Precision Pools Pty Ltd v Federal Commissioner of Taxation

, the applicants before his Honour, consist of a number of companies in the Grollo group of companies, the nature of which is described in the other judgment, a number of trusts and two individuals, Mr Bruno Grollo and Mr Rino Grollo who are also referred to in that judgment. The terms of settlement are referred to generally in the other judgment. It is now necessary to refer to them more specifically. Before that is done, it is appropriate to mention the background of the matter which is set out comprehensively in his Honour's judgment. During the period 1989 to 1992 the respondent ("the Commissioner") conducted an audit of the income tax affairs of the appellants in the course of which disputes arose both as to whether any, and if so what, taxable profit or income was derived by any, and if so which, of the appellants by or from the construction of a building in Melbourne known as the Rialto building, and as to income tax issues other than those arising out of or relating to the construction of the Rialto project. In 1992 there were negotiations between the parties in an attempt to resolve these disputes. On 30 June 1993 certain of the appellants instituted proceedings in the Federal Court seeking, inter alia, a declaration that the Commissioner and the appellants who were parties to those proceedings had concluded an enforceable settlement of the disputes. In the 1993 proceedings the Commissioner denied that any such agreement had been made. On 22 September 1993, prior to the hearing of those proceedings commencing, the appellants and the Commissioner executed an agreement, described as terms of settlement, in respect of the 1993 proceedings and the disputes. As mentioned in the other judgment, by the terms of settlement the parties agreed, in full settlement of all issues other than the Rialto issue and another immaterial issue, that the appellants would pay to the Commissioner $27.5 million, that the Commissioner would issue assessments in respect of the non-Rialto issues for a total amount not exceeding $27.5 million, that the payment by the appellants of the $27.5 million would be in full and final discharge of all liability under the non-Rialto assessments and that the applicants would forego certain carried forward losses specified in the terms of settlement. The parties also agreed that, in full settlement of the Rialto issues, the Commissioner would issue and serve assessments for a total sum (including additional tax and other penalties) not exceeding $39 million, being $19 million primary tax and $20 million penalties, that the Commissioner could issue and serve alternative assessments and that, except as expressly provided to the contrary in the terms of settlement, all such assessments would be raised in accordance with the provisions of the Income Tax Assessment Act 1936 ("the Act") and be subject to the ordinary objection and referral or appeal provisions of Part IVC of the Taxation Administration Act 1953 ("the Administration Act"). His Honour said that the parties were in dispute as to whether, on the true construction of the terms of settlement, the Commissioner, in making the Rialto assessments, was entitled to make adjustments to the income and losses as returned by any or all of the appellants in respect of issues other than the Rialto issues. The appellants denied that the Commissioner was so entitled whereas the Commissioner said that, in making the Rialto assessments, he was entitled to have regard solely to the profit derived from the construction of the Rialto building and to disregard or adjust the income and losses as returned by any or all of the appellants. A further dispute concerns the question whether, if contrary to the appellants' contention, on the proper construction of the terms of settlement, the Commissioner, in making the Rialto assessments, was entitled to make adjustments to the income and losses as returned by any or all of the appellants in respect of issues other than the Rialto issues. The appellants denied that the Commissioner was entitled to take that course. The Commissioner, on the other hand, said that, in making the Rialto assessments, he was entitled to have regard solely to the profit derived from the construction of the Rialto building and to disregard or adjust the income and losses as returned by any or all of the appellants. As we understand what his Honour has said, the reference to the income and losses returned by the appellants was a reference to income and losses derived or incurred in relation to transactions or activities other than those arising out of the construction of the Rialto building. In this respect, we should say that we are not sure that the way his Honour has put these questions conforms with the way in which the appellants put the matter to this Court on appeal. Nothing turns on this because, in due course, we shall come to the detail of the submissions made by counsel for the appellants in these appeals. The declarations sought by the appellants were in the following terms: "(a)a declaration that on the proper construction of the Terms of Settlement, the Respondent, in making the Rialto Assessments, is not entitled pursuant to the Terms of Settlement to make adjustments to the income and losses as returned by any or all or the Applicants in respect of issues other than the Rialto Issue; (b) alternatively, if contrary to the contention of the Applicants the Respondent, in making the Rialto Assessments, is entitled pursuant to the Terms of Settlement to make adjustments to the income and losses as returned by any or all of the Applicants in respect of issues other than the Rialto Issue, a declaration that on the proper construction of the Terms of Settlement the taxpayers against whom the Rialto Assessments are issued are entitled pursuant to the Terms of Settlement to object against the Rialto Assessments in respect of those adjustments on any grounds;" His Honour referred to a number of facts which he found established. In accordance with the terms of settlement, the 1993 proceedings were struck out. No order as to costs was made. On 28 September 1993 the Commissioner issued assessments in respect of the non-Rialto issues for an aggregate sum of $27.5 million. This sum was paid. On 27 September 1993 the Commissioner issued the Rialto assessments, including alternative assessments. In both the primary assessments and in the alternative assessments the aggregate amount of tax assessed was $39 million less three cents. On 17 October 1993 notices of objections were lodged by the respective taxpayers in respect of all the Rialto assessments. All objections were disallowed in their entirety by the Commissioner. On 29 October 1993 each taxpayer referred the relevant objection decision to the Tribunal for review. No profit or income derived by any of the appellants by or from the construction of the Rialto building had been returned in any return lodged by any of the appellants. That was no doubt because of the stand taken by the Grollos and those advising them that the receipts of moneys by Grofam up to 27 October 1983 and by Grollo Australia thereafter were on capital account. Those are matters dealt with in the other judgment. The various sums set out in Schedule 3 to the Terms of Settlement represented the respective amounts claimed in the income tax returns of the companies and "other entities" referred to in that schedule lodged for the year ending 30 June 1989 as losses carried forward as at that date pursuant to s.80 of the Act. Schedule 3 to the terms of settlement is headed, "Losses as at 30 June 1989 Agreed to be Foregone". The losses totalled $88.4 million and were in respect of a number of companies and trusts. From the $88.4 million was deducted the sum of $11 million which was described as the agreed loss to be retained in the Rialto Unit Trust. That left a total of $77.4 million in losses which were agreed to be foregone. We shall refer to this matter again when we come to deal with the terms of settlement. His Honour said that it appeared from the evidence that, in preparing the Rialto assessments, the Commissioner had adopted as his starting point the net income or loss as returned by the relevant taxpayer and had then made adjustments by adding "Rialto Construction Profit" and "other Adjustments" in accordance with "Deed of Settlement" and by deducting any losses brought forward pursuant to s.80 of the Act in order to obtain an "Adjusted net income". His Honour said that the applicants disputed the entitlement of the Commissioner, in accordance with the terms of settlement, to make the "other adjustments" referred to, and said that if the Commissioner was so entitled, the appellants were entitled to object to them in the review proceedings. In cases where an assessment involved an adjustment of this type, the relevant taxpayers' notices of objection identified the adjustment and contended that it was not authorised by the terms of settlement