced in argument and there was no controversy about them. Nor was there controversy that the certificates in respect of the notices of assessment of income tax constitute conclusive evidence of the due making of the assessment and that the amount and all the particulars of the assessment are correct, as provided in s 177(1) of the Income Tax Assessment Act 1936 (Cth) ("ITAA"). The only exception permitted by s 177(1) is that on a review or appeal pertaining to the assessment the production of the notice is not conclusive as to the amount or particulars of the assessment. But that is not this case. In this proceeding the plaintiff seeks the recovery of amounts which are debts presently due and payable. Hence, in this recovery proceeding the defendant is precluded from questioning the amount of the assessments to income tax and the particulars of the assessments. See F J Bloemen Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia[1] and, as instances in this Court of applications of s 177(1), Deputy Commissioner of Taxation v Cameron[2]; Deputy Commissioner of Taxation v Collie[3]; Deputy Commissioner of Taxation v Loftus[4].

7 On the other hand, under the relevant statutory provisions all of the other certificates constitute prima facie evidence of the liability and matters stated therein. This includes notices of instalment of provisional tax, additional tax, interest, general charge and the RBA deficit debt. In relation to these it is open to the defendant to challenge liability for the amount claimed.

8 The defendant relied in opposition to the application on an affidavit sworn by himself on 26 November 2004. He denied being indebted in the amount claimed or any amount at all.

9 Before dealing with the substantive grounds raised by the defendant it is necessary to deal with two points of a preliminary nature argued by his counsel. They were also raised before the Listing Master. The points were these:

(a) as this was a second application for summary judgment, and the plaintiff had not sought leave under Rule 22.02(4) to make the application, let alone file an affidavit setting out why leave should be granted, the application should be refused.

(b) the plaintiff should not have been given leave to further amend the statement of claim; there had been previous amendments and the plaintiff should not have a further indulgence. Further, the need for the amendment should have been explained by affidavit.

10 Although I consider that each of these points should be rejected it is necessary to refer to the history of the litigation to both understand how the points arise and to deal with them.

11 The proceeding was commenced on 15 May 2002. The statement of claim endorsed on the writ claimed the defendant owed $214,994.84 in respect of income tax, provisional tax and additional charges for late payment in respect of the tax years 1995 to 2000 inclusive, and $11,202.17 as the RBA deficit debt. The defence, which merely denied or did not admit the allegations, was filed on 24 July 2002. On 1 August 2002 Master Bruce made directions for interlocutory steps. The plaintiff provided particulars of the statement of claim and an affidavit of documents but the defendant did not comply with the directions. On 2 December 2002 the plaintiff applied for an order that the defence be struck out and that the plaintiff have leave to enter judgment. That was dealt with by orders in February 2003 that the defendant provide particulars and an affidavit of documents, and those orders were complied with. On 13 March 2003 the Listing Master directed a reply, inspection of documents and interrogatories and referred the proceeding to mediation.

12 On 29 August 2003 the plaintiff filed a summons for summary judgment in the proceeding. Affidavits by Ms Loh were filed in support. The summons was adjourned on a number of occasions.

13 At one point, following (as I was told) the agreement of the plaintiff to consult with the defendant in relation to his claims as to his indebtedness, the plaintiff reviewed the defendant's account and provided him with a reconciliation document. That was followed, on 26 May 2004 by a meeting between representatives of the parties and the defendant at which the defendant was provided with an updated statement of his account with the general interest charge calculated to 25 May 2004. The defendant said he would review the documents but made no subsequent contact to discuss the matter.

14 Following that, on 11 June 2004, the Master ordered by consent -

(a) that the plaintiff's summons for summary judgment be "dismissed without prejudice to the plaintiff's right to make a further application for summary judgment",

(b) that the plaintiff have leave to amend the statement of claim, and

(c) that the defendant file a defence to the amended statement of claim.

15 The amended statement of claim took the claim back to include the 1993 and 1994 tax years and also amended the amount of some items. The total amount claimed increased to $325,748.37.

