Sunrise Auto Ltd v Deputy Commissioner of Taxation Deputy Commissioner of Taxation v Sunrise Auto Ltd Deputy Commissioner of Taxation v Sunrise Auto Ltd [1995] FCA 969

Federal Court of Australia|1986-10-30|Before: Shepherdson J, Matheson JJ, Beazley JJ

TAXATION - Service of notice pursuant to statutory garnishee provision (s.218) - appellant was a "taxpayer" within the meaning of s.218 - Commissioner may collect withholding tax by way of such notice - whether notice invalid because notice of assessment not served in accordance with regulations. TAXATION - Service of notice of assessment - where no address is given, the "address of the person as described in any record in the custody of the Commissioner shall be his address for service" - service to mailing address obtained from bank records referring to taxpayer and noted in memorandum - memorandum is a "record" as it was intended to preserve the knowledge of the address for service in Australia of the taxpayer with the object of subsequent retrieval of that information - record was within Commissioner's "custody" as it was in his physical or defacto care or possession as well as within his legal possession. TAXATION - objection to notice of assessment validly served on taxpayer - amount assessed remains due at law by taxpayer until challenge determined - Commissioner bound to amend notice in light of successful challenge. TAXATION - Whether Court has jurisdiction to entertain challenge by a third person to the validity of a notice of assessment - whether challenge limited by s.177 to proceedings brought by taxpayer under Pt IVC of the Taxation Administration Act 1953 - parties with sufficient interest limited to challenges of arbitrary or improper use of power - substantive issue of correctness of notice is foreclosed from review in absence of allegation of fraud or failure to otherwise satisfy Hickman criteria - amount assessed continues to be due by taxpayer unless and until true liability to tax proved otherwise by taxpayer in Pt IVC proceedings.

Cases Considered Meaning of "address for service" Simmons v Woodward [1892] AC 100 In re Stogdon; Ex parte Leigh [1895] 2 QB 534 Berry v Farrow [1914] 1 KB 632 Cardinal Insurance Company v Maple Underwriters Ltd (1983) 46 B.C.L.R. 137 Re Pugliese; Ex parte The Chase Manhattan Bank of Australia Ltd (1993) 44 FCR 536 Hemmerling v IMTC Systems (1993) 109 DLR (4th) 582

Meaning of "record" R v Tirado [1974] 59 Cr.App.R. 80 R v Jones [1978] 1 WLR 195 Savings & Investment Bank Ltd v Gasco Investments (Netherlands) B.V. [1984] 1 WLR 271 DCT v Homebeech Limited, Supreme Court of Qld, Shepherdson J, 30 October 1986, Unreported Regina v Gold [1988] 1 AC 1063 R v O'Loughlin [1988] 3 All ER 431 R v Cunningham [1989] Crim.L.R. 435 Reg v Iqbal [1990] 1 WLR 756 Duke GRP (In liq.) v Arthur Young (1990) 3 ACSR 420 Burnside Sub Branch RSL Inc. v Burnside Memorial Bowling Club Inc., 28 November 1990, Unreported, Jacobs,Cox and Matheson JJ Karmot Auto Spares Pty Limited v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 Cigna Insurance Australia Ltd v General Newspapers Pty Ltd (1992) 7 ANZ Insurance Cases, 61-121 Reg. v Brent L.B.C.; Ex parte Awua [1995] 3 WLR 215 Meaning of "custody" FCT v Australia and New Zealand Banking Group Ltd. (1979) 143 CLR 499 Rural Timber Ltd v Hughes [1989] 3 NZLR 178 Roux v Australian Broadcasting Commission [1992] 2 VR 577 Botany Fork & Crane Hire Pty Ltd v New Zealand Insurance Co. Ltd (1993) 44 FCR 27 Operation of s218 Clyne v DCT (1981) 150 CLR 1 Edelsten v Wilcox (1988) 88 ATC 4484 FCT v Government Insurance Office (NSW) (1993) 45 FCR 284 Operation of s177(1) - challenge to Notice of Assessment R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 Batagol v Commissioner of Taxation (1963) 109 CLR 243 F.J. Bloemen Pty Ltd v FCT (1981) 147 CLR 360 Snow v Deputy Commissioner of Taxation (1987) 70 ALR 672 Ahern v Deputy Commissioner of Taxation (1987) 76 ALR 137 DCT v Moorebank Pty Ltd (1988) 165 CLR 55 David Jones Finance & Investments Pty Ltd v FCT (1991) 28 FCR 484 Oil Basins Ltd v The Commonwealth (1993) 178 CLR 643 FCT v Prestige Motors Pty Ltd (1994) 181 CLR 1 DCT v Richard Walter Pty Ltd (1995) 69 ALJR 223

SUNRISE AUTO LIMITED v DEPUTY COMMISSIONER OF TAXATION No. QG 122 of 1994 DEPUTY COMMISSIONER OF TAXATION v SUNRISE AUTO LIMITED No. QG 129 of 1994 DEPUTY COMMISSIONER OF TAXATION v SUNRISE AUTO LIMITED No. QG 163 of 1994 BEAUMONT, DRUMMOND AND BEAZLEY JJ. BRISBANE 28 NOVEMBER 1995

IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) ) GENERAL DIVISION )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA No. QG 122 of 1994 BETWEEN: SUNRISE AUTO LIMITED Appellant AND: DEPUTY COMMISSIONER OF TAXATION Respondent No. QG 129 of 1994 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Appellant AND: SUNRISE AUTO LIMITED Respondent No. QG 163 of 1994 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Appellant AND: SUNRISE AUTO LIMITED Respondent

CORAM: BEAUMONT, DRUMMOND AND BEAZLEY JJ. PLACE: BRISBANE DATE: 28 NOVEMBER 1995

Appeal No. QG 122 of 1994 from the order answering question 1 dismissed. 2. In appeal No. QG 129 of 1994, vary the answer given at first instance to the second question as follows:

"Q. (2) Was it open to Surnise to have determined in these proceedings the question whether the provisions of s.128B(3)(h)(ii) applied to the income earned by Mr. Radisich by way of the interest payable by reason of the subject transactions?" "A. (2) The Court has jurisdiction to entertain Sunrise's claims, but the scheme of the Act is to protect the validity of notices of assessment while allowing a taxpayer a full opportunity to have the general provisions of the Act affecting tax liability applied by invoking the review or appeal procedures provided in Part IVC of the Taxation Administration Act; and, the term `due making of the assessment' in s.177(1) extends to every purported exercise of the power to ascertain the taxable income and tax liability of a taxpayer which satisfies the criteria expressed by the Hickman principle."

Appeal No. QG 163 of 1994 stood over generally, with liberty reserved to either party to restore the appeal to the list on 28 days' notice. 4. Liberty reserved to either party to apply for costs of any of these appeals by written submission filed and served within 28 days of publication of these reasons.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) ) GENERAL DIVISION )

CORAM: BEAUMONT, DRUMMOND AND BEAZLEY JJ. DATE: 28 NOVEMBER 1995

REASONS FOR JUDGMENT BEAUMONT AND BEAZLEY JJ. INTRODUCTION AND BACKGROUND These are appeals from orders answering separate questions made in proceedings arising out of notices given by the Commissioner of Taxation under the statutory garnishee provision, s.218 of the Income Tax Assessment Act 1936 ("the Act") which, relevantly, provides:

"218(1) The Commissioner may ... by notice in writing (a copy of which shall be forwarded to the taxpayer at his last place of address known to the Commissioner), require: ... (b) any person who holds or may subsequently hold money for or on account of a taxpayer; ... to pay to the Commissioner, either forthwith upon the money becoming due or being held, or at or within a time specified in the notice (not being a time before the money becomes due or is held): (e) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of tax or, if the amount of the money is equal to or less than the amount due by the taxpayer in respect of tax, the amount of the money; ... ..."