and, in the alternative, was wrong as a matter of the proper application of the Act. The Commissioner's response was that the net income or losses returned had no relevance to the assessment of a profit or income derived from the construction of the Rialto building and that, having taken it into account, it was necessary to make an adjustment in order to achieve the result that the total primary tax would not exceed $19 million. The appellants relied on the evidence of two witnesses. Mr R.J. Heathcote is a member of the firm, Arnold Bloch Leibler, the solicitors for the appellants. His evidence conveniently summarises the effect of some of the documentary evidence which is important for the resolution of the present problem. Mr Heathcote said that, in making the "purported" Rialto assessments, the Commissioner made adjustments that were expressed to be made in respect of the Rialto issue. He said that, in respect of the "primary assessments", the Commissioner included in the income of Grollo Australia as trustee of the Rialto Unit Trust for the years ended 30 June 1983 to 30 June 1988 inclusive amounts that were described in the adjustment sheets as "Rialto construction profit". Consequential adjustments were made to the income of the successive trusts and beneficiaries. In respect of the alternative assessments, the Commissioner included in the income of Grofam Pty Limited as trustee of the Grofam Unit Trust for the period mentioned amounts that were described for the period up to 27 October 1983 as "Rialto construction profit" and thereafter as adjustments pursuant to determinations under s.177F of the Act. Consequential adjustments were made to the income of the successive trusts and beneficiaries. Mr Heathcote said that, in making the "purported" Rialto assessments, the Commissioner also made other adjustments to the income and losses returned by some of the appellants for the period mentioned. In some, but not in all cases, those other adjustments were described in the adjustment sheets as "other adjustments in accordance with Deed of Settlement". Mr Heathcote then summarised the adjustments in para. 15 of his statement. We do not go to the detail of what he there said. Mr Heathcote said that, in respect of the alternative assessments, the other adjustments were as listed by him in para. 16 of his statement. Again we do not go to the detail of what he said. He concluded by saying that adjustments consequential upon these adjustments were made to the assessments made in respect of the successive trusts and beneficiaries for the period in question. Mr Heathcote said that the adjustment sheets did not identify the particular transactions in respect of which the adjustments referred to in paras 15 and 16 of his statement were made and provided no information to explain the basis of those adjustments. Mr Heathcote said that he was instructed by Mrs Kay, a member of the firm KPMG Peat Marwick, the accountant to the Grollo group of companies, and verily believed, that those adjustments did not relate to or arise out of any alleged profit or income from the construction of the Rialto building. It would appear that that last statement is argumentative and not very helpful although no submission about it along those lines was made in the course of the hearing. The other witness upon whose evidence the appellants relied was Mrs Kay. As Mr Heathcote said, Mrs Kay is a member of the firm of KPMG Peat Marwick. She is a chartered accountant by profession. Her evidence about the matter was to the same effect as that given by Mr Heathcote and we do not refer to the detail of it. There is no issue between the parties that the general purport of that evidence is correct. In other words the evidence is an accurate reflection of what is contained in the various documents to which reference is made. That is the usefulness of it. Against the background of those various matters, it is now appropriate to come to the provisions of the terms of settlement. The terms of settlement were made on 22 September 1993 between the Commissioner of Taxation, the Director of Public Prosecutions and a number of persons and companies referred to in Schedule 1, they being the appellants in these proceedings. Each of the companies is a member of the Grollo group of companies. There are a large number of trusts and, as mentioned, Mr Bruno Grollo and Mr Rino Grollo are also parties. Recitals mentioned the audit of the tax affairs of the Grollo Group, the fact that disputes had arisen between the Commissioner and the Group as to its taxable income, or at least as to the taxable income of some of its members, and the negotiations which were held in an endeavour to resolve the disputes. It was also recited that the Director of Public Prosecutions had decided to exercise his civil remedies function in respect of the Grollo Group and had communicated with the Commissioner in relation to the resolution of the disputes between the Commissioner and the Grollo Group. There was mention of the proceedings instituted in the Federal Court in which, inter alia, a declaration was claimed that the decision of the Director of Public Prosecutions to exercise his civil remedies function and his conduct purportedly pursuant to that decision were not authorised by the Director of Public Prosecutions Act 1983. This was denied in the proceedings. Paragraph 1 of the terms of settlement contained a number of definitions. We do not refer to these here but we shall refer to some of the definitions when referring to particular paragraphs. Paragraph 1A dealt with interpretation; it is unnecessary to refer to that paragraph. Paragraph 2 of the terms of settlement was as follows: "Payment of $37.7 million and Carried-Forward Losses Forgone 2. The Grollo Group: (a) in full settlement of the Non-Rialto Issues - (i) will pay to the Commissioner the sum of $27.5 million; (ii) subject to paragraph 4 hereof, agrees to forego all of the carried-forward losses as at 30 June 1989 of each of the members of the Grollo Group named in Schedule Three hereto (other than carried-forward losses in the Rialto Unit Trust in the sum of $11 million) which carried-forward losses are agreed to be in the sums specified in Schedule Three hereto; (iii) agrees that Grollo Finance Pty Ltd and No. 1 Spring Street Pty Ltd shall forego the Residual Losses as referred to in paragraph 9 hereof; (b) will pay to the Commissioner the sum of $10.2 million on account of any tax and penalties payable in respect of the Rialto Issue." Paragraph 3 dealt with the manner in which the payments referred to in Paragraph 2 should be made and the dates upon which they should be made. Paragraph 4 provided that the parties agreed that the Rialto Unit Trust should be entitled as at 1 July 1989 to carried-forward losses in the sum of $11 million. As mentioned, Schedule 3 to the terms of settlement showed how this sum was arrived at. Paragraph 5 dealt with the non-Rialto issues. These were defined in para. 1(k) to mean all income tax issues other than the Rialto issue arising out of or relating to the income tax affairs of a number of companies and trusts which are specified in the definition. It was also provided that included in the non-Rialto issues were all issues under the Act relating to or arising out of profit or income derived from the construction of the World Congress Centre. The expression "Rialto Issue" was defined in para. 1(o) to mean the issue as to whether any and if so what taxable profit or income was derived by any and if so which member or members of the Grollo Group by or from the construction of the Rialto building. Paragraph 5 of the terms of settlement is one of the critical paragraphs of them. The other is contained in para. 10. Paragraph 5 was as follows: "5 (a) The Commissioner will issue such assessments as he determines in respect of the Non-Rialto Issues provided that: (i) any assessment against Grocon Pty Limited for the year ended 30 June 1989 shall be for an amount of primary tax not greater than the sum of $2.5 million; (ii) no assessment shall be made or issued which is contrary to the matters contained in paragraphs 7 and 8 hereof; (iii) the total amount due under the Non-Rialto Assessments on any account whatsoever including any tax and penalties shall not exceed in aggregate the sum of $27.5 million; and (iv) the payment by the Grollo Group of the sum of $27.5 million referred to in sub-paragraph 1(a)(i) hereof shall be in full and final discharge of each and every liability under the Non-Rialto Assessments, including the assessment against Grocon Pty Limited referred to in sub-paragraph 5(a)(i) above and all other assessments against it for the years up to and including the year ended 30 June 1989; (b) the parties agree that the Commissioner will not serve Adjustment Sheets in respect of the Non-Rialto Assessments, unless such adjustment sheets are requested in writing by the Grollo Group." Paragraphs 7 and 8 of the terms referred to in para. 5(a)(ii) contained some specific