16 A defence was filed on 21 July 2004 but, as before, it consisted merely of bare denials or non-admissions.

17 That was followed, on 18 August 2004, by the plaintiff filing the present summons for summary judgment. The application was supported by an affidavit affirmed by Ms Loh to which were exhibited the following:

(a) a certificate of indebtedness as at 18 August 2004 pursuant to s 255-45 of the Taxation Administration Act 1953 (Cth) ("TAA"),

(b) notices of assessment pursuant to s 177(1) of the ITAA for the years ended 30 June 1993 to 30 June 2000 inclusive,

(c) a statement of the defendant's RBA as at 10 June 2004, and

(d) a certificate pursuant to s 8AAZJ of the TAA stating the amount of the defendant's RBA deficit debt as at 18 August 2004.

The product of these certificates was a present debt of $333,532.40. Ms Loh deposed that the additional tax for late payment, interest for late payment and the general interest charge imposed on the defendant and claimed by the plaintiff had been properly calculated in accordance with the applicable statutory provisions (which she identified). She deposed to her belief that there was no defence to the claim and requested summary judgment for the above amount.

18 Then followed several adjournments of the summons.

19 In the meantime the plaintiff gave consideration to the claim and the evidence in support. On 28 October 2004 Ms Loh affirmed a further affidavit in support. She stated that the plaintiff intended to abandon her claim in respect of two notices of instalment of provisional tax in relation to the first and fourth quarters of the year ended 30 June 1993. The claim was now for $326,354.44 comprising:

(a) liability for income tax, provisional tax, late payment penalty and general interest charge of $311,299.91, and

(b) liability for the RBA deficit debt of $15,054.53.

A certificate of the plaintiff pursuant to s 255-45 of the TAA and identifying the provisional tax notices in the 1993 to 1999 tax years was exhibited to the affidavit. Ms Loh also exhibited 22 notices of instalment of provisional tax in respect of the 1993 to 1999 tax years and the provisional tax notice in respect of the 2000 tax year. Each were certified by the plaintiff under the TAA. Ms Loh deposed that the amounts of provisional tax on each notice were not paid on the due date whereby the defendant became liable to pay the amount outstanding, additional tax for late payment, interest for late payment and general interest charges under the several statutory provisions she identified. Finally, Ms Loh deposed that there was no defence.

20 A proposed further amended statement of claim was delivered to the defendant's solicitors on 4 November 2004 with a request that the defendant provide a response. No response was received.

21 The plaintiff's summons was adjourned to 8 December 2004 when the Listing Master commenced hearing the application. When the hearing commenced the plaintiff filed a further affidavit of Ms Loh. This affidavit, affirmed on 8 December, exhibited three further certificates of the plaintiff, namely a notice of amended assessment for the year ended 30 June 1994 and two certificates under the TAA which produced a total present indebtedness of $330,933.37. She deposed that the amounts for additional tax for late payment, interest and general interest charge were properly calculated.

22 Before the Listing Master, and before me, the plaintiff relied on the affidavits of Ms Loh affirmed 18 August, 28 October and 8 December 2004. The plaintiff also relied on Lane's affidavit.

24 Rule 22.02(4) provides that except by order of the Court the plaintiff shall make only one application for judgment under the Order. Counsel submitted that the order made on 11 June 2004 did not alter that position. The plaintiff required leave to bring a second application and it had neither filed a summons seeking such leave nor an affidavit as to why such leave should be granted. Accordingly, there was no material before the Court which could enable it to exercise the discretion to allow a second application. It was also submitted that leave should be refused on the separate ground of the number of attempts the plaintiff had made to ascertain the amount owed and formulate the claim. This latter submission included reference to an earlier proceeding brought by the plaintiff against the defendant which had been discontinued.

25 The primary submission on this point is untenable if not disingenuous. The order of 11 June 2004 was made by consent in circumstances where the plaintiff, following reconsideration of the matter at the request of the defendant to consult as to his indebtedness, had produced an amended statement of claim upon which it intended to proceed. The effect of the order that the summons be dismissed without prejudice to the plaintiff's right to make a further application for summary judgment was to entitle the plaintiff to make such a further application on the amended claim, and to do so without first obtaining leave. If the order did not have that operation, then it was empty of meaning. That is because, absent the order, it was open to the plaintiff to seek leave to make a second application. If the order still left that requirement on the plaintiff then it had no effect at all, and that cannot have been the intention of the parties or the effect of the order. It therefore being open to the plaintiff to file a further application for summary judgment, there was no need for the plaintiff to also apply for leave to file that summons and to support that application by an affidavit to establish why the indulgence should be granted. The plaintiff was at liberty to file its further application together with such affidavits in support as it was advised. I should add that even if I were wrong in that conclusion it is so overwhelmingly obvious an appropriate exercise of discretion in the circumstances that leave would be granted to make the second application.