(The definitions of "tax" and "taxpayer" are defined, inclusively, in a fashion that does not include withholding tax under Part III Division 11A. However, in that Division (s.128A(4)) it is specifically provided that in s.218, "tax" includes withholding tax. The significance of this will appear later.) The appeals, brought by leave granted, are from orders made by a Judge of the Court (Spender J.) striking out parts of a statement of claim challenging the validity of certain notices issued by the Commissioner under s.218 and parts of a defence in the following circumstances. By its further amended statement of claim, Sunrise Auto Limited ("Sunrise"), a New Zealand corporation, alleged that it was owned and controlled by Anthony Steven Radisich, a resident of New Zealand; that in August 1988, Mr. Radisich deposited the sum of $712,000 into an account at the Toowong branch of the Commonwealth Bank of Australia; that those funds, and interest thereon, were held for the benefit of Sunrise; that on 4 May 1993, the Deputy Commissioner issued an assessment to Mr. Radisich for income tax and penalties in respect of this interest; and that on 4 May 1993, the Deputy Commissioner issued notices pursuant to s.218 of the Act in respect of the subject of this assessment. But, Sunrise then alleged (para.10) the notice of the assessment was not served upon Mr. Radisich in accordance with the provisions of the Regulations under the Act; and that, in any event, it was not served upon him prior to service of the s.218 notice upon the Bank; consequently, (para.11) the s.218 notice was, it was claimed, invalid. Further, or alternatively, Sunrise alleged (para.12) that Mr. Radisich was not, for the purposes of s.218, a "taxpayer" in that he was not a resident of Australia and did not carry on business in Australia at or through a permanent establishment in Australia. For this reason also, it was claimed, the s.218 notice was invalid (para.13). Then Sunrise alleged further, or alternatively, (para.14), that by an assignment made in June 1993, Mr. Radisich transferred to Sunrise his interest in the funds deposited with the Bank. Sunrise sought declaratory orders that the funds were its property; and that the s.218 notice was invalid. It also sought orders directing the Deputy Commissioner to direct the Bank to release the funds, including any accretions, to Sunrise; and an order enjoining the Deputy Commissioner from enforcing the s.218 notice. By his amended defence, the Deputy Commissioner disputed that Sunrise was entitled to the relief sought and, inter alia (in para.10) in answer to the matters alleged in paras.12 and 13 of the statement of claim, he objected in point of law to those claims on the grounds that these matters could only be raised by Mr. Radisich (and not by Sunrise); and in any event, could only be agitated in proceedings brought pursuant to the appeal provisions contained in Part IVC of the Taxation Administration Act 1953. THE ORDER FOR SEPARATE QUESTIONS At the request of the parties, two issues were argued before Spender J. as preliminary questions. For these purposes, the parties agreed certain facts,to be mentioned shortly. For the reasons reported at (1984) 124 ALR 425, his Honour decided one issue in favour of the Commissioner and the other in favour of Sunrise. In each instance, the unsuccessful party has appealed. It will be convenient to deal with these issues separately. THE FIRST QUESTION: WERE THE ASSESSMENTS SERVED IN ACCORDANCE WITH THE REGULATIONS? (a) Background The agreed facts were, relevantly, as follows: "4. In early April 1993 Mr. Herman Mergler ('Mergler'), an employee of the First Respondent, the Deputy Commissioner of Taxation ('DCT'), commenced an investigation into the affairs of Radisich and, in particular, the funds held by the [Commonwealth] Bank. 5. On 16 April 1993 Mergler attended upon Mr John Spalding (Spalding'), the accountant at Toowong branch of the Bank, for the purposes of ascertaining certain information from the records of the Bank pursuant to a notice issued pursuant to Section 264 of the Income Tax Assessment Act (the Act'). [By s.264(1) it is relevantly provided: "264(1) The Commissioner may by notice in writing require any person ... - (a) to furnish him with such information as he may require; and (b) to attend and give evidence before him or before any officer authorised by him in that behalf concerning his or any other person's income or assessment, and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto."] 6. The information given by Spalding to Mergler was recorded by Mergler in the form of an internal office memorandum which was placed by Mergler on a file kept in the office of the DCT in the name of Radisich. A copy of that memorandum is annexed hereto and marked A'. [See below] 7. Included in the information given to Mergler in this interview was information as to Radisich's address. Mergler was told, and recorded in the memorandum marked A', that the current address of Radisich was 830 Great South Road, Penrose, Auckland, New Zealand and that the Bank sent mail to Radisich care of Geoff Klooger & Associates, 22nd Floor, Jetset Building, 288 Edward Street, Brisbane. 8. Thereafter Mergler obtained details of the income earned on the funds in the name of Radisich. Those details were used as the basis of determining the taxable income of Radisich for the 1989, 1990, 1991 and 1992 income years. 9. On 4 May 1993 the DCT made assessments pursuant to Section 167 of the Act of the taxable income of Radisich, and the tax payable thereon, for each of the 1989, 1990, 1991 and 1992 income years. Copies of the Notices of Assessment certified under the hand of the DCT, are annexed hereto and marked B-1' to B-4'. [See below] 10. The Notices of Assessment required Radisich to pay to the DCT amounts of income tax, provisional tax and additional tax totalling $385,246.91. 11. On 4 May 1993 the DCT issued a notice pursuant to Section 218 of the Act requiring the Bank to pay to the DCT the sum of $385,246.91 from the monies held in the name of Radisich. 12. At no time prior to 4 May 1993 had Radisich lodged an income tax return with the DCT and no address for service of Radisich had been given to the DCT or the Commissioner of Taxation. 13. At about 4.00 pm on 4 May 1993 Notices of Assessment (being the original of the documents B-1' to B-4') were personally delivered to a female person in the employ of Mr Klooger at the offices of Geoff Klooger & Associates, 22nd Floor, 288 Edward Street, Brisbane by ... an employee of the DCT." The memorandum marked "A" (mentioned in paras. 6 and 7 above) was in Mr. Mergler's handwriting as follows: "Commonwealth Bank Toowong Accountant John Spalding 371.3211 Visited Bank 11 AM 16.4.93 Mr. Radisich has 3 current accounts 1. Commercial Bill for $977,000 2. Cash Management Account $84.62 4129-10018446 3. Savings Account $358.61 1. Commercial Bill was purchased 7.1.91. It has been rolled over monthly. It was renewed 7/4/93 and matures 12/5/93. Interest rate is 5.25%. Current balance $977,000 States he is a resident. 2. Cash Management Call Account Account opened 29/5/92 Used for identification Amex 377420917138005 Exp. 3/92 Diners 157500 Exp. 3/4/50 Visa NAB 4506128014908531 Exp. 5/92 3. Savings Account Opened 9/8/88 States he is a non resident. Current address 830 Great South Road Penrose Auckland NZ mail to Geoff Klooger & Assoc. 2297527 288 Edward St Jetset Building 22nd Floor. (Emphasis added) Mr. Spalding stated from memory that the initial deposit was a large amount of cash but he will have to check vouchers. Also Mr. Radisich's partner a Mr. Craig Hanson from Toowong Videos (Evadex P/L) was the subject of some enquiries by a tax auditor 8/9 months ago. He will check his records for his name. MER 16/4/93"

Each of the notices of assessment mentioned in paras. 9, 10 and 13 above were addressed to: "ANTHONY STEVE RADISICH C/ GEOFF KLOOGER & ASSOCIATES 22ND FLOOR JETSET BUILDING 288 EDWARD ST BRISBANE 4000" (b) The legislative scheme (i) As to notice of assessment Section 174(1) of the Act provides that as soon as conveniently may be after any assessment is made, the Commissioner shall serve notice thereof in writing by post or otherwise upon the person liable to pay the tax. By s.204(1), any income tax assessed shall be due and payable by the person liable to pay the tax on the date specified in the notice as the date upon which tax is due and payable, not being less than 30 days after the service of the notice, or, if no date is so specified, on the thirtieth day after the service of the notice. (ii) As to service Regulation 36 provides: "36. Every person who furnishes a return shall, in the return, give an address in Australia for service." Regulation 37 provides:

"37. Every person who has given an address for service and who subsequently changes his address shall, within one month after the change, give to the Commissioner, at the place where he furnished his return, notice in writing of his new address in Australia for service." Regulation 38 provides:

"38. The address for service last given to the Commissioner by any person shall, for all purposes under the Act and Regulations, be his address for service, but where no address for service has been given to the Commissioner, or where the departmental records disclose that such person has subsequently changed his address and he has not notified the Commissioner, either in the return or by separate written advice, of such change, then the address of the person, as described in any record in the custody of the Commissioner, shall be his address for service." (Emphasis added) Regulation 39 provides: "39. The address for service as prescribed in regulation 38 shall, for all purposes under the Act and Regulations, be deemed to be the last known place of business or abode in Australia of any person." Regulation 170(1) provides: "170(1) Any notice or other communication by or on behalf of the Commissioner may be served upon any person: (a) by causing it to be personally served on him; or (b) by leaving it at his address for service; or [Emphasis added] (c) by posting it by prepaid letter post addressed to him at his address for service; and in any case to which paragraph (c) applies, unless the contrary is proved, service thereof shall be deemed to have been effected at the time when it would, in the ordinary course of post, have arrived at the place to which it was addressed. (c) The preliminary question The first preliminary question for determination was expressed in these terms: "1. Whether hand delivery of the four notices of assessment to a female person in the employ of Mr Klooger at the offices of Geoff Klooger & Associates constituted valid and effective service on the second respondent pursuant to the provisions of the Act and regulations, and whether by reason of any defect in service of them, the s 218 [notice] is of no force and effect." (d) The decision at first instance Spender J. said (at 431) that since the time when notice of the assessments was received by Mr. Radisich was critical, the Deputy Commissioner had to rely on the second limb of Reg. 170(1)(b) for present purposes, providing relevantly - "... where no address for service has been given to the Commissioner ... then the address of the person, as described in any record in the custody of the Commissioner, shall be his address for service." (Emphasis by his Honour)

His Honour held (at 433) that - "If the address at which the notices were left was, for the purposes of reg 38, the address of Mr Radisich, it is in my opinion immaterial whether the notices were posted to it or left there. Both avenues of effecting service were open to the Deputy Commissioner, and the consequence of using one rather than the other is simply that the time at which service was effected would be different." Turning to the question whether the Brisbane address mentioned of Geoff Klooger & Assoc. was "an address of the person [i.e. Mr. Radisich], as described in any record in the custody of the Commissioner ..." and thus his address for service within Reg. 38, Spender J. said (at 434): "... in my view, the word record' in reg 38 should be given a wide ambit. In my opinion, the word record' is used to refer to that by which information is recorded, and covers not only documents but computer information and suchlike." His Honour went on to say (at 434-5): "Counsel for the applicant submitted that if the mere writing down of an address by an officer of the Deputy Commissioner was sufficient to make such an address a record for the purposes of reg 38, it would result in a situation open to abuse. It was also submitted that the use in the first limb of reg 38 of departmental records', indicated that of records in the custody of the Commissioner' in the second limb did not encompass departmental records. The argument was that the failure to use the expression departmental records' indicated the intention by the parliament that record' ought have a different meaning. Counsel for the applicant posited the situation where an officer of the Deputy Commissioner simply wrote down from the telephone book an address for a taxpayer, or walked up to anyone on the street and asked them what an address for a certain taxpayer may be, and wrote down the answer. This result, it was suggested, demonstrated that the contention on behalf of the Commissioner was untenable. I do not agree. It is unnecessary in the present case to answer speculation as to the ambit of the word record', but it seems to me at least to require a bona fide recording of information. The memorandum of Mr Mergler, in my view, is a record' within the meaning of that word in reg 38." Spender J. further held that the word custody' where used in Reg. 38 should not be given a narrow meaning, observing (at 436): "Regulation 38 is part of the scheme providing for service by the Commissioner on persons so as to allow the Commissioner to proceed with his obligations under the Act. It seeks to facilitate the service by providing that certain addresses may be used by the Commissioner. In that context, in my view, custody' is not restricted to those things which are in the control of the Commissioner, but are the subject of legal ownership or right to possession is in others. It extends to those records which are in the control or guardianship of the Commissioner, regardless of who is the owner of those records." Spender J. thus answered Q. 1 in the affirmative. (e) Conclusions on the appeal on this issue As has been seen, the essential question for the learned primary Judge was whether Mr. Radisich's "address for service" within Reg. 38 was the office of Geoff Klooger & Associates at the 22nd Floor, 288 Edward Street, Brisbane, being an address of Mr. Radisich as described in any "record in the custody of the Commissioner". (i) The meaning of "address for service" There is no definition in the Act, or the Regulations, of the individual words making up the composite phrase "address for service". The dictionary meanings of "address" include -

"2. A direction as to name and residence inscribed on a letter, etc. 3. A place where a person lives or may be reached". (Macquarie Dictionary, 2nd ed.)

The word "for" in this context appears to have these dictionary meanings (Macquarie) - "1. with the object or purpose of ... ... 3. in order to obtain."

The applicable dictionary meaning of "service" (Macquarie) is the act of making legal delivery of a process. Thus, in its ordinary meaning, an address for service may be described for present purposes, as the place at which a person may be reached for the purpose of making formal delivery of a notice of assessment. This is the context in which the instant question arises. The context is an important one since the service of the notice of assessment on the taxpayer is what fixes the ascertainment of the amount of the taxable income and the amount of the tax payable by the taxpayer (see Federal Commissioner of Taxation v Prestige Motors Proprietary Limited (1994) 181 CLR 1 (at 13)). At the same time, it seems clear that, for present purposes, an "address for service" need not be the taxpayer's place of residence. Rather, it is intended to be the place "where a person may be found or communicated with, and hence is not always synonymous with word residence" (see Words and Phrases Permanent Edition, Vol. 2, citing Ridge v Boulder Creek Union Junior-Senior High School Dist. of Santa Cruz County, 140 P.2d 990,992, 60 Cal.App.2d 453). The authorities confirm this approach. In Simmons v Woodward [1892] AC 100, Lord Watson said (at 109): "The statutory schedule requires that the attesting clause shall contain the address' of the witness. That condition has, in my opinion, been substantially fulfilled, and the first objection fails, because the clause sets forth the place at which the witness was admittedly employed and was generally to be found during business hours." In Re Pugliese; Ex parte The Chase Manhattan Bank of Australia Ltd. (1993) 44 FCR 536, Heerey J. said (at 538): "The term address' means, amongst other things, `a place where a person lives or may be reached' (Macquarie Dictionary). The purpose of a bankruptcy notice is to convey to the debtor the amount which the judgment creditor claims and to give the debtor the opportunity of paying or securing that amount. For that purpose the judgment debtor must be told what the amount is and where the creditor can be reached to accept payment or security. The requirement of providing the address of the creditor was satisfied in this case by giving the address of the creditor's solicitors, since that was a place where payment of the debt would be accepted, even though it was not a place where the creditor carried on business." These cases may be compared with In re Stogdon; Ex parte Leigh [1895] 2 QB 534. There a bankruptcy notice stated the address of the creditor who issued it to be "White's Club, St. James', S.W." The creditor did not reside at the club, and he was in fact out of England during the whole of the seven days limited by the notice for the payment of the debt. There was evidence that, if the debtor had gone to the club, he would have been referred to the creditor's London solicitor, who held a general power of attorney for the creditor, and could have received payment of the debt on his behalf. Lord Esher said (at 535-6): "In my opinion regard must be had to the substance and meaning of the Bankruptcy Act and Rules, and not merely to the words. Unless the requirements of the Act and Rules are complied with in substance, they are not complied with at all. Here I think the creditor gave no address such as is required by the Act and the Rules. None of the things which the debtor is required by the bankruptcy notice to do could be done by him at White's Club, and therefore his omission to do them did not constitute an act of bankruptcy."

See also Re Buchanan; Ex parte Mervac Finance Limited (1991) 31 FCR 135 at 138-141. In Hemmerling v IMTC Systems (1993) 109 DLR (4th) 582, s.87(1)(a) of the Company Act, R.S.B.C., 1979 required that the register of debenture holders contain the name of each holder "together with ... the ... address of every debenture holder". Gibbs J.A. said (at 583): "The register has a common address for 32 of the other 42 debenture holders. It is: C/O Intercontry Management Corporation P.O. Box 3340 6002 Lucerne, Switzerland