provisions, the detail of which is not relevant for present purposes. Paragraph 6 of the terms provided that the Grollo Group agreed not to lodge an objection against, or to take any curial proceeding, to set aside or otherwise to have declared invalid any of the non-Rialto assessments. That expression was defined in para. 1 to mean the assessments to be issued in respect of the non-Rialto issues in accordance with para. 5. The definition of "non-Rialto issues" has been referred to. Paragraph 9 is not of relevance to the issues in question here. As mentioned, the other critical paragraph of the terms of settlement was para. 10. It bore the heading, "Rialto Issue", and was as follows: "10 (a) The Commissioner will issue and serve any assessments in respect of the Rialto Issue on or before 27 September 1993, provided that the aggregate amount of tax assessed (including additional tax and any other penalties) shall not exceed in total $39 million (being $19 million primary tax and $20 million penalties); (b) The Commissioner may in addition to the assessments referred to in sub-paragraph 10(a) above issue and serve on or before 27 September 1993 alternative assessments to those referred to in sub-paragraph 10(a) above, provided always that the total amount of tax assessed (including additional tax and any other penalties) in respect of the Rialto Issue does not exceed $39 million. (c) Subject to paragraph 20 hereof, nothing in these Terms of Settlement shall prevent, restrict or limit in any way the Commissioner's power to issue further assessments in respect of the Rialto Issue if he considers it necessary to do so following the determination of the Tax Appeals, provided that the Grollo Group shall be at liberty to lodge objections against such further assessments and to bring, institute or take such proceedings under Part IVC of the Taxation Administration Act 1953, s 39B of the Judiciary Act 1903 or otherwise as it determines to set aside, to have declared invalid or otherwise to challenge the validity or correctness of such further assessments or any objection decision in respect of such further assessments. (d) Except as expressly provided to the contrary in these Terms of Settlement, the Rialto Assessments shall be raised in accordance with the provisions of the ITAA [the Act] and shall be subject to ordinary objection and referral or appeal provisions contained in Part IVC of the Taxation Administration Act 1953." Paragraph 20 referred to in para. 10(c) provided that, subject to subpara. 20(A)(c), the Commissioner and the Grollo Group agreed that whatever the outcome of the tax appeals and of any further applications, the Commissioner was not to assess and was not to recover or be entitled to recover more than $39 million under the Rialto assessments "or otherwise in relation to the Rialto issue". The expressions "Tax Appeals" and "Further Applications" were defined in para. 1 of the terms of settlement. "Tax Appeals" were defined in para. 1(p) to mean the applications for review or the appeals under Part IVC of the Administration Act instituted pursuant to subpara. 13(a) of the terms of settlement and "further applications" were defined in para. 1(g) to mean the objections lodged in any proceedings instituted, brought or otherwise taken by the Grollo Group to set aside, to have declared invalid or otherwise to challenge the validity or correctness of any further assessments referred to in para. 10(c). Paragraph 20A(c) referred to in para. 20 provided that, if upon the final determination or discontinuance of the tax appeals and any proceedings referred to in subpara. 20A(b), the amount of tax including additional tax and other penalties, due and payable in respect of the Rialto issue was more than $10.2 million, that being the sum provided for in para. 2(b) of the terms earlier quoted, the Commissioner was to be entitled to recover additional tax upon any unpaid balance of the amount due and payable. Paragraph 20A(b) provided that, in the event that the Grollo Group instituted the tax appeals, as defined, or any proceedings under Part IVC of the Administration Act in respect of the further assessments referred to in subpara. 10(c), the Commissioner and the Grollo Group agreed that the date for final payment under the Rialto assessments should be 21 days after the final determination or discontinuance of the tax appeals or of the proceedings under Part IVC whichever was the later date. Paragraph 20A(a) provided that, subject to para. 20A(b), the Grollo Group acknowledged that the due date for payment of the amounts of tax (including additional tax and any other penalties) payable under the Rialto assessments was as specified in the assessments provided that the date should not be less than 30 days after service of the assessments. Paragraphs 11 and 12 dealt with the time for the lodgment of objections and the time within which the Commissioner agreed to make his decisions. Paragraph 13(a) dealt with the time within which appeals against objection decisions under Part IVC of the Administration Act might be instituted. Paragraph 13(b) provided that the Grollo Group agreed that, save for the tax appeals, it would not institute or otherwise take any curial proceeding to set aside or otherwise to have declared invalid or to challenge the validity or correctness of any assessment issued and served in accordance with subparas 10(a) or 10(b). It is unnecessary to mention the detail of paragraphs 14, 15, 16, 17, 18, and 19. Nor is it necessary to mention paras 21 and 21 dealing with franking credits or paras 23, 24, 25 and 26 dealing with the proceedings which had been instituted in the Federal Court by the appellants. Paragraph 27 dealt with freedom of information applications which were to be withdrawn. Paragraphs 28, 29, 29A and 30 applied in relation to the Director of Public Prosecutions and need not be referred to. There were then paragraphs dealing with personal guarantees by the two Grollo brothers, the furnishing of a statement of net assets by the Grollo Group and the consequences of default in payment. There followed a section of the terms of settlement dealing with the reservations of rights. Paragraphs 35 and 36(a) and (b) were as follows: "35 The parties agree that the Commissioner has reserved to himself the right to produce these Terms of Settlement or such part or parts of them as is or are necessary on the hearing of the Tax Appeals to explain any apparent inconsistency in the alternative Rialto Assessments. 36 (a) The execution of these Terms of Settlement by the Grollo Group is made for the purposes of settling the disputes between it and the Commissioner in relation to its income tax affairs and the disputes between it and the DPP and the Commissioner in relation to the Proceedings and in no way contains or constitutes any admission whatsoever by any of the Grollo Group that any tax is due and owing in respect of the Rialto Issue or the Non-Rialto Issues or that the amounts and the particulars of any of the assessments to be issued hereunder are correct and, subject to paragraphs 6, 13(b), 15, 26 and 34 hereof, is made wholly without prejudice to its rights to contend that the amounts and the particulars of the assessments to be issued hereunder are incorrect. (b) The parties acknowledge that the Grollo Group intends if any assessments are issued in respect of the Rialto Issue to contend that no member of the Grollo Group derived a taxable profit or income by or from the construction of the Rialto building and that no tax was or is due or payable in respect of the Rialto Issue." Paragraph 37 dealt with representations and para. 38 with what was described as "Settlement". Paragraph 38 was as follows: "38 These Terms of Settlement are in full and final settlement of: (a) all income tax issues of all of the Grollo Group (other than Grocon Ltd, No. 1 Spring Street Pty Ltd, Grollo Finance Pty Ltd and Collins Street Constructions Pty Ltd) for all years of income from the year of income ended 30 June 1981 up to and including the year ended 30 June 1989; (b) all income tax issues of Grocon Pty Limited for all years of income up to and including the year of income ended 30 June 1989 with the exception of the emerging profits issue (IT 2450), being the issue as to the appropriate basis for recording the profit from unfinished construction contracts as raised by Grocon Pty Limited in its income tax return for the year of income ended 30 June 1989 by way of application under s 169A of the ITAA; (c) all income tax issues of the Karenda Trust and the beneficiaries of the trust in so far as they derived assessable income from the trust for all years of income up to and including the year ended 30 June 1990; (d) all income tax issues of No.1 Spring Street Pty Ltd, Grollo Finance Pty Ltd and Collins Street Constructions Pty Ltd for all years of income up to and including the year ended 30 June 1991; (e) all income tax issues of each trust referred to in Schedule One hereto (other than the