26 The second point was that the plaintiff should not have been given leave to amend the amended statement of claim. In the circumstances of this case the submission is fatuous. In my view leave to amend was properly granted. The amendments were few, did not change the nature or substance of the claim, but deleted two quarterly periods concerning provisional tax instalments in 1993, and reduced by recalculation one item, to produce an overall reduction in the amount claimed as at 10 June 2004. Further, the defendant had had the amendments since 4 November 2004 and had not suggested any difficulty. And there hardly could have been. The claim was supported by the earlier affidavits of Ms Loh, and was further supported by her affidavit of 8 December 2004 which brought the amount of the debt up to date. Further, Ms Loh explained the deletion of the 1993 items, and the rest were obvious. There was no need for any elaboration. In my view, in the circumstances it was correct to permit the amendment and to proceed to hear the application on the basis of the further amended statement of claim. No other course consistent with the expeditious, economic and just determination of the proceeding was properly open.

27 I turn then to deal with the substantive matters argued on the application.

28 The first point is that the evidence of Ms Loh including the certificates verifies the facts on which the claim is based. Nevertheless, the defendant submits that the plaintiff has failed to make out the proofs necessary to obtain judgment. While not questioning the conclusiveness of the notices of assessment, counsel submitted that the prima facie evidence of the plaintiff concerning additional tax, interest and general charges was displaced by the earlier statements of account provided by the ATO which do not support the claim and in particular disclose allocations of payments by the defendant that differ from those shown in the latest reconciliation. In the face of this conflict in the materials produced by the plaintiff, it was not possible for the Court to ascertain precisely what sums, if any, were due from the defendant. In other words, the defendant should have leave to defend not merely on account of his evidence in opposition, but because the plaintiff's evidence cannot be accepted for the purpose of summary judgment. It was further submitted that the Court could, in its discretion, grant leave to defend on terms as to the payment of interest pending the hearing and determination of the proceeding. It was further requested that the proceeding be referred to mediation. The convenient way in which to deal with the matters relied upon by the defendant is to consider them in the order in which they appear in his affidavit.

29 At an early part in his affidavit the defendant referred to and exhibited statements of his account as at 10 February 2004, 13 April 2004 and 9 June 2004 provided to him by the plaintiff. He said that these statements recorded payments in excess of the amounts of primary tax, and that the plaintiff's claim is for penalty tax and interest. He said that the plaintiff had not explained the changes in the further amended statement of claim.[5] He then referred to an earlier proceeding, 6006 of 1997, brought by the plaintiff against him for payment of tax, penalties and interest in respect of the same period as the present proceeding but only up to 1997, and to an affidavit sworn in that proceeding by John Whitehouse, an employee of the ATO, on 6 August 1998 in support of an application for summary judgment. The Whitehouse affidavit sought to verify the claim in that case and thus set out details of the claim. One of the exhibits, JW41, recorded the debits and credits, including the nature of the items, in the defendant's account in and between 1989 and 1997. These included certain items of credit in respect of provisional tax on pages 18-22 to which counsel drew attention and which, counsel submitted, showed that the defendant was then ahead in payment of his provisional tax and which items should have been credited in his favour. At the least, it was said, these items showed that there were issues that required investigation. I note that this proceeding was discontinued without adjudication. The plaintiff then commenced the present proceeding.

30 Against that background, in paras 23-26 the affidavit addressed the year ended 30 June 1993. Paragraph 23 set out the item as it appeared in the particulars to the further amended statement of claim concerning income tax liability for the 1993 year, namely:

Income tax liability for the year ended 30 June 1993 as per notice of assessment issued 19 September 1994 which became due for payment on 22 October 1994

PLUS: Additional tax for late payment pursuant to section 207 of the ITAA 1936, calculated to 4 October 1998

PLUS: Interest for late payment pursuant to section 207A of the ITAA 1936, calculated to 4 October 1998

PLUS: The general interest charge pursuant to Item 93 of Schedule 2 of the ANTS(PAYG)A 1999 and Division 1 of Part IIA of the TAA 1953, calculated up to and including 9 June 2004

The amount of $76,335.48 formed a portion of the amount claimed in the further amended statement of claim. This claim, the defendant said, was incorrect, it had not been verified by Ms Loh, and the relevant notice of assessment had not been produced. The correct position, the defendant stated in para 26, was evidenced by the copy of notice of assessment issued on 19 September 1994 which was Exhibit JW2 to the Whitehouse affidavit. That certificate recorded that rather than being liable to pay any tax for the 1993 year the defendant had a credit in his favour arising out of surplus provisional tax paid in previous years and as a consequence there was no late payment of income tax for the 1993 year. In view of this claim it is necessary to set out the items in Exhibit JW2. Exhibit JW2 is headed "Extract From A Notice Of Assessment" and sets out the following as details of the defendant's assessment.