Mr. Hemmerling does not like that address. He says that it is only a forwarding address and that a forwarding address is not the kind of address contemplated by s.87(1)(a). I do not understand that proposition. It seems to me that on the plain wording of s.87(1)(a) a forwarding address is just as good as any other address." In the Canadian case, Cardinal Insurance Company v Maple Underwriters Ltd. (1983) 46 B.C.L.R. 137, Hinds J. said (at 142): "Black's Law Dictionary, revised 4th ed., defines address' as: Place where mail or other communications will reach person ... Generally a place of business or residence.'" In construing Reg. 38, it is material to take into account the serious consequences that could follow if a notice of assessment did not come to the attention of a taxpayer. As Bankes J. said in Berry v Farrow [1914] 1 KB 632 (at 639): "It is, I think, clear that the object of the notice is to give the person charged an opportunity of challenging the correctness of the assessment by appealing against it, and a construction should therefore be adopted which would include some place at which the notice would be likely to be brought to his attention." See also Alexander v Stocks and Holdings (Sales) Pty. Ltd. [1975] VR 843 at 847. Turning to the language used in the present context, Reg. 38 deals with several possible situations: (1) Where an address for service has been provided; or (2) (a) Where no such address has been given; or (b) Where departmental records disclose that the address has changed, but not been notified, then either in (a) or in (b) - the address for service is deemed to be the person's address "as described in any record in the custody of the Commissioner". As it was common ground that no address was given (i.e. the situation in 2(a), above) the question, as has been seen, was the meaning, in this connection, of the phrase "the address of the person described in any record in the custody of the Commissioner". (Emphasis added) There is no definition of either "record" or "custody" in the Act or the Regulations. (ii) The meaning of "record" - generally The dictionary (Macquarie) definitions of "record" include the following: "11. An account in writing or the like preserving the memory or knowledge of facts or events. 12. information or knowledge preserved in writing or the like. ... 19. An official writing intended to be preserved. ..." The meaning of "record" has been considered in the courts on a number of occasions, some of which were mentioned in argument. In Savings & Investment Bank Ltd. v Gasco Investments (Netherlands) B.V. [1984] 1 WLR 271 it was held that a report of inspectors appointed by the Secretary of State for Trade was not admissible as a "record" within the meaning of s.4(1) of the Civil Evidence Act 1968 (U.K.) because it consisted only of secondary sources of information. Section 4(1) provided for the admission into evidence of a "document [which] is, or forms part of, a record compiled by a person acting under a duty from information which was supplied by a person (whether acting under a duty or not) who had, or may reasonably be supposed to have had, personal knowledge of the matters dealt with in that information and which, if not supplied by that person to the compiler of the record directly, was supplied by him to the compiler of the record indirectly through one or more intermediaries each acting under a duty". Peter Gibson J. said (at 284-5): "The crucial question is whether the reports can properly be called records. Mr. Lindsay submits that they do not, and he relies on the recent statement by Bingham J. in H. v Schering Chemicals Ltd. [1983] 1 WLR 143. In that case the documents in question were summaries of the results of medical research and articles and letters published in medical journals. Bingham J., after reviewing the authorities, came to the conclusion that the documents were not records within section 4. He said, at p.146: `The intention of that section was, I believe, to admit in evidence records which a historian would regard as original or primary sources, that is, documents which either give effect to a transaction itself or which contain a contemporaneous register of information supplied by those with direct knowledge of the facts.' Mr. Parker accepts that, judged by that standard, the reports are not records, but he submits, again rightly, that Bingham J. was in no way concerned with documents such as a report of inspectors. Nevertheless I respectfully accept as correct the test propounded by Bingham J. To my mind it is obvious that a report by inspectors, containing as it does a selection of the evidence put before the inspectors and their comments and conclusions thereon, is not a record in any ordinary sense of the word. It falls short of simply compiling the information supplied to them in the sense that some information will not be included in the report, and it goes beyond such a compilation in that it expresses opinions thereon. In my judgment, therefore, this alternative submission of Mr. Parker must be rejected." In R v Tirado [1974] 59 Cr.App.R. 80, the Court of Appeal doubted whether a file of correspondence was a "record" for the purposes of s.1 of the Criminal Evidence Act 1965 (U.K.). The Court said (at 90): "... although we will leave the matter for final decision on another day, we have at least some hesitation in saying that a file of correspondence, maintained simply as a file of correspondence, and added to from time to time as letters come in, is or can be a record relating to any trade or business and compiled from information supplied within the meaning of section 1 of the Act of 1965. The language of section 1 seems on its face to contemplate the making or compilation of a record. That means the keeping of a book or a file, or a card index, into which information is deliberately put in order that it may be available to others another day. A cash book, a ledger, a stock book: all these may be records because they contain information deliberately entered in order that the information may be preserved." In Regina v Gold [1988] 1 AC 1063, it was held that the process whereby a number and a password were held momentarily in the control area of a computer for verification before being irretrievably expunged was not a process to which the words "recorded or stored" in s.8(1)(d) of the Forgery and Counterfeiting Act 1981 (U.K.), given their ordinary and natural meaning, could properly be applied. Lord Brandon said at (1072-3):

"... section 8(1)(d) contemplates that information may be recorded or stored by electronic means on or in (i) a disc, (ii) a tape, (iii) a sound track (presumably of a film) and (iv) devices other than these three having a similar capacity. The words recorded' and stored' are words in common use which should be given their ordinary and natural meaning. In my opinion both words in their ordinary and natural meaning connote the preservation of the thing which is the subject matter of them for an appreciable time with the object of subsequent retrieval or recovery." (Emphasis added) In R v O'Loughlin [1988] 3 All ER 431, it was held that a witness statement dictated to a police officer was not a "record" compiled by the police for the purposes of s.78 of the Police and Criminal Evidence Act 1984. Kenneth Jones J., held (at 438) that a deposition did not become a "record", compiled by the clerk of the magistrates' court, of information supplied by the witness to the clerk, and observing (at 438): "Again, what counsel says is that the police officer in writing down what the witness dictated to him was making a record of information which was supplied to him by the witness. Again, this seems to be torturing words out of their ordinary meaning. If it was a record at all it would seem to me to be a record made by the witness himself, and, of course, that would not be caught by the Act because there is no suggestion the witness was under any duty to make such a record. But ... it seems to be torturing words out of their ordinary meaning to say that the mere fact that a police officer wrote it down at his dictation alters the whole character of the document and turns it into a record compiled, collected together that must be, by the police officer." In R v Cunningham [1989] Crim L.R. 435, it was held that proofs of evidence and attendance notes made by the accused's solicitor when interviewing witnesses were not admissible as part of a "record" within s.68(1) of the Police and Criminal Evidence Act 1984. Following Tirado, above, R v Jones [1978] 1 WLR 195 (see below) and Schering, above, it was held that "record" had been given a restricted meaning to mean a book, card index or "primary source". In Jones, above, it was held that a bill of lading and a cargo manifest could be a "record" within the meaning of the phrase "record relating to any trade or business" in s.1(1) of the Criminal Evidence Act 1965 (U.K.). It was held by the Court of Appeal that a "record" for this purpose could be a single document setting out the history of one transaction. The Court said (at 198-9): "The other case is Reg. v Tirado ... . That was a very different circumstance. The record' which it was sought to introduce was a file of letters from various people in Morocco who had been writing to the appellant about the prospect of a course in Oxford which he had advertised. We do not feel that the decision in that case is of any value because a file of various letters from various people does not seem to us to be something which could in any event properly be described as a record. Although it is not an exhaustive definition of the word, record' in this context means a history of events in some form which is not evanescent. How long the record is likely to be kept is immaterial: it may be something which will not survive the end of the transaction in question, it may be something which is indeed more lasting than bronze, but the degree of permanence does not seem to us to make or mar the fulfilment of the definition of the word `record'. The record in each individual case will last as long as commercial necessity may demand. (Emphasis added) The documents in the present case seem to us to fall precisely into that category. They are the written records of the particular transaction. They are documents containing the history of this particular transaction, where the goods started from, the method of transport, the name of the ship, the port of arrival and the container depot destination on the one hand and the final consignee's destination on the other. They are carefully and deliberately compiled for the information of those in this country who are going to be the recipients of the goods."

