Re Abraham Gilbert Saffron v the Commissioner of Taxation [1991] FCA 363; 91 Atc 4646/22 Atr 307/102 ALR 19 30 FCR 578 - FCA 1991 case summary — Zoe

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11. In the taxation appeals in this Court, pre-trial directions were given that the taxpayer and the Commissioner file statements of facts, issues and contentions. In the taxpayer's statement of facts, several restaurant and night club businesses carried on in Sydney, principally at Kings Cross, are mentioned, including the "Venus Room" and "Carousel" Cabaret, the latter business being said to be carried on by Apsley Investments Pty. Limited ("Apsley"), a company associated with the taxpayer (para.1). The taxpayer is said to be a shareholder of Apsley (para.1). It is stated that the Commissioner included in the taxpayer's assessable income for certain years "certain amounts as having been derived by the taxpayer from the carrying on of the said businesses" (para.2). In dealing with issues and contentions, the statement raised, inter alia, the following questions: (1) Was the taxpayer the owner of the businesses previously mentioned? (para.3(a)). (The taxpayer contends that he was not and that Apsley owned the "Carousel" cabaret (para.3(b) and (c)).) (2) Was the taxpayer in partnership with James McCartney Anderson in the ownership of any of the businesses? (para.4(a)). (The taxpayer contends to the contrary (para.4(b)). (3) If it be held that the taxpayer owned any of the businesses, did he derive any of the amounts stated in the assessments as his assessable income from carrying on the businesses? (para.5(a)). (The taxpayer contends to the contrary (para.5(b)). (4) If it be held that the taxpayer was in partnership, did he derive income from his interest in the partnership? (para.6(a)). (The taxpayer contends to the contrary (para.6(b)).) If it be held that the taxpayer did derive income, is he entitled to any allowable deductions for losses or outgoings incurred in carrying on the businesses? (para.7(a)). (The taxpayer contends that he was entitled to allowable deductions equal to the amounts found to have been so derived (para.7(b).) Other issues and contentions were raised relating to alleged income from some other sources, penalty tax and remission of tax.

Parties

Applicant/Plaintiff:

# Re Abraham Gilbert Saffron

Respondent/Defendant:

the Commissioner of Taxation \[1991\] FCA 363; 91 Atc 4646/22 Atr 307/102 ALR 19 30 FCR 578

Legislation Cited (15)

Court of Australia Act 1976

Tax Assessment Act 1936

Courts (Miscellaneous Amendments) Act 1987

Poisons Act 1966

Appeals Tribunal Act 1975

Court of Australia Act 1976

Tax Assessment Act 1936

Courts (Miscellaneous Amendments) Act 1987

Poisons Act 1966

Appeals Tribunal Act 1975

Court of Australia Act 1976

Tax Assessment Act 1936

Courts (Miscellaneous Amendments) Act 1987

Poisons Act 1966

Appeals Tribunal Act 1975

Cases Cited (25)

Re Abraham Gilbert Saffron v the Commissioner of Taxation [1991] FCA 363; 91 Atc 4646/22 Atr 307/102 ALR 19 30 FCR 578 (13 August 1991)

8. Mr Burbidge did not rely upon issue estoppel, no doubt accepting that the parties in the criminal proceedings were not the same parties as those in the taxation appeals. See, e.g. Carl Zeiss Stiftung v Rayner and Keeler Ltd (No. 2) (1967) 1 AC 853; Ramsay v Pigram [1968] HCA 34; (1967-1968) 118 CLR 271. Moreover, issue estoppel has little or no application to criminal proceedings. See e.g. Director of Public Prosecutions v Humphrys (1977) AC 1; R v Storey [1978] HCA 39; (1978) 140 CLR 364.

His Lordship distinguished that instance from the second category, in which a conviction may be a relevant factor but the decision is not based upon it. His Lordship's first category was applied by Full Courts of this Court in Minister for Immigration and Ethnic Affairs v Daniele [1981] FCA 212; (1981) 39 ALR 649; Degerli v Minister for Immigration and Ethnic Affairs (1981) 4 ALN N39 and Minister for Immigration and Ethnic Affairs v Gungor [1982] FCA 99; (1982) 42 ALR 209 and by several decisions of single judges of the Court, including Sioeli Sim Lai v Minister for Immigration Local Government and Ethnic Affairs (Morling J., 5 April 1991, unreported) and Beckner v Minister for Immigration Local Government and Ethnic Affairs. Those cases establish that, where a conviction is the foundation for the exercise of a power, no challenge can be made to the fact of the conviction or to the essential facts on which it was based. But by making clear the circumstance in which no such challenge may be made, the cases establish that, where the exercise of the power is not founded on a criminal conviction, then, even if the conviction be relevant, a challenge may be made to the essential facts on which it was based. In Australia, an example is the decision of the High Court of Australia in Ziems v The Prothonotary of the Supreme Court of New South Wales [1957] HCA 46; (1957) 97 CLR 279.