31 When the defendant swore his affidavit, Ms Loh's final affidavit which exhibited the notice of assessment for the 1993 year had not yet been provided. Exhibit JW2 was in fact an extract from the assessment for the 1993 year and not the full notice of assessment. Section 177(4) of the ITAA authorised production of an extract.

32 The extract set out, in identical terms, the statement of the amount of the defendant's taxable income down to the item "Balance of this Assessment $7,125.86". That is where the extract ends but the actual notice of assessment contains the following further items:

The actual amount payable was then rounded down by the reduction of two cents.

33 Section 177(4) provides that the production of an extract from a notice of assessment shall be evidence of the matter therein set forth to the same extent as the original would be if it were produced. There is no clash between the items in the extract produced as an exhibit to the Whitehouse affidavit and the notice of assessment, and there could not be as the former is an extract from the latter.

34 The amount of the tax liability of $64,998.14 is readily calculable from the items in the notice of assessment and the extract. It is thus -

For this purpose the credit for 1993 provisional tax is not taken into account. The item is a credit to reflect the effect of the annual adjustment to income tax. It is not a monetary adjustment. Provisional tax can only give rise to a monetary allowance for adjustment if it is actually paid. The system of provisional tax has been explained in Federal Commissioner of Taxation v Clyne[6] and Kinny v Deputy Federal Commissioner of Taxation[7]. As Dixon CJ stated in Clyne provisional tax was not a separate tax but a liability ancillary to income tax. The amount payable was provisional upon the assessment for the year. When the assessment was issued, which stated the amount of the taxable income and the actual tax payable, the liability to provisional tax was extinguished. The Commissioner's rights then lay in recovery of the tax thus assessed together with any amount of additional tax "payable in respect of provisional tax unpaid during the period when it was due and payable".[8]

35 It is seen that, consistently with this system of taxation, the above claim in respect of income tax in the 1993 year is for the income tax liability for the year and additional tax and interest on account of late payment plus a general interest charge.

36 In these circumstances the following conclusions may be expressed concerning the defendant's contentions. First, the notice of assessment has been produced and the claim has been verified. Secondly, the notice of assessment and a proper understanding of the provisional tax system makes it clear that the defendant did not have a credit for provisional tax paid or a balance in his favour; he was in fact in overall debit to $146,892.55. Thirdly, once analysed it is apparent that the defendant's attack is upon the correctness of the notice of assessment. Indeed, in para 26 he states that the "correct position" is evidenced by the Whitehouse extract. However that was a mere extract and the "correct" position appears in the actual notice of assessment which is conclusive of the amount and particulars of the assessment. For these reasons the contentions in paras 23-26 do not raise an arguable defence. Indeed, strictly speaking, the affidavit is not admissible against the conclusive status afforded the notice of assessment by s 177(1).

37 I add that neither in this nor in the other instances did the defendant challenge the actual calculation of the amounts of the additional tax, interest and general interest charge.

38 In his affidavit the defendant proceeded to make the same contention in relation to the 1994 year. For the reasons given above, the contention is untenable.

39 In paras 31-38 the defendant agitates the notice of assessment for the 1995 year. In the course of doing so he relied on Exhibit AEH13 to his affidavit which is a notice of amended assessment relating to the 1994 year, and which is therefore irrelevant to the 1995 year. Apart from that, the contentions are not arguable for the reasons given above.