In Reg v Iqbal [1990] 1 WLR 756, a more liberal approach emerged when it was held by the Court of Appeal (Watkins LJ, Nolan and Ward JJ.) that confession statements were documents which formed "part of a record" within s.68(1)(a) of the Police and Criminal Evidence Act 1984 (U.K.) as being part of a police record of a criminal investigation into an allegation of dealing in drugs, compiled by the inspector in the execution of his duties, which arose independently of the issues in the trial. Their Lordships noted (at 761) that the English courts had been careful not to give any exhaustive definition of "record", referring to Tirado, Jones and Schering. After citing from Gasco, above, the Court said (at 762): "One can, therefore, readily see that the following were held not to be records: the file in the Land Registry containing a collection of inquiries and reports on the rights to the waters of a Cyprus river as in Ioannou v Demetriou ... the file of correspondence in Reg. v Tirado ... and the inspector's report in the Savings & Investment Bank case ... ." Their Lordships noted (at 764) that the court in R v Cunningham (above) gave the word "record" a restricted meaning which also excluded the solicitor's attendance notes which had only come into existence because the defendant's solicitor was preparing the defendant's case for trial. Watkins LJ., Nolan and Ward JJ. expressed their conclusion as follows: "(1) The confession statements are documents which form part of a record, as we interpret that word. It is a record because it is a compilation of facts supplied by those with direct knowledge of the facts which is preserved in writing or other permanent form, in order that it is not evanescent, and which will serve as an original source or memorial or register of those facts and thus be evidence of them or of the transaction to which the document gives effect. In saying that, we do not intend it to be an exhaustive definition of the word `record'. In plain language these documents were part of the record of a criminal investigation into an allegation of dealing in drugs. They are as much a part of the police records as would be the occurrence book in which the desk sergeant notes what is said to him across the counter of a police station. [Emphasis added) (2) This record was compiled by the inspector in the execution of his duty in the occupation in which he was engaged ... . (e) His duty to record the facts supplied to him arose independently of the issues which were raised far away from him in the Guildford Crown Court. True it may be that the taking of the statements arose in the execution of his duty to prepare a case which would or might lead to a criminal prosecution, but not this prosecution. The records were not created for the purpose of the trial in which they are now sought to be admitted, which is the governing limitation in Reg. v Martin ... and Reg. v Cunningham. ..."

On the other hand, in Karmot Auto Spares Pty Limited v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560, Heerey J. said (at 565): "... the document in question is not part of the records of the business of Walkers Auto Spares. It had passed out of the possession and control of that firm. I think the ordinary sense of business record' connotes a repository of information in organised form which is accessible in the usual course of and for the purposes of that business to those who conduct it." (Emphasis added) Likewise, in Cigna Insurance Australia Ltd. v General Newspapers Pty Ltd (1992) 7 ANZ Insurance Cases, 61-121, it was held that a library of photograph transparencies were not part of the "records" of an insured within the meaning of a policy of insurance. Clarke JA said (at 77,602): "Although records' is a word of wide meaning which may include something which is retained as a memorial its meaning in para (e) is governed by the context in which it appears. The primary context is one relating to what might be described as the business records of Federal Publishing Company although the reference to specifications, plans, drawings and designs' would indicate that, in the context of a publishing company, business records should not be understood too narrowly. Although plans and specifications would not normally be understood to form a part of the business records of a publishing company there may well be occasions in which such a company would have and retain such documents for its business purposes. On the other hand the computer systems records, documents, manuscripts, and business books would clearly form part of its business records as would securities and deeds which it kept at the premises. While, therefore, the paragraph refers to records of every description' it would seem clear to me that it refers only to those documents or items which were made or gathered together for the purpose of recording information which it was desired to keep for use in the business." (Emphasis added) His Honour went on to say (at 77,603): "In my opinion a transparency library would not be understood as a matter of ordinary language to constitute business records or records of the insured..." In the United States, it has been held that records "are intended to serve as evidence of something written, said or done, and are not kept to gratify the curious or suspicious" (see Owens v Woolridge, 22 Pa. Co. Ct.Rep. 237,240 cited in Words and Phrases Permanent Edition (West Publishing Co.) at 37). Finally, it should be noted that the circumstances may require one to look beyond the initial use of a document in order to ascertain whether it has come to be used as a "record" even if, originally, it had a different purpose. In Duke GRP (In liq.) v Arthur Young (1990) 3 ACSR 420, Perry J. (at 429) cited the following statement by Jacobs, Cox and Matheson JJ. in Burnside Sub Branch RSL Inc. v Burnside Memorial Bowling Club Inc., 28 November 1990, unreported: "Often, no doubt, where a copy of a document is used as a record, it will have been made expressly for that purpose, but that need not be the case. The very use of the document, certainly over any length of time, may fulfil the purpose of recording a particular matter relating to the business, whether the document was originally created for that reason or not. It need not have had its genesis within the business if the user alternative is satisfied." (Emphasis added) In that case, the Full Court considered whether a typed copy of a lease held by the lessee, a bowling club, was a "business record". It did not appear that the copy was endorsed in any way by the club; it came forward simply as a document retained in the club's records. The Court said that it "was part of [the club's] records, kept in a safe place under the custody of its proper officer, and was evidently the only copy it had of the 1957 lease agreement" (see 3 ASCR, at 428-9). (iii) The meaning of "record" in Reg. 38 It appears that the only decided case on the point is Deputy Commissioner of Taxation v Homebeech Limited, Supreme Court of Queensland, Shepherdson J., 30 October 1986, unreported, where, in an application to set aside a default judgment, a question arose as to the true construction of Reg. 29, the precursor to the present Reg. 38. Shepherdson J. referred to an affidavit sworn by the plaintiff's solicitor which stated - "...that the record in the custody of the Deputy Commissioner of Taxation which gives the address of the defendant as C/- Barry Cronin, Primrose Couper Cronin and Rudkin, 1st Floor, Custom Credit House, 35/39 Scarborough Street, Southport is the document being Folio 23 of the National Crime Authority working papers relating to the defendant ... [being Ex B] ..." Exhibit B was a photocopy of a lined sheet with a serial number "023" on it. Towards the bottom of the sheet appeared the following: "Barry Cronin Primrose Couper Cronin Rudkin, 1st Floor, Custom Credit House, 35-39, Scarborough Street, Southport. Qld. 4215." Shepherdson J., having noted that all the document did was to record the address of Mr. Cronin, said (at 9): "Mr. Gzell [for the defendant taxpayer] has submitted that [Reg.] 29 cannot [help] the plaintiff ... . He submitted ... that a record' means something more than just a name and address on a piece of paper. He referred to ... Schering [above] ... at 851-2. He submitted that record' means something more than any document and means something of an official recording. I do not find it necessary ... to rule on ... [this] because ... I find it quite impossible to construe that document as being the address of the defendant as described in a record, assuming it to be a record in the custody of the Commissioner." His Honour, turning to the defendant's second submission that "the record has to be on its face the address of the taxpayer", said that "this obviously is not so." As has been seen, the case is distinguishable from the present circumstances, where the document does refer to the taxpayer. Moreover, again as has been noted, Shepherdson J. did not need to express any concluded view on the instant question which does not appear to have been considered in any other case. (iv) Summary of the authorities on the meaning of "record" It follows, we think, that the foregoing analysis may be summarised thus: the meaning of "record" in the present context is not the subject of any authoritative decision, although the recent English cases indicate a less rigorous approach than previously; the word does not appear to be used here as a term of art, or to have any special or technical meaning; and it appears to have been intended to have its ordinary dictionary meaning which emphasises that the writing is meant to preserve, for an appreciable time, the memory or knowledge of a fact or an event, even in an informal, or unofficial, fashion with the object of subsequent retrieval of the information; a writing may constitute an official or formal, or an unofficial or informal, record of a fact or event; but the latter type of writing could nonetheless fairly be described as a "record" for the purposes of Reg. 38 as, no doubt, could an official record, for instance, a formal document such as the Electoral Roll. (v) The meaning of "custody" As has been noted, Reg. 38 speaks of "the address of the person, as described in any record in the custody of the Commissioner" (my emphasis). What is the meaning here of "custody"? The primary dictionary (Macquarie) definition of "custody" is - "1. keeping; guardianship; care." As Spender J. noted (at 435), the meaning of the word "custody" where used in s.264 of the Act was considered by the High Court in FCT v Australia and New Zealand Banking Group Ltd. (1979) 143 CLR 499. Gibbs ACJ observed (at 519) that "custody" was a wider, vaguer word than "possession" so that a person who has "physical control" of something has "custody" of it even if legal possession of it is not held. Mason J., citing (at 532-3) the primary dictionary definition of "custody", said that it was wide enough to include "many types of possession which are not commensurate with full ownership". In Roux v Australian Broadcasting Commission [1992] 2 VR 577, Byrne J., in a discovery context, said (at 589): "A party has `custody' of a document where the document is within the corporeal possession of that party whether or not this is accompanied by a right to possession".