Karenda Trust) and the beneficiaries of such trust in so far as they derived assessable income from the trust for all years of income from the year of income ended 30 June 1981 up to and including the year of income ended 30 June 1989; and (f) all issues under the ITAA relating to or arising out of profit or income derived from the construction of the World Congress Centre." The reference to IT2450 in para. 38(b) was a reference to an income tax ruling which is discussed in the other judgment. There were five schedules to the terms of settlement. We have referred to some of these. It is unnecessary to refer to the remaining ones. After referring to the detail of the terms of settlement, his Honour said: "By separating the income of the applicants into two separate streams, that is the Rialto income and the non-Rialto income, the terms of settlement contemplate a procedure not otherwise open to the Commissioner in the assessment of income tax payable by each individual applicant. Ordinarily, the tax assessed to a taxpayer would take into account all of the taxable income of the taxpayer from all sources, and in that process the taxable income of each taxpayer would from year to year reflect the effect of any losses carried forward from previous years pursuant to s 80 of the Income Tax Assessment Act. In my opinion the effect of sub-paragraphs 2(a), 5(a) and 5(b) and paragraph 6 of the terms of settlement is that the agreed sum of $27.5 million represents the tax payable on the taxable incomes of the applicants for the various periods referred to in the definition of 'Non-Rialto issues' after taking into account all losses capable of being carried forward pursuant to s 80 but without regard to any income that may have been derived from the construction of the Rialto building. The terms of settlement recognise that, if contrary to the applicants' contention, any member of the Grollo Group derived a taxable profit or income by or from the construction of the Rialto building, any tax payable in respect of such profit or income is (subject to the agreed limit) payable in addition to the agreed sum payable in respect of the non-Rialto assessments." In the first of these paragraphs his Honour has mentioned a matter which is at the heart of the present problem. His Honour said that the terms of settlement contemplated a procedure not otherwise open to the Commissioner in the assessment of income tax payable by each individual applicant. Ordinarily, the tax assessed to a taxpayer would take into account all of the taxable income (i.e. the whole of the taxpayer's assessable income less the entirety of the allowable deductions and losses) of the taxpayer from all sources. As well, the taxable income of each taxpayer would, from year to year, reflect the effect of any losses carried forward from previous years pursuant to s.80 of the Act. In the second paragraph of the passage which we have quoted his Honour noted that the effect of the terms of settlement was that the agreed sum of $27.5 million represented the tax payable on the taxable incomes of the appellants for the various periods referred to in the definition of non-Rialto issues after taking into account all losses capable of being carried forward and without regard to any income that may have been derived from the construction of the Rialto building. His Honour also noted that any tax payable in respect of assessable income, after taking into account allowable deductions, from the construction of the Rialto building was, subject to the agreed limit, payable in addition to the agreed sum payable in respect of the non-Rialto assessments. His Honour summarised the effect of this in what followed where he said: "The terms of settlement provide an agreed framework within which to facilitate, in isolation from all other issues relating to the taxable affairs of the applicants, the determining of the question first as to whether any taxable profit or income was derived by or from the construction of the Rialto building and second, if so, what amount of tax is payable." The Commissioner's power to settle or compromise proceedings to which he is a party derives from s.8 of the Act which provides that the Commissioner shall have the general administration of the Act. In Precision Pools Pty Ltd v Federal Commissioner of Taxation (1992) 37 FCR 554, a sales tax case, Spender J said (at 567) that by s.4 of Sales Tax Assessment Act (No. 1) 1930, the Commissioner was given the general administration of that Act. It is to observed that the section is in the same terms as s.8 of the Act in question here. Spender J continued, "That administration has to be bona fide and for the purposes of the Act, but it is a grant of wide power and would encompass, for instance, the power to compromise proceedings in which he was a party or to make agreements or arrangements concerning the efficient management of a dispute in which he was involved." Nevertheless, it is noted in CCH Australian Federal Tax Reporter, Vol. 1 (at 2352), that the Commissioner may not fetter his powers in settling taxpayer disputes and cannot be estopped from applying the law. Reference is made to the "Guidelines for Negotiated Settlements of Taxation Liabilities" issued by the Australian Tax Office on 31 January 1991. See under the title "Other Guidelines, OG62", in Butterworths Australian Tax Practice, Vol. 4, at 10,007. The Guideline is of limited assistance in the present problem. We have found no authority for the proposition stated in it. It may be that it goes too far. But that is not of consequence in the present case because the terms made the position clear; see, for example, paras 5 and 10 which provided for the issue of assessments and para. 10(c) which provided for proceedings under Part IVC of the Administration Act in respect of the assessments. It is true that para. 10(d) commenced with the words, "Except as expressly provided to the contrary in these terms...". However, there is not to be found anywhere in the terms of settlement any provision which provided to the contrary of the remaining provisions of para. 10(d). His Honour's statement that the terms of settlement contemplated a procedure not otherwise open to the Commissioner could not, in our respectful opinion, be correct. That is because the assessments contemplated in the terms of settlement were to be assessments under the Act. If they were not, the procedure of objection and reference or appeal under the Administration Act would not have been available. But his Honour's statement serves to emphasise that there will often be a tension between the compromise of a complex dispute such as this and the Commissioner's duty to administer the Act in accordance with its terms. The parties here attempted to reach agreement about two distinct matters. They succeeded in respect of one, namely, the non-Rialto issues. They failed in relation to the other; but at least they went so far as to agree to the ceilings on the amount of tax and additional tax which could be imposed in respect of the other issues, that is to say the Rialto issues. The Commissioner had to give effect to the terms of settlement by making assessments. That was what they contemplated. His task was complicated by the large number of companies and trusts which were involved and the need to follow decisions about assessable income and allowable deductions through chains of companies, trusts and beneficiaries. In the end he had to produce a set of assessments, both in respect of the non-Rialto and the Rialto issues, which were capable of representing valid and bona fide exercises of his power to make assessments of the taxable incomes of the various companies, trusts and individuals that were involved. A further problem is that the apparent splitting of the affairs of the Grollo Group, using that expression in a very wide sense, may have led to the Commissioner being placed in a false position by having to deal with the matter as if, in the same year of income, there were two distinct assessment processes to be undertaken, one in respect of non-Rialto issues and the other in respect of the Rialto issues. The non-Rialto issues were settled and posed little difficulty. Adjustment sheets were not required unless requested by the Grollo interests; para. 5(b) of the terms. The matters to which we have referred underlie the questions which arise for determination in these proceedings. They are, to a degree, the source of the parties' disagreement about the matters of construction of the terms of settlement which are in question. None of these matters was mentioned in argument. We do not believe that they were matters raised in argument before his Honour. That no doubt accounts for the absence of any explicit reference to them by him. Nevertheless, there are signs here and there in what he has said that he was also troubled by them. It should be said that no matter relating to these problems was raised by any member of the Court with either counsel during the run of the argument. So