40 The position is the same with the 1996 and 1997 years where contentions are made in the same form.

41 Then, in paras 47-54[9] the defendant relies on an agreement made with the plaintiff in March 1992 in settlement of a proceeding brought against him by the plaintiff in the County Court for tax liabilities. He states that pursuant to "the agreement" he agreed to pay and the plaintiff agreed to accept payment of $138,431.28 in full settlement of all arrears of income tax and provisional tax then due, plus additional tax and interest for late payment and costs. In summary, he was told that this amount brought him up to date, and "would wipe the slate clean". He produced a letter from the plaintiff dated 18 March 1992 "confirming the said 1992 agreement". In view of that statement it is necessary to refer to the terms of the letter, which states:

"Further to your telephone conversation this day advising that you are making application to the Bank of Melbourne for a Home Equity Loan for $100,000 and that you need to provide the Bank with written confirmation of the purpose of the loan.

It is confirmed that this office has sought immediate payment of arrears of tax due and owing by you in the sum of $135,431.28. This amount includes the balance of provisional tax instalments of $74,826.46 and additional tax for late payment accrued to 18 March 1992 of $60,504.82.

It is further confirmed that you have agreed to apply the proceeds of the loan towards payment of the above amount and will authorise the Bank of Melbourne to pay the amount lent directly to the Deputy Commissioner of Taxation."

I note that due to the poor quality of the copy of the letter produced to me the dollar amounts stated may not be precisely correct.

42 The defendant said that he made payments between 18 March 1992 and 15 May 1992 on which date the plaintiff wrote acknowledging receipt of $100,000.00 "in respect of income tax outstanding" and noted that $10,411.30 remained outstanding in respect of the balance of additional tax for late payment and legal costs to finalise his account. He paid this amount by three payments in May and June 1992. He then alleged, in paras 50 and 51, that in breach of the agreement the plaintiff had wrongly applied $61,400.93 in purported payment of additional tax and interest allegedly incurred in the years 1987-1991, which amount should be offset against the tax liabilities payable on 5 October 1998 and the removal of additional tax, interest and general interest penalties imposed for late payment of the respective amounts so credited.

43 Then, in para 52 the defendant said that on 5 October 1998 he paid the plaintiff $150,000.00 in payment of his income tax liability for the 1993-1998 years. Of that amount only $88,235.51 was allocated to payment of income tax for those years (para 53); $61,764.49 was wrongly applied in payment of additional tax and interest incurred for late payment of various amounts of tax in the 1987-1991 years (para 54).

44 The defendant then (in the second para 52) referred to the three statements of his account provided by the plaintiff and referred to above, from which it was apparent the plaintiff had purported to change the allocation of monies paid between 1988 and 1992 to represent the payment between those years of the additional tax and interest for late payment allegedly incurred for late payments of various amounts of tax in the 1988-1991 years set out in particulars in the County Court proceeding and stated therein to have been paid out of the $150,000 payment.

45 The defendant further said, in the second paras 53 and 54, that upon examination of the three statements of account referred to above it was apparent that five amounts totalling $6,346.44 had been wrongly applied in payment of additional tax and interest alleged to have been incurred after the making of the 1992 agreement. As a consequence he was entitled to be credited with that amount.

46 These contentions concern and depend on, the 1992 agreement. The defendant stated that the letter dated 18 March 1992 confirmed the agreement. In my view the letter does not confirm an agreement. The letter is of a different nature as is evident from its terms. It referred to advice of the defendant as to applying for a loan, to confirmation that the plaintiff had sought immediate payment of arrears of tax due in the sum of $135,431.28 (including the balance of provisional tax instalments and additional tax for late payment to 18 March 1992) and confirmation of the defendant's agreement to apply the proceeds of the loan towards payment of that amount. The letter is reflective of a taxpayer wishing to discharge his liability as at that date. The apparent purpose of the letter is to provide information to the Bank in connection with the making of the loan. In my view it is not a letter which on its terms reflects an agreement by the plaintiff to accept a sum in settlement of a liability for outstanding tax and related liability. Relevantly, the letter is merely a statement of the plaintiff of an amount in respect of which the plaintiff "has sought immediate payment" and, contrary to the statement of the defendant, the letter does not refer to income tax as such; the amount sought as arrears is made up by the stated amounts for provisional tax instalments and additional tax for late payment. It was, in short, a statement by the plaintiff as to the amounts required at that time to be applied on those accounts.

47 Furthermore, the 1992 "agreement" related to tax periods prior to the years of tax which are the subject of this proceeding.

48 The question is whether, notwithstanding these matters, in paras 50-54 (including the second paras 52-54) the defendant has raised an arguable ground of defence to the amount claimed.