Continuity of physical possession is an ingredient of the concept of "custody", but it may be appropriate to imply an exception of necessity, so as to include the possibility of constructive custody for an essential or extreme reason. In Rural Timber Ltd. v Hughes [1989] 3 NZLR 178, s.199 of the Summary Proceedings Act 1957 (N.Z.) required things seized under s.198 to be retained under the custody of a constable, except while being used in evidence or in the custody of the Court. The police allowed the personnel of the Ministry of Transport to have, for examination, materials that had been seized. The New Zealand Court of Appeal held that, as with the case of an expert asked to consider material for similar purposes, the Ministry should be regarded as holding the materials on behalf of and subject to the direction and control of the police, so that there was no breach of s.199. The Court said (at 186) that "custody" there must be interpreted reasonably liberally in order to make the provision workable. In Botany Fork & Crane Hire Pty. Ltd. v New Zealand Insurance Co. Ltd. (1993) 44 FCR 27 at 34, in an insurance context, it was held that property in the "custody" of the insured refers not only to legal custody but also to actual or de facto custody; moreover, the custody need not be exclusive of some other person, so that more than one person may have, at any given point of time, custody of the item in question. It will be noted that Reg. 38, on its face, appears to draw a distinction between "the departmental records" on the one hand, and "any record in the custody of the Commissioner" on the other. It may be accepted that, as a matter of form, a distinction can be made here; that is, to take one example, a document may be produced to the Commissioner pursuant to s.264(1)(b), and thus be in his "custody", but the Commissioner could decide not to place it with, or treat it as part of, the departmental records. Nonetheless, the document might be said to be a "record" in the "custody" of the Commissioner. As a matter of substance rather than form, however, the position may not be so clear. As a matter of substance, such a document may well be regarded as part of the departmental records, even if not formally so treated. (vi)Was Klooger's address, as noted in Mr. Mergler's memorandum, "the address of [Mr. Radisich], as described in [a] record in the custody of the Commissioner ..." for the purposes of Reg. 38? We accept, as has been said, that an informal "record" will suffice in this connection. We further accept that an unduly narrow or pedantic approach to the meaning of "record" is not warranted; and that we are not here dealing with terms of art or with technical language; so that the question, to borrow the language of Lord Hoffmann in Reg. v Brent L.B.C.; Ex parte Awua [1995] 3 WLR 215 (at 223) is: can the memorandum "fairly be described" as a "record"? At the same time, we bear in mind that the Commissioner may have "recourse" to "many official and confidential channels of information" (per Isaacs ACJ in FCT v Clarke (1927) 40 CLR 246 at 276); and that the pursuit of this process will not necessarily involve the creation of a "record". Although the question is difficult, we have, with some hesitation, come to the conclusion that the memorandum may fairly be described as a "record". Essentially our reason for this conclusion is that it should be inferred that the memorandum was intended to preserve, for an appreciable period of time, the memory or knowledge of several facts, including the Australian address of Mr. Radisich, with the object of subsequent retrieval of that information. By "Australian address", we mean the "address" in its ordinary sense, being a place in Australia where Mr. Radisich could be contacted; that is to say, his address "for service" in Australia. It may be that, in its original form, the notes made by the Bank or by Mr. Mergler were not necessarily believed to constitute a record, at least of a formal kind. But the inference is open that, over a period of time, the notes came to be used as a record. At all events, the notation of Mr. Radisich's mailing address was not intended to be something that was merely ephemeral or "evanescent". We are further of the view that this "record" was within the "custody" of the Commissioner in the sense previously explained; that is, it was within his physical or de facto care or possession, as well as within his legal possession. It follows that we would dismiss the appeal on this question. THE SECOND QUESTION: WAS IT OPEN TO SUNRISE TO HAVE DETERMINED IN THESE PROCEEDINGS THE QUESTION WHETHER THE PROVISIONS OF s.128B(3)(h)(ii) APPLIED TO THE INCOME EARNED BY MR. RADISICH BY WAY OF THE INTEREST PAYABLE BY REASON OF THE SUBJECT TRANSACTIONS? (a) Background The terms of s.218 have already been set out. As has been noted, the definition in that provision of "taxpayer", an inclusive definition, does not pick up a person liable to pay withholding tax pursuant to Division IIA; but by s.128A(4) it is provided that for the purposes of s.218, "tax" includes withholding tax. As Spender J. pointed out, s.218 imposes an obligation in respect of "the amount due by the taxpayer in respect of tax", that is, the section requires that an amount is due by the taxpayer. In Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1, where Mason J. (at 19) observed the "quite striking" similarity between s.218 and provision for garnishee orders, it was held that income tax was "due" when it was assessed and the notice of assessment was served. Section 128B of the Act deals with liability to withholding tax. By s.128B(2), subject to sub-section (3), s.128B applies to income that consists of interest that, inter alia, is derived by, and paid to, a non-resident. (Withholding tax in the case of interest is imposed at the rate of 10 per cent.) By s.128B(3), it is provided that the section does not apply to -