there is the difficulty that the parties have not been heard in relation to the various matters which we have discussed. We return to his Honour's judgment. His Honour noted that the Commissioner was entitled to assess as income only such amount of profit or income as was derived from the construction of the Rialto building. He continued: "Paragraph 10 contemplates that the Rialto assessments would not require the payment of tax in excess of the agreed maximum amount. It does not contemplate that in the event that the tax assessed exceeded the agreed limit, the Commissioner would accept the lesser sum in satisfaction of the combined liabilities of the various taxpayers. It must necessarily follow therefore that in order to give effect to the provisions of sub-paragraph 10(a) and 10(b) the Commissioner was entitled to make such adjustments to the assessable income of the applicants as would have the effect of limiting the total amount of primary tax to $19 million. Such adjustments would only be called for if the maximum limit imposed by the terms of settlement would, in the absence of some adjustment, be exceeded." That raises another problem. Paragraph 10 of the terms was not an invitation to the Commissioner to assess the taxable income derived from the Rialto project at $39 million. It was a ceiling. The taxable income might be less than the ceiling but it could not be more. One way of dealing with a situation in which the taxable income was found to be more than the ceiling would have been to assess for what the Commissioner believed to be the correct amount and then, because of the compromise, accept a lower figure in full payment of the assessments. In our opinion, that is a course which the Commissioner's power to compromise would permit him to follow. The Commissioner could then have assessed for the correct amount irrespective of the ceiling; objections could have been made and his disallowances of those objections appealed from. If the amount of the assessments was, at the end of the process, still in excess of the ceiling, the Commissioner would have been bound to accept the lower figure by reason of the provisions of the terms of settlement. That, however, is not the procedure which the parties apparently decided to follow. His Honour expressed the view that the declaration sought in para. (a) of the application did not in his opinion reflect the proper construction of the terms of settlement. This was because the Commissioner was entitled to make such adjustments as might be necessary to ensure that the terms of settlement were adhered to. Reference was made to para. 10(d) of the terms in which it was agreed that, except as expressly provided to the contrary in the terms, the Rialto assessments were to be raised in accordance with the provisions of the Act and were to be subject to ordinary objection and referral or appeal provisions contained in Part IVC of the Administration Act. His Honour emphasised that that paragraph envisaged that the Rialto assessments would not necessarily be raised in accordance with the provisions of the Act. His Honour said that this must be the case as the basis of the agreement was that the Rialto assessments would not take into account any non-Rialto "issue", i.e., as we understand what his Honour has said, non-Rialto assessable income or non-Rialto allowable deductions. He said that the second part of para. 10(d) should be construed in that context, namely, that it provided for the preservation of the ordinary objection and referral or appeal provisions in respect of assessments which related "only to the taxable profit or income" derived from the construction of the Rialto building (my emphasis). Otherwise all other tax issues relevant to the particular taxpayers were to be disregarded. His Honour concluded this part of his judgment in the following terms: "In my opinion sub-paragraph 10(b) preserves the rights of the applicants under Part IVC of the Taxation Administration Act to object to the Rialto assessments insofar as they purport to assess the taxable income or profit derived from the construction of the Rialto building. In these circumstances, the declaration sought in paragraph (b) of the application does not reflect the proper construction of the terms of settlement." His Honour went on to deal with a submission made by counsel for the Commissioner that a declaration should be made that, on the proper construction of the terms of settlement, the Commissioner, in raising the Rialto assessments, was entitled to disregard all losses returned in the income tax returns of the applicants for the relevant years. His Honour said that, whilst such a declaration would be consistent with the reasoning which had led him to decline to make either of the declarations sought by the appellants, it appeared to him to be unnecessary to make such a declaration. He said that, in view of the evidence that the Commissioner did not in fact disregard the returned losses when raising the Rialto assessments, it would seem inappropriate to make the declaration which was sought. At one stage counsel for the Commissioner pressed for the making of such a declaration and raised that matter in a notice of contention. Counsel for the appellants said that the matter should have been raised by way of cross-appeal and not notice of contention. The Commissioner's claim for a declaration was eventually abandoned so that there is no occasion for any further consideration of that matter. In the submission of counsel for the appellants, on the proper construction of the terms of settlement, the Commissioner, in making the Rialto assessments, was not authorised by para. 10 of the terms of settlement to make adjustments to the income and losses as returned by any or all of the appellants in respect of issues other than the issue as to whether any, and if so what, taxable profit or income was derived by any, and if so which, of the members of the Grollo Group from the construction of the Rialto building. Counsel said that the issues between the parties that could be raised by the Rialto assessments pursuant to para. 10 of the terms of settlement were limited to the Rialto issue. Accordingly, under the Rialto assessments, the Commissioner was entitled to increase the income and to disallow losses returned by any or all of the appellants provided the adjustments related to the issue as to whether any and if so what taxable profit or income was derived by any and if so which members of the Grollo Group from the construction of the Rialto building. Counsel stressed that, in their submission, para. 10 of the terms of settlement did not enable the Commissioner to increase the taxable income of any of the appellants by increasing returned income or disallowing returned losses if the adjustments did not relate to the Rialto issue. Counsel for the appellants challenged the correctness of his Honour's conclusion that, in issuing the Rialto assessments, the Commissioner was entitled to ignore any returns lodged by any of the appellants. His Honour said that it was conceded that the returns were prepared without regard to any taxable profit or income derived from the construction of the Rialto building. He added that the Commissioner was entitled to assess as income only such amount of profit or income as was derived from the construction of the building. Counsel also challenged his Honour's conclusion that, by separating the income of the appellants into two separate streams, that is the Rialto income and the non-Rialto income, the terms of settlement contemplated a procedure not otherwise open to the Commissioner in the assessment of income tax payable by each individual appellant. Counsel said that the terms of settlement did not purport to authorise the Commissioner to exercise a power he did not have under the Act. The Commissioner was not empowered under the Act to issue an assessment having regard solely to income or profits from a single income stream and in disregard of income and losses from all other sources. A purported assessment issued on such a basis was not an assessment within the meaning of the Act for the purposes of Part IVC of the Administration Act. Neither the Tribunal nor this Court would have had jurisdiction under Part IVC of the Administration Act to hear an application in respect of it. Paragraph 10 of the terms of settlement contemplated assessments validly issued under the provisions of the Act in respect of which valid objections could be lodged and applications instituted pursuant to Part IVC of the Administration Act. Counsel said that the Rialto issue must be dealt with in assessments within the meaning of the Act in respect of which objections could be lodged and applications could be made to the Tribunal or the Court pursuant to the Administration Act. That was why, in their submission, his Honour should have made the first of the declarations which were sought. In support of their alternative submission, that is their submission that, if the declaration