49 The argument goes not to question a notice of assessment, and could not be permitted to do so, but to the allocation of payments and the correctness of the amounts due for additional tax, interest and the general charge. The first point to note is the generality of the defendant's contentions, as against the prima facie evidence of the amount due to the plaintiff, and the detail in the reconciliation of the defendant's account prepared following the defendant's request to consult and the discussion between the parties. It is notable that the defendant relies on the materials in the earlier County Court proceeding and the two earlier reconciliation documents as well as the latest one. In my view the defendant is entitled to do that for the purpose of seeking to establish doubt and uncertainty concerning the claim. What the defendant has not done is address the latest reconciliation, or indeed the earlier ones in detail, and relate his broadly expressed contentions to that document, and in so doing provide an understandable explanation. Certainly the defendant does not venture a calculated estimate of his liability, if any. His position is rather to assert certain matters, point to differences in the materials provided and submit that there is a degree of doubt that makes it appropriate to grant leave to defend. In the end, regarding the matter overall, I am satisfied that in paras 50-54 the defendant has raised matters as to the allocation of payments that merit investigation and warrant leave to defend.

50 The defendant's affidavit then proceeded to set out a number of further bases upon which he was entitled to a credit. I deal with each in turn.

51 In paras 55-57 the defendant stated that he was entitled to a credit in relation to his income tax liability for the years ended 30 June 1993, 1994 and 1995 on the basis that his taxable income was reduced by the amount of interest paid to the Bank of Melbourne in respect of the loan of $100,000.00 referred to above for the purpose of paying his tax commitments. He produced a letter to the plaintiff from his solicitor dated 22 July 1999 in which a re-assessment was sought accordingly. This cannot avail the defendant in this recovery proceeding. The raising of these claims was properly a matter to be taken by way of review or objection to the relevant assessment and cannot now be raised to challenge the correctness of the relevant notices of assessment.

52 Next, in paras 58-63 the defendant calculates that the amount of additional tax, interest for late payment and the general interest charge for the years 1993-1999 totals $59,336.72. He states that it would not be fair and reasonable to obtain heavy penalties in that sum for failure to pay $194,436.56 by way of provisional tax "that the plaintiff was never entitled to receive by way of income tax liability and which if paid would have had to be returned to [him]". He believes that the claim is unconscionable and inequitable in the circumstances and states that he made application for remission of the amounts by his solicitor's letter dated 22 July 1999 referred to at [51] above. No response had been forthcoming other than the promise made in 1998 that once his primary tax was paid he and his representatives would be afforded an opportunity to support his application and pursue the matter with the plaintiff's officers. However, despite payment of his primary tax the plaintiff and her officers had declined to discuss the application. He therefore requested an order that the plaintiff consider and determine the applications made in the solicitor's letter after giving the defendant an opportunity to support the applications prior to the further determination of the proceeding. Alternatively he requested that the proceeding be stayed pending the consideration of the applications made in the said letter. In my view these contentions do not provide an arguable ground of defence. They also seem to rest on a misconception of the effect of non-payment of provisional tax when it is due, that is to say that penalty tax and interest remain payable.

53 In the next paragraph, para 64, the defendant stated that he had further calculated that if the credits referred to in paras 54-57 had been properly applied at the relevant times and allocated to the payment of provisional tax in the years 1993-1998, no late payment of provisional tax for those years should have occurred which would further reduce the plaintiff's claim by $24,151.77. As to this contention, it is sufficient to refer to the above discussion concerning the matters raised by the defendant in the second paras 53 and 54 (see [45]-[49] above) and paras 55-57 (see [51] above). For the reasons there stated, there should be leave to defend in relation to this matter insofar as para 64 relates to the second paras 53 and 54.

54 Then, in paras 65 and 66 the defendant contends that his income tax liability for the year ended 30 June 1998 was not correctly stated and should be re-assessed in accordance with the application for re-assessment which he had been informed by his accountant had been made on his behalf. As a consequence the amounts alleged to be payable for additional tax, interest, general interest and provisional tax set out in the particulars are incorrect. The amount alleged to represent his income tax liability for the year should be substantially reduced and be the subject of an amended assessment. This cannot constitute a basis for leave to defend. It is an attempt to challenge the conclusive effect of the notice of assessment.