"(h)(ii)interest derived by a non-resident in carrying on business in Australia at or through a permanent establishment of the non-resident in Australia." Such income would be included in a non-resident's assessment under the ordinary provisions of the Act in respect of the whole of his income from Australian sources. However, where interest derived by such a non-resident is not attributable to the business carried on in Australia through the permanent establishment, withholding tax is payable and such interest is not liable to ordinary income tax (see Australian Federal Tax Reporter, 41,671). In the agreed facts, it was noted that Sunrise contends, in paras.12 and 13 of its statement of claim, that Mr. Radisich was not a taxpayer for the purposes of the Act; and, specifically, that s.128B(3)(h)(ii) did not apply in his case, contrary to the Commissioner's contention. It was further noted that, in any event, whatever the substantive position, the Commissioner asserted that this question could only be raised by Mr. Radisich (and not by Sunrise) in a review or an appeal relating to the assessment pursuant to the provisions of Part IVC of the Taxation Administration Act 1953. For this purpose, reliance was placed by the Commissioner upon s.177 of the Act as follows: "The production of a notice of assessment ... shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct." From the standpoint of Sunrise, the present question was whether Mr. Radisich was a "taxpayer" for the purposes of s.218. Sunrise argued that, in order to maintain the s.218 notice, the Commissioner needed to show (i) that Mr. Radisich was a resident (i.e. not a "non-resident" - a matter that is now common ground); or (ii) that Mr. Radisich was carrying on business in Australia at or through a permanent establishment in Australia; that is to say, Sunrise contended that withholding tax only ought to have been assessed. The subject assessments were made under s.25(1) of the Act as income in the ordinary sense whereas, if as Sunrise contended, the withholding tax regime applied, as has been noted, a rate of only 10 per cent would be applicable. Thus, although as a matter of form, both Sunrise's pleadings and the separate question tended to focus on s.128B(3)(h)(ii), the possible operation of s.177(1) in the present context was also to be taken into account, and from the Commissioner's standpoint, in the absence of any suggestion of fraud, it was, in practical terms at least, decisive. It will be convenient to turn next to the possible application of s.177(1). (b) The authorities explaining the operation of s.177(1) In F.J. Bloemen Pty. Ltd. v Federal Commissioner of Taxation (1981) 147 CLR 360, the taxpayer, in the course of disputing an assessment, sought a declaration from the Supreme Court of New South Wales that the assessment was void. Mason and Wilson JJ. (with the concurrence of Stephen and Aickin JJ.) said (at 375): "An explicit and, in our view, correct statement of the effect of s.177(1) was made by Taylor J. in McAndrew ... . For the reasons there expressed his Honour concluded that s.177(1) was intended to make it impossible for a taxpayer, in proceedings other than appeal against it, to challenge an assessment on any ground'. He conceded that the word excessive' in s.190(b) was inappropriate. However, he considered that an assessment made in purported but not justifiable exercise of a statutory power' could properly be described as excessive' ... . This interpretation gives expression to the policy which underlies, and is manifest in, the statutory provisions. The effect of this policy is that, once the Commissioner takes advantage of s.177(1) by producing an appropriate document, the taxpayer is precluded from contesting that the Commissioner has made an assessment or that in making the assessment he has complied with the statutory formalities. The taxpayer is entitled to dispute his substantive liability to tax in proceedings under Pt V." (Emphasis added) Their Honours went on to say (at 376): "It does not necessarily follow from what we have said that the Act excludes the general jurisdiction of the Supreme Court. Section 177(1) specifically operates by compelling a court, for example, the Supreme Court, in the exercise of its jurisdiction to treat a notice of assessment on its production as conclusive evidence that the assessment has been duly made and thereby foreclosing that issue. In theory s.177 leaves the Supreme Court with jurisdiction to decide whether an assessment has been duly made in a case in which an appropriate document is not produced. However, the rights of review given to the taxpayer by Pt V are comprehensive. Quite evidently it was contemplated that the Commissioner would in every case take advantage of s.177(1) and foreclose the exercise of jurisdiction to decide whether an assessment has been duly made. The general tenor of the statutory provisions suggests that a taxpayer wishing to challenge a notice of assessment served upon him will be effectively confined to the Pt V procedures." Later, their Honours said (at 378) that production of the notice - "... will put beyond contention the due making of the assessment so that the Court cannot find that no assessment was made or that, if made, it was made for an inadmissible purpose." In Deputy Commissioner of Taxation v Moorebank Pty. Ltd. (1988) 165 CLR 55, in proceedings brought in the Supreme Court of Queensland by the Deputy Commissioner to recover income tax and additional tax, it was held that State limitation legislation, in respect of a cause of action to recover a penalty, was inapplicable. Mason C.J., Brennan, Deane, Dawson and Gaudron JJ. said (at 67): "The intrusion of State Limitation Acts provisions would undermine other aspects of the coherent scheme which the Assessment Act embodies. The intrusion of such provisions would, e.g., lie ill indeed with the Assessment Act provisions pursuant to which income tax and additional tax become and remain due and payable notwithstanding that an objection to payment of the tax has been lodged and the appellate procedures for challenging an assessment have been invoked: s.201. There will inevitably be cases in which it would be oppressive for the Commissioner to seek to enforce payment of the full amount due under a notice of assessment or by way of additional tax before the final resolution of a genuine dispute about the correctness of the assessment: ... A case in which the Commissioner issues a number of assessments on an alternative basis to different taxpayers in respect of the same income provides an obvious example." (Emphasis added) Bloemen was distinguished in David Jones Finance & Investments Pty. Ltd. v Commissioner of Taxation (1991) 28 FCR 484, where it was held, by a majority (Morling and French JJ.), that s.177 could not displace the jurisdiction conferred on this Court by s.39B of the Judiciary Act. In Prestige Motors, above, the High Court observed (at 14) that s.177(1) - "... is a facultative provision; if the notice does not fall within the sub-section, the only consequence is that the Commissioner cannot rely upon the provision." (Emphasis added) David Jones was disapproved by the High Court in Deputy Commissioner of Taxation v Richard Walter Pty. Ltd. (1995) 69 ALJR 223 for the reason, inter alia, that it appeared that account was not taken in David Jones of the "critical importance" (per Mason C.J. (at 231)) of s.175, which provides that the validity of an assessment shall not be affected by reason that any of the provisions of the Act have not been complied with. In Walter, it was held, by a majority (Mason C.J., Brennan, Deane and Gaudron JJ.), that the production of the notice of assessment did not of itself preclude, wholly or in part, a challenge to or review of the assessment under s.39B of the Judiciary Act, by reason of the operation of s.177, but that such challenge must fail or such review must be refused in the circumstances of that case. The minority (Dawson, Toohey and McHugh JJ.) were of the view that production of the notice wholly precluded challenge or review. Since what was decided in Walter is of central importance for present purposes, it will be necessary to refer to the reasoning in some detail. Mason C.J. said (at 230): "A conclusive evidence provision would not ordinarily be regarded as ousting jurisdiction or interfering with the exercise of judicial power. That is because a provision of that kind usually does no more than attach definitive legal consequences to an act, transaction or instrument. However, it would be very different if an attempt were made to give conclusivity to a document or certificate which was in its terms determinative of the very issue for determination in a pending case." (Emphasis added) His Honour went on to say (at 230-1): "It follows that the characterisation of s.177(1) is the critical consideration. Does it prescribe a substantive rule that all procedural steps, other than those going to substantive liability and so going to the excessiveness of the assessment, are directory only and do not touch the validity of the assessment? Or is it a jurisdictional provision which simply attempts to preclude the court from inquiring into matters which do go to the validity of the assessment?" (Emphasis added) His Honour concluded that the former, rather than the latter, characterisation was appropriate.

After referring to the passage cited from Bloemen, above (at 378), Mason C.J. said (at 232): "This last statement, which perhaps goes further than anything said before, proceeds upon the footing that the paramount purpose of the Act is to ascertain the liability of taxpayers to tax and that the Act, with that object in view, sets up a legislative regime whereby the Commissioner assesses a taxpayer to tax, the taxpayer being liable to pay the amount stated in the notice of assessment, subject to a reference to the Administrative Appeals Tribunal or an appeal under Pt IVC to the Federal Court. In such an appeal, it is for the taxpayer to show that the assessment is excessive. In that context, the existence of an admissible purpose on the part of the Commissioner plays no part. The central element of the legislative regime is the making of an assessment by the Commissioner which ascertains the taxpayer's liability to tax and the reference to the Tribunal or the appeal to the Federal Court, in which the taxpayer is entitled to dispute his or her substantive liability to tax. In such an appeal, the taxpayer is at liberty to challenge the exercise of any relevant discretion by the Commissioner. Thus, on appeal, the court will set aside the assessment if any relevant exercise of discretion by the Commissioner is affected by error of law, if he has taken an extraneous factor into account or if he has failed to consider a material factor." His Honour held (at 232) that - "... the first limb of s 177(1) is effective to preclude a challenge by the taxpayer in proceedings in the Federal Court under s 39B of the Judiciary Act to the validity of the assessment on the ground that the Commissioner has included the same amounts in the taxable income of more than one taxpayer. In any event, there is long-standing authority supporting the proposition that the Commissioner has power to assess more than one taxpayer in respect of the same income. ... I did not understand the taxpayer to contend that the assessments were tentative or were vitiated by bad faith or improper purpose otherwise than by reference to the fact that two taxpayers were assessed to tax in respect of the same income deriving from the one source." Brennan J. said (at 238): "It is conceivable that a purported assessment could be made in bad faith so as to forfeit the protection which s175 would otherwise confer on the assessment. If such a case were to occur, neither s175 nor s177(1) would transform the purported but invalid assessment into a source of liability. ... The purported assessment would be a nullity. But an assessment which has been made in a bona fide attempt to exercise the power to make it is not invalid merely on account of a disconformity between the amounts assessed and the amounts properly assessable under the general provisions of the Act." His Honour went on to say (at 239): "The jurisdiction of the Federal Court on appeal from, or of the Administrative Appeals Tribunal on review of, a decision on an objection extends to every issue which affects the amounts ultimately included in the taxable income or tax liability of a taxpayer. If any of these issues be resolved in favour of the taxpayer, an amendment of the assessment so as to reduce the taxable income or the tax liability of the taxpayer must follow. The width of that jurisdiction ... and the evident purpose of the Act to channel all issues as to the true tax liability of the taxpayer into the objection, review and appeal procedures found the clearest implication that exceptions to the broadest literal application of s 175 must be narrowly confined and a corresponding operation must be attributed to s 177(1). As the scheme of the Act is to protect the validity of notices of assessment while allowing a taxpayer a full opportunity to have the general provisions of the Act affecting tax liability applied, I would construe the term due making of the assessment' in s 177(1) as extending to every purported exercise of the power to ascertain the taxable income and tax liability of a taxpayer which satisfies the criteria expressed by the Hickman principle." (Emphasis added) Earlier (at 236), Brennan J. had explained the Hickman principle as follows: "The apparent conflict between the rules prescribed by the general provisions of the Act and s 175 raises a question similar to that addressed by Dixon J in R v Hickman; Ex parte Fox and Clinton. ... The Hickman principle', as it has been called, reconciles the prima facie inconsistency between one statutory provision which seems to limit the powers of the [repository of the power] and another provision, the privative clause, which seems to contemplate that the [repository's] order shall operate free from any restriction.' ... The reconciliation is effected by reading the two provisions together and giving effect to each'. ... The privative clause is given effect despite non-compliance with the provisions governing the exercise of the power, but only if the purported exercise is a bona fide attempt to exercise the power, it relates to the subject matter of the legislation and it is reasonably capable of reference to the power given to the body purporting to exercise it. ... The validating provision cannot be so construed if the impugned act by the repository of the power is not referable to the power given to the repository ... or exceeds the power which can constitutionally be given to the repository. ..." (Emphasis added) Later (at 239), his Honour held that - "The power to make an assessment is exercised by ascertaining the taxpayer's taxable income and defining the resulting tax liability of the taxpayer. If it appears, either on the face of a notice of assessment ... or from elsewhere ... that the Commissioner has not attempted in good faith to determine the taxable income ... or has not made an assessment definitive of the tax liability of the taxpayer, ... the assessment does not attract the protection of s 175. ... Nor, in my opinion, does s 177(1) make the production of such a purported notice of assessment conclusive evidence of the due making of the assessment. ..."