sought in para. (a) of the application were not made, the Court should have made the declaration sought in para. (b) thereof, counsel for the appellants said that the taxpayers under the Rialto assessments were entitled under the terms of settlement to object against the adjustments that did not relate to the Rialto issue as well as the adjustments that did relate to that issue. The reason was because the right of objection that was recognised and preserved by para. 10(d) of the terms of settlement was a right to object against each assessment as a whole. Paragraph 10(d) contained the proviso that the "ordinary" objection provisions should be subject to express provisions to the contrary in the terms of settlement. Counsel said that there was no express provision in the terms of settlement that purported to limit or restrict in any way the grounds of an objection to a Rialto assessment. His Honour had said that he was of opinion that para. 10(d) (his Honour referred to para. 10(b) but this is obviously a slip) preserved the right of the appellants under Part IVC of the Administration Act to object to the Rialto assessments in so far as they purported to assess the taxable income or profit derived from the construction of the Rialto building; that is, his Honour's statement was intended to be exhaustive. The sense of what he intended to say would be been clearer if the words "and not otherwise" had concluded the sentence. Counsel submitted that para. 10(d) should not be restricted in its operation so that it applied only in respect of profit or income assessed as having been derived from the construction of the Rialto building. Not only was there no such limitation expressed in subpara. 10(d); there was no other provision of the terms of settlement that expressly imposed such a limitation. Counsel referred again to the phrase "ordinary objection and referral or appeal provisions" and said that it connoted the full and unrestricted operation of those provisions in respect of the Rialto assessments. They said that para. 10(d) should be given its ordinary and apparent meaning and operation. Contrary to what Olney J apparently found, a restriction or limitation should not be read into that meaning and operation because the clear intention of the parties to the terms of settlement was to preserve and facilitate the rights of the relevant taxpayers to contest the Rialto assessments. Counsel said that it would be contrary to that intention to construe the terms of settlement as entitling the taxpayers to object to the inclusion of income from the construction of the Rialto building in their assessable income but disentitling them to object in respect of income from other sources that was included in their assessable income under the Rialto assessments. In the course of their submissions, counsel for the appellants addressed the fact that the Commissioner had made adjustments that were not entirely in respect of the Rialto issue and yet increased the income returned by the Rialto Unit Trust, the Bruno Grollo Nos 11-30 Trusts and successive trusts and beneficiaries entitled to the benefit of the income. Reference was made to the evidence of Mr Heathcote and Mrs Kay. Counsel referred to the detail of their evidence which showed that the non-Rialto issue adjustments under the Grollo Australia assessments increased the taxable income of the taxpayers by additions to the income for each of the years ending 30 June 1984, 1985, 1986 and 1988. A similar exercise was done in respect of the non-Rialto issue adjustments under the Grofam assessments which increased the taxable income of the taxpayers for the years ending 30 June 1985, 30 June 1986 and 30 June 1988. Counsel said that, under the Rialto assessments, the Commissioner allowed certain non-Rialto expenses and losses that were claimed by the various trustees and beneficiaries in their returns. But in the 1988 year of income, the inclusion of income from non-Rialto sources exceeded the allowed non-Rialto expenses and losses. Counsel also said that there was no evidence that the losses allowed were not deductible and, that, in any event, the Commissioner was not entitled to disallow the returned income, expenses and losses in making the Rialto assessments. Counsel for the appellants denied the proposition, advanced by counsel for the Commissioner, that the terms of settlement required the Commissioner to disallow as deductions some, if not all, of the carried forward losses returned by the appellants. There was no provision in the terms of settlement that produced that result. Counsel for the Commissioner said that, in making the Rialto assessments, the Commissioner had assessed the Rialto construction profits. In order to comply with the limits of primary tax of $19 million and additional tax of $20 million, which the terms of settlement imposed, the Commissioner had reduced the taxable incomes of the taxpayer in each case by allowing some otherwise non-deductible, non-Rialto expenses and losses. Counsel also said that the terms of settlement not only permitted; they required the respondent to disallow as deductions some, if not all, of the carried forward losses returned by the appellant because under the terms of settlement the assessments were to be limited to the Rialto construction profits, the tax returns were prepared and lodged by the appellants before any dispute arose and hence did not take the terms into account; and the carried forward losses were taken into account in the non-Rialto assessments because, save for some losses which arose in 1988 and which were permitted to be carried forward, the appellants agreed not to carry them forward. They were therefore not available to be offset against the Rialto construction profits. Counsel for the Commissioner agreed that the terms of settlement did not purport to authorise the Commissioner to exercise a power which he did not have under the Act. Counsel submitted, however, that the terms of settlement provided a framework in which all expenses and losses other than those relating to the construction of the Rialto building "did not exist" because they were taken into account in the non-Rialto assessments. Hence the only revenue and expenses and losses remaining to be assessed in the Rialto assessments were those arising from the construction of the Rialto building. In the alternative, counsel for the Commissioner submitted that the terms of settlement involved the waiver by the appellants of any claim for a reduction for the carried forward losses or other non-Rialto expenses or losses in determining the amount to be assessed in the Rialto assessments. A further alternative put by counsel was that the terms of settlement created an estoppel which prevented the appellants from claiming a deduction for any of the carried forward losses in the Rialto assessments. Counsel emphasised that the appellants' rights to object against the Rialto assessments were limited to the assessment of the Rialto construction profit because the Rialto assessments did not assess any non-Rialto construction profit and hence did not take into account non-Rialto expenses and losses such as the carried forward losses. As alternatives, counsel relied upon either waiver or estoppel. Counsel then turned to their own case for a declaration which, as mentioned, was not eventually pressed. In their reply to the Commissioner's submissions, counsel for the appellants went into a great deal of detail about the way in which the assessments had been made. This is not entirely easy to follow and creates a problem in that it tends to suggest that there are evidentiary matters, not any of which were the subject of findings by his Honour, which needed to be taken into account and understood before one could reach a conclusion. The question which, in our opinion, the appellants submissions in reply raise is whether this application was after all a satisfactory vehicle for the exercise which the parties expected of it. It seems that the matter is far more complicated factually than it was apparently thought at first. It may need to be the subject of an application which will permit a much more detailed consideration of the detail of the evidence and the making of declarations and the granting of any necessary consequential relief which will make it clear in relation to each individual assessment what it is that the Commissioner may include and what it is he must omit. What concerns us is that the appellants' submissions in reply have gone away from any straightforward or simple approach to the problem and raised matters which cannot be the subject of decision because of the absence of findings about them by the primary judge. That is no criticism of his Honour or the parties or their legal representatives. The appeals dealt with in both judgments are concerned with very complex structures and transactions. The terms of settlement achieved a partial settlement of some of the many questions in issue. The fact that substantial questions