12. I am content to leave open the question of the admissibility of the conviction, as evidence in the taxation appeals, for it is not raised by the question put to the Court. In Hollington v F. Hewthorn and Co Ltd (1943) KB 587, the Court of Appeal held that a conviction is not, in civil proceedings, admissible evidence of the essential facts on which it was based. Likewise, in R v Seery [1914] HCA 70; (1914) 19 CLR 15 at 16-17 17, Griffith C.J. said:-

See also Wing On and Co. Ltd. v Collector of Customs (NSW) [1938] HCA 71; (1937-1938) 60 CLR 97 per Starke J. at 100. Hollington v Hewthorn has, however, attracted much criticism, e.g. in Hunter v Chief Constable of the West Midlands Police [1981] UKHL 13; (1982) AC 529 at 543; Jorgensen v News Media (Auckland) Ltd (1969) NZLR 961. In the United Kingdom and in many States of Australia, but not in New South Wales, its effect has been abrogated by statutes which provide that a conviction is admissible evidence in other proceedings.

18. In support of his submissions, Mr Burbidge referred to the American principle of collateral estoppel, as enunciated in cases such as Teitelbaum Furs Inc v Dominion Insurance Company 375 P 2d 439 (1962); S.T. Grand Inc v City of New York 344 NYS 2d 938 at 941 (1973); Considine v United States 645 F.2d 925 (1981); Gray v Commissioner of Internal Revenue [1983] USCA6 840; 708 F.2d 243 (1983); Klein v Commissioner of Internal Revenue [1989] USCA10 198; 880 F.2d 260 at 262 (1989); Manzoli v Commissioner of Internal Revenue [1990] USCA1 239; 904 F.2d 101 at 105 (1990). But that principle is not a part of the law of this country.

20. Mr Burbidge also relied upon the reasoning and dicta of Hill J. in Commissioner of Australian Federal Police v Butler [1989] FCA 408; (1989) 91 ALR 293 at 301-3. Insofar as his Honour's reasoning is to the contrary of mine, I do not accept it. I have not considered, however, the correctness of the decision itself.

15. The discussion of the question before us should commence with Hunter v Chief Constable of the West Midlands Police [1981] UKHL 13; (1982) AC 529 which concerned the trial of the Birmingham Bombers. Bombs exploded in two Birmingham public houses on 21 November 1974 killing 21 people and injuring 161 others. Five of the six plaintiffs in subsequent civil proceedings, being Irish Republican supporters, were arrested by the Lancashire police and taken to a police station. The sixth plaintiff was also taken there after his subsequent arrest.

28. Counsel for the respondent also referred us to a decision of the Full Bench of this Court in Minister for Immigration and Ethnic Affairs v Gungor [1982] FCA 99; (1982) 42 ALR 209. In that case the respondent was convicted of an offence under the Poisons Act 1966 (N.S.W.) for supplying Indian hemp and sentenced to one year's imprisonment. The Minister made an order for deportation of the respondent under the Migration Act 1958 (Cth) s. 12. The Administrative Appeals Tribunal, after reviewing the decision of the Minister, decided to recommend that the Minister revoke the deportation order and the matter was remitted to the Minister for reconsideration. The Minister then appealed to this Court pursuant to s. 44 of the Administrative Appeals Tribunal Act 1975 on questions of law.

His Honour found support for his conclusion in the speeches of the members of the House of Lords in Spackman and the decision in Pochi v Minister for Immigration and Ethnic Affairs [1979] AATA 64; (1979) 26 ALR 247 especially per Brennan J. at 253-4. Both Fox J. at 215-216 and Sheppard J. at 230-231 approved the following passage from the judgment of Fisher and Lockhart JJ. in Minister for Immigration and Ethnic Affairs v Daniele [1981] FCA 212; (1981) 39 ALR 649 at 653:

34. Appeals or reviews pursuant to Part V of the Assessment Act are of a special nature. Their purpose is to ascertain the true tax liability of the taxpayer under the Assessment Act. The onus is on the taxpayer to prove that the assessment is excessive (s. 190(b)). As Brennan J. observed in Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1989) 168 CLR 614 at 621:

(1989) 17 NSWLR 395

(1978) 140 CLR 364

(1981) 39 ALR 649

(1982) 42 ALR 209

(1957) 97 CLR 279

(1914) 19 CLR 15

(1976) 9 ALR 509

(1989) 91 ALR 293

(1988) 17 NSWLR 395

(1988) 1 QdR 144

(1979) 26 ALR 247

(1989) 168 CLR 614

(1988) 165 CLR 543

(1975) 49 ALJR 176

Re Abraham Gilbert Saffron v the Commissioner of Taxation [1991] FCA 363; 91 Atc 4646/22 Atr 307/102 ALR 19 30 FCR 578

At a glance

Court

Decision date

Source

Judgment (50 paragraphs)

Parties

Legislation Cited (15)

Cases Cited (25)

Re Abraham Gilbert Saffron v the Commissioner of Taxation [1991] FCA 363; 91 Atc 4646/22 Atr 307/102 ALR 19 30 FCR 578 (13 August 1991)