55 Then, in paras 67 to 70 the defendant addressed contentions concerning his income tax liability for the year ended 30 June 1999 as alleged in the particulars in the further amended statement of claim. Again, there had been an application for a re-assessment and, in consequence of that re-assessment, the amounts alleged to be payable for interest, provisional tax and interest thereon as set out in the particulars are incorrect in that they are based and calculated upon an incorrect income tax liability for the year. The amount alleged to represent that liability, along with the interest, provisional tax and interest thereon, should be extinguished and replaced by an amended assessment. He further said that an amount of $3,185.50 being the group certificate payment that had been paid on his behalf should be refunded as a consequence of the re-assessment. This again is an impermissible attempt to challenge the conclusive notice of assessment for the year in question and cannot provide a basis for leave to defend.

56 In the next paragraph, para 71, the defendant states that the amounts alleged to represent additional tax for late payment and the general interest charges in relation to the years ended 30 June 1995-1997 are incorrect in that they are not calculated upon the correct amounts of his taxable income for each such year. As a consequence the amounts alleged to be payable for additional tax for late payment and general interest charges should be reduced and calculated upon the re-assessed amounts of income tax liability for those years. This again comes back to a challenge to the amounts stated in the relevant notices of assessment and for this reason this is not a matter which is open to the defendant to raise as a ground of defence. As with the other similar matters, the defendant's right was to object and seek a review of the relevant notices of assessment.

57 I turn then to paras 72 and 73 in which the defendant stated that the plaintiff had not, contrary to the allegations in para 2 of the further and better particulars of the statement of claim filed on 24 September 2002, given him due credit in the statement of claim for the full credits arising from the amended assessments referred to in those particulars, or made sufficient allowances with respect to such reductions of his tax liability and in particular with respect to reductions of general interest and other interest and additional tax penalties that are due to him and which have not been acknowledged therein or at all. He further said that apart from the credits arising from the amended assessments referred to in para 2 of the further and better particulars of the plaintiff's claim, no reduction or allowance had been made with respect to the amounts of provisional tax payable for the following financial year. He said that a proper re-assessment of provisional tax should have been made resulting in a consequent reduction in the amounts of additional tax for late payment and the general interest charge as set out in the particulars in the statement of claim for each provisional tax instalment charged during the year preceding the financial years ended 30 June 1996-2000. There are several difficulties with these contentions. The first issue is whether it is established, on an arguable basis, that there has been a failure to give credit arising from amended assessments or allowance made with respect to such reductions of the defendant's tax liability. No details are provided. There also seems to be the misconception as to the operation of the provisional tax system. Nevertheless sufficient is said to raise questions appropriate for investigation at trial.

58 Paragraph 74 stated that the RBA deficit debt should be eliminated or significantly reduced on a pro rata basis by reason of the matters deposed to in the preceding paragraphs of the affidavit. As the defendant has established arguable grounds in relation to the matters of allocation and treatment raised in paras 50-54, 64 (insofar as it relates to the second paras 53-54) and 72-73, there must be leave to defend in respect of this contention to the extent it pertains to those matters, but not otherwise.

59 The affidavit concluded with a general denial of indebtedness, an assertion as to incorrect calculation of amounts of additional tax and penalty interest, a request that the proceeding be referred to mediation or that there be a taking of accounts prior to determination of the application, and that the defendant be granted leave to defend.

60 For the above reasons the appeal will be allowed and paras 2 and 3 of the orders made by the Listing Master on 17 December 2004 will be set aside. I will hear counsel on the appropriate order for leave to defend which would seem to be that the defendant have leave to defend as to the matters raised in paras 50-54 (including the second paras 52-54), 64 (insofar as it relates to the second paras 53-54) and 72-74 of the affidavit of the defendant sworn 26 November 2004. I will also hear counsel on the question of costs and on the matter of directions for the further conduct of the proceeding.

1. [1] [1981] HCA 27; (1981) 147 CLR 360.
2. [2] (1990) 21 ATR 1091.
3. [3] [1998] 2 VR 106.
4. [4] [2002] VSC 68.
5. [5] The defendant's affidavit was sworn prior to Ms Loh's final affidavit.
6. [6] [1958] HCA 10; (1957-1958) 100 CLR 246 at 260 per Dixon CJ.
7. [7] (1987) 88 ATC 4049.
8. [8] Kinny v Deputy Federal Commissioner of Taxation at 4,054 per McHugh JA.
9. [9] In fact paras 52, 53 and 54 are duplicated, thus the paras run 47-54, followed by second paras 52-54. I deal with all of those paras in this section.