were not settled coupled with the right of the appellants to object to assessments and to appeal against the disallowance of objections, is what has led to the problem. But, if the true meaning and effect of the terms is to be ascertained, there is no shortcut. It will be necessary to explore the position in relation to each of the assessments (unless an agreed selection of them can be made by the parties). There will be the need for more detailed evidence and for findings of fact by the primary judge. What we propose to do is to express some views in a general way about the approach which we think should be adopted to the construction of the terms of settlement. We do not think that these views will lead to the conclusion that either of the declarations sought by the appellants is appropriate nor, on the other hand, will they lead to the conclusion that the refusal of relief was necessarily correct. That is because it seems likely that the forms of declaration conceal an underlying problem or dispute which only begins to be revealed when one considers the detail of the parties' submissions. The approach adopted in the terms of settlement is simple enough. They dealt separately with non-Rialto issues and with Rialto issues. The difference between these is easy to perceive. This is made clear by the definitions of the two terms. Non-Rialto issues mean all income tax issues other than the Rialto issue arising out of or relating to the income tax affairs of the companies, trusts and individuals referred to in the relevant paragraph, para. 1(k) of the terms. "Non-Rialto assessments" are the assessments to be issued in respect of the non-Rialto issues in accordance with para. 5 of the terms. In contrast, "Rialto issue" means the issue as to whether any and if so what taxable profit or income was derived by any and if so which member or members of the Grollo Group by or from the construction of the Rialto building. "Rialto assessments" are the assessments to be issued in respect of the Rialto issue in accordance with para. 10; see paras 1(n) and 1(o). The approach was simplistic. The parties agreed about the non-Rialto issues. They agreed on the amount of tax and penalties to be paid. They could not agree about the amount of tax and penalties to be paid in respect of the Rialto issue and so they reflected the progress of their negotiations by putting a ceiling on the amount which could be recovered for tax and additional tax. The two key paragraphs of the terms of settlement are paras 5 and 10. Before we come to para. 5, we should mention para. 2. That paragraph opened with the words "The Grollo Group... in full settlement of the non-Rialto issues..." There then followed the provisions about payment of the various sums, the foregoing of carried forward losses as at 30 June 1989 of each of the members of the Grollo Group mentioned in Schedule 3, and residual losses referred to in para. 9. Paragraph 5 provided that the Commissioner would issue such assessments as he determined in respect of the non-Rialto issues provided that a number of conditions were complied with. We have earlier quoted the paragraph and we do not repeat the detail of the conditions. Adjustment sheets in respect of the non-Rialto assessments were not to be served unless they were requested. The evidence does not, so far as we are able to tell, disclose whether there was any such request. Paragraph 10 dealt with the Rialto issue. It was the paragraph that provided for the ceilings of $19 million primary tax and $20 million in additional tax, a total of $39 million. It also provided for the issue of alternative assessments, a course which, in any event, was open to the Commissioner so long as the alternative assessments were against taxpayers different from those to whom the primary assessments were directed. That is the purport of Deputy Commissioner of Taxation v Richard Walter Pty Limited (1995) 183 CLR 168 referred to in the other judgment. There were some other provisions in para. 10 to which we do not refer, but they are set in the quotation of it earlier in these reasons. Finally, para. 10 provided that, except as expressly provided to the contrary in the terms of settlement, the Rialto assessments were to be raised in accordance with the provisions of the Act and were to be subject to ordinary objection and referral or appeal provisions contained in Part IVC of the Administration Act. We agree with submissions made by counsel for the appellants that there is no provision of the terms of settlement in which it was expressly provided to the contrary of the general purport of that paragraph. The intention was that the assessments should issue under the Act and be subject to the ordinary objection and appeal provisions available to taxpayers. One then needs to bring into play para. 4 which provided that the parties agreed that the Rialto Unit Trust should be entitled as at 1 July 1989 to carried forward losses in the sum of $11 million. The make-up of that sum is shown in Schedule 3 to which we have referred. In all there were said to be $88.4 million in losses. These were foregone except for the $11 million which was agreed to be the amount of the losses to be retained in the Rialto Unit Trust. Finally, para. 38 made it clear that the terms of settlement were intended to bring a number of disputes between the parties to an end and to confine other disputes, those concerning the Rialto building, to matters associated with that issue. Ceilings were imposed upon the amounts which could be recovered for tax and additional tax in relation to it. Paragraph 38 provided, inter alia, that the terms of settlement were in full and final settlement of all income tax issues of all of the Grollo Group, other than those concerning three companies which were mentioned, for all years of income from that ending 30 June 1981 up to and including that ending 30 June 1989. Paragraph 38 must be read with it in mind that there was not a complete settlement because of the outstanding questions concerning the Rialto building. Nevertheless, the parties, very sensibly in our opinion, intended to bring matters to an end so far as they could and to confine their dispute so far as this was not possible. It would appear that the problems which now confront the Court arose when the Commissioner began the complex and difficult task of actually making assessments and issuing notices of assessment. It would seem likely that that was when difficulties arose which were not perceived at the time that the terms of settlement were entered into. The Commissioner had to issue valid assessments. He could not divide the matter up in the way that his Honour envisaged because the assessments had to be valid assessments in accordance with the law. The Commissioner could not pretend that a particular Grollo company which was in receipt of income from a number of sources had received income relating to non-Rialto issues which was to be the subject of allowable deductions in respect of those issues and at the same time treat the Rialto matter separately by assessing only the Rialto income and the allowable deductions in respect of it. The task had to be one task. It seems plain that the Commissioner would not have contemplated such a course. In relation to those companies which had income from multiple sources, i.e. Rialto and non-Rialto sources, there had to be one assessment; there could not be two. That is not a course which the Act permits. And, as earlier emphasised, the terms made it clear that the assessments were to be assessments issued pursuant to the Act which would attract, so far as the Rialto issue was concerned, objections and the availability of appeal and review procedures for which the Administration Act provides. Where the parties have not found common ground is in relation to the detail of the various assessments which were issued. Income has apparently been added so that the amount of tax is greater than it would have been if non-Rialto income had not been included. And deductions have not been allowed which would have the effect of reducing that income. That seems to be the essence of the appellants' complaint. There is also a question about the taking into account of losses. We find it difficult to understand this in the light of the clear agreement which there is in paras 2 and 4 of the terms and in schedule 3. It would seem that the only losses which could be taken into account were the $11 million which the Grollo Group was entitled to carry forward. These various matters raise questions about the detail of individual assessments, what has been included by way of income and what has been allowed by way of deductions. Apparently, some of the income is said to be non-Rialto income and some of the deductions not allowed said to have been wrongly disallowed because they were properly allowable against the non-Rialto income which was included. The Commissioner says that the appellants are precluded from raising these matters because that part of the case was settled. The payment of $27.5 million was in full settlement of that aspect of the matter. But that does not overcome the problem which apparently confronts the appellants. If non-Rialto income can be included in the Rialto assessments it would seem only right, unless the terms provide clearly to the contrary, that the appellants should have the opportunity to attempt to reduce the amount of the additional income by claiming allowable deductions which relate to non-Rialto issues. In this respect we refer to para. 2(a)(ii) of the terms of settlement provides that the Grollo group of companies, subject to para. 4, agrees to forego all of the carried forward losses as at 30 June 1989 of each of the members of the Grollo Group named in schedule 3 (other than carried forward losses in the Rialto Unit Trust in the sum of $11 million). The carried forward losses are agreed to be in the sum specified in schedule 3. Counsel for the Commissioner relied on this provision to justify the disallowance of deductions for the years of income up to 30 June 1989. Paragraph 4 of the terms read with para. 2(a)(ii) and schedule 3 have the effect of denying to the Grollo companies carried-forward losses up to 30 June 1989 except for the sum of $11 million which was agreed as the loss to be retained in the Rialto Unit Trust. But, in our opinion, that provision had nothing to do with what deductions might properly be claimed by any of the relevant companies or trusts in any particular year of income. As counsel for the appellants submitted, clause 2(a)(ii) is not an agreement that the income and expenditure of previous years which gave rise to the amounts of the carried forward losses claimed as at 30 June 1989 would be increased or disallowed in the years prior to 30 June 1989 when that income or expenditure was derived or incurred. Counsel referred to the income of the Rialto Unit Trust for the year ended 30 June 1984. It returned a loss of $6.15 million. That loss represented the difference between income and deductions (excluding carried forward losses) derived or incurred in the 1984 year. In counsel's submission para. 2(a)(ii) of the terms did not purport to authorise or entitle the Commissioner to increase that income or disallow those deductions in the 1984 year. All it did was to prevent the loss which was incurred being carried forward for the benefit of the trust in later years, unless of course the total losses did not exceed $11 million. We agree with this submission. It may be that this expression of opinion will enable the parties to evolve an appropriate form of declaration which will guide them in the task of assessment or re-assessment which will need to take place and in the task of dealing with the question of making objections to existing or new assessments and dealing with the consequences of those objections. But we do not believe that any such declaration will overcome all the problems which we have raised. Furthermore, the inclusion of non-Rialto income and the taking into account of non-Rialto deductible expenditure would seem to run counter to the intention of the parties as reflected in the terms of settlement. We are left with the impression, which we acknowledge may be erroneous, that the Commissioner felt obliged to reach a figure of $39 million in the total amount of tax and additional tax which he assessed. We have earlier pointed out that the presence of the ceiling in the terms of settlement was not an invitation to the Commissioner to assess for that amount. Nevertheless, there is the problem, which we have mentioned, of there being more than one assessment in respect of taxpayers who earned income from both non-Rialto and Rialto sources. That is the core of the difficulty which we perceive. Another problem we have is to be clear about the dividing line between the matters which may be dealt with on an application for declaratory relief to the Court and matters which must be dealt with, and can only be dealt with, by way of appeals from the disallowance of objections made pursuant to the provisions of the Administration Act. We cannot help thinking, having read and reread the papers in this matter, that there are matters wrapped up in this application which may be appropriately matters for objection and appeal under the Administration Act and not for the determination of the Court on an application for declaratory relief. One of the concerns we have in not feeling able to assist the parties by supporting the making of a suitable declaration of the rights of the parties in relation to the terms of settlement is that they will find themselves in a further difficulty because the matters which they wish to raise should really have been the subject of objections and appeals rather than an application for declaratory relief. As to this it seems likely that there will need to be a reconsideration by the Commissioner of a number of the assessments both as a consequence of the other judgment and of the opinion just expressed. There will also be the need for the appellants to consider objections, not only to any new assessments which are issued, but also to those which are unaffected by the two judgments except to the extent of what has been said in this one. Whether existing objections will cover all the matters which the appellants may wish to raise we do not know. If they do not, there may be a question whether any further objections which the appellants may wish to make will be out of time. Another difficulty that we mention is that the other judgment, subject to any application that may be made to the High Court for leave to appeal, will itself necessitate changes in a number of the assessments, particularly in relation to income earned after 27 October 1983 by Grollo Australia and also Grofam as regards additional tax. Nevertheless, until the matters raised in this appeal are resolved, there cannot be any finalisation of the assessment process because one needs to know the extent of the impact which the terms of settlement themselves may have on the process which is involved. It may help to clarify the matter if the Commissioner is able to foreshadow in draft form the likely assessments which are to be made in the light of our decision in the other appeals. That process itself may enable the parties to see the problems which they have more clearly. In the result, we think that the orders made by his Honour should be set aside and the matter remitted to a Judge of this Court to be heard and determined again. Obviously, there will need to be a directions hearing. We indicate that we think it appropriate to give each party leave to make such amendments as they may be advised to pleadings and particulars and to formulate a claim for additional or alternative relief to that which is formulated in the present application. Directions will need to be made as to the leading of further evidence by the parties or for them to agree on an appropriate statement of facts. We think that the costs of the appeal and of the proceedings before Olney J should abide the outcome of the further hearing of the proceedings. An alterative to this course would be to dismiss this appeal, but preserve to the appellants the right to bring such further proceedings as they may be advised seeking the same or similar relief as was sought in these proceedings as well as any other relief which might be thought appropriate. We would finally say this. Perhaps further discussions between the parties and their legal advisers will result in a sensible adjustment of the matters raised by the application for declaratory relief made by the appellants. The alternative is probably further protracted litigation with its consequent delay and expense. We realise that the Commissioner is mindful of the important public duty which he has in administering the Act. Nevertheless, if this were a commercial dispute, there would be much to be said for the view that a further attempt at settlement should be made, perhaps with the aid of an appropriate mediator. We see no reason associated with the Commissioner's powers and duties which should dissuade him from that course if he thought it otherwise an appropriate one for him to follow. We do not make any orders in this appeal today. The matter will stand over for a short time to enable the parties and their legal representatives to consider what has been said. When the matter is again in the list, counsel should bring in short minutes of order to give effect to our decision. We would be prepared to hear short argument in relation to aspects of the matter upon which counsel have not had an opportunity of being heard. Any further submissions should be in writing and notified to the other party before the hearing takes place. Subject to further order, any such further submissions are to be limited to 12 A4 pages. The submissions need not include quotations. I certify that this and the fifty-one (51) preceding pages are a true copy of the reasons for judgment herein of the Court. Associate Dated