Although agreeing in the outcome proposed by Mason C.J. and Brennan J., Deane and Gaudron JJ. took a somewhat different approach. Their Honours said (at 245): "Even when [s. 177(1)] operates [by actual production of the notice of assessment], the subsection does not impart validity to an assessment which is otherwise invalid. It simply forecloses the issues of validity and (where applicable) correctness of amount and particulars by making production of the relevant document conclusive evidence' in relation to those matters. Thus, the fact that a notice of assessment had been produced as conclusive evidence of due making and correctness in one set of proceedings would not of itself establish validity or correctness for the purposes of a different set of proceedings in which no notice of assessment or other document under the hand of the Commissioner or a Deputy Commissioner was produced." Their Honours later (at 247) said: "... the prima facie inconsistency between s 39B(1) of the Judiciary Act and s 177(1) of the Act must be resolved, in accordance with the ordinary rules of construction of statutes, ... in favour of the subsequent provision, that is to say, in favour of s 39B(1). The effect of that is that s 39B(1) overrides or pro tanto amends s 177(1) to the extent that s 177(1) would make a certificate of the Commissioner or a Second or Deputy Commissioner conclusive evidence of the due making of an assessment in proceedings in the Federal Court under s 39B(1) in which the applicant's case is that the assessment is invalid on the ground that it is not bona fide." Their Honours concluded (at 248) that - "... the taxpayer's challenge to the relevant determinations and assessments must fail for the reason that that alleged fact would not, if established, of itself suffice to establish that the relevant determinations or assessments are not determinations or assessments for the purposes of the Act or that they are void. In that regard, we are in general agreement with the reasons given by Dawson J for concluding that the provisions of the Act permit the Commissioner to make s177F determinations and assessments based upon them on an alternative basis. That is not, of course, to suggest that the courts would be powerless to prevent their processes being abused to obtain double recovery by enforcement of an alternative assessment." (Emphasis added) (c) The decision at first instance Before Spender J., the Commissioner relied on the tender of the notices of assessment and the reasoning in Bloemen, above. However, his Honour, who decided this matter before the High Court had disapproved David Jones in Walter, considered himself "constrained by the ratio of the majority" in David Jones, namely that: "In this Court and in the proper exercise of the [s.39B] jurisdiction ... the due making' of the assessment and the amount and all particulars thereof is open to inquiry." Spender J. therefore ordered that the separate question be answered to the effect that it was open to Sunrise to have determined in these proceedings the question whether s.128B(3)(h)(ii) applied to the interest derived by Mr. Radisich. (d) The parties' contention on the appeal On behalf of the Commissioner, reliance is placed upon the meaning of s.177(1) as explained in Walter in disapproving David Jones. On the other hand, it is accepted by Sunrise that, in the light of the decision in Walter, Mr. Radisich could not, absent an allegation of fraud, challenge the assessments save in Part IVC proceedings. But Sunrise argues that although s.177(1) binds Mr. Radisich, as taxpayer, in this fashion, Sunrise itself, not being the taxpayer, is not so bound. On behalf of the Commissioner it was acknowledged that in the light of the decision of Dawson J. in Oil Basins Ltd. v The Commonwealth (1993) 178 CLR 643, ordinarily, in the absence of an assessment, it would be open to a party having a sufficient interest to seek a declaratory order that there was no liability to tax. But the Commissioner points to the tender of the notices of assessment here and the absence of an assessment in Oil Basins. It was further submitted for the Commissioner that, as a matter of discretion, the Court should not make a declaration in favour of Sunrise since, if Sunrise were to establish, as it claims, a beneficial entitlement to the subject funds, the question whether s.177(1) had any operation in the present context would be merely hypothetical. (e) Conclusions on the appeal It appears that the present question has not previously arisen for consideration in the context of a notice given under s.218. In Clyne, above, for instance, there was no attempt to challenge the assessment. A number of novel and difficult issues arise. It will be convenient to address them in turn. (1) Standing The first issue is that of the standing, if any, of Sunrise to seek a declaration, and if necessary, an injunction. With respect to the operation of s.218, the duty upon the third person to comply with the Commissioner's notice is underpinned by a criminal sanction (see s.218(2)). But, as Brennan J. observed in Clyne, there is also to be implied into s.218 a civil obligation to comply with the notice - "... and there is no reason why the Commissioner's right, reciprocal to the third party's obligation, should not be enforced by proceedings other than prosecution under sub-s. (2)." (at 24-25)

It would seem to follow that, if otherwise appropriate (for instance, if there was some utility in so declaring), the third party could, in case of doubt, move a civil court of competent jurisdiction for a declaration that the notice was invalid. It would further seem to follow that any other party with a sufficient interest in the matter could also seek similar relief (see Federal Commissioner of Taxation v Biga Nominees Pty. Ltd. [1988] VR 1006; Inland Revenue Commissioners v National Federation of Self-Employed and Small Business [1982] AC 617; cf. Bennett Honda Pty. Ltd. v Borg Warner Acceptance Corporation (Australia) Ltd. (1985) 7 FCR 31). It would also seem that the grounds of invalidity that could be raised would include a challenge brought on the basis that there had been an arbitrary or improper use of the power which, as has been noted, is analogous to that of a garnishee, something that the courts have traditionally supervised (see Edelsten v Wilcox 88 ATC 4,484 per Burchett J. at 4,495; and see, generally, on the grant of relief against abuse of an administrative process, Walton v Gardiner (1993) 177 CLR 378). It would follow, in our view, that Sunrise would have standing, for present purposes, to complain, for instance, that the power to issue the s.218 notice had been used arbitrarily or oppressively, such that no reasonable person could reasonably have so acted. (2) Justiciability, including jurisdiction, and the operation of s.177(1) The next issue to be considered is the justiciability of Sunrise's claims. There are two possible aspects here. One is "non-justiciability" in the broad sense, that is, an area where the courts will not enter on policy grounds, for instance, because a "political question" is involved (see Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd. (1987) 15 FCR 274 per Wilcox J. at 304-5). This is not, and could not be, suggested here. Another possible aspect of "non-justiciability" is the narrower question of a possible lack of jurisdiction in the Court to entertain the claim. As we followed the argument, this is not suggested by the Commissioner either. In our view, the Commissioner was correct to accept this in the light of the reasoning and decision in Walter. That is to say, in our opinion, the Court has jurisdiction to entertain the present matter, which arises under s.218 of the Act, but may only do so subject to the application of s.177(1), to be applied in the light of the Hickman principle. In other words, the Court has, technically speaking, jurisdiction to entertain a claim that a notice under s.218 is invalid, including a claim that the issue of such a notice was oppressive; but, in practical terms, the substantive issue of the correctness of the notice of assessment, in terms of the correctness of the amount of the tax and its particulars, is upon its tender, substantively (if not adjectivally) foreclosed, at least in the absence of an allegation that the making of the assessment was vitiated by fraud, or otherwise failed to satisfy the Hickman criteria. We would add that, as already noted, although s.177(1) is facultative, it may, in our view, be availed of in any proceedings (other than, of course, a review or appeal under Part IVC) in which the amount of the tax or its particulars is an issue, including but not limited to, proceedings in which the taxpayer is a party. Thus, in this context, Sunrise is, in our view, in no different a position than that of Mr. Radisich. Put in other words, upon the tender of the notice of assessment then, provided it is within the limits of the Hickman principle, both Sunrise and the taxpayer are bound to accept its correctness, in amount and particulars, unless Mr. Radisich seeks review or appeals under Part IVC. In short, Sunrise can be in no better position than the taxpayer to mount a collateral challenge to the notice of assessment, provided the Hickman criteria are observed. Of course, if those criteria are not satisfied, judicial review may be sought by Sunrise, as well as by Mr. Radisich, as both would be detrimentally affected. (3) Proposed order answering the separate question Accordingly, we would vary the answer to this question made at first instance in accordance with the observations of Brennan J. in Walter (at 239) cited above, by answering it instead as follows:

"The Court has jurisdiction to entertain Sunrise's claims, but the scheme of the Act is to protect the validity of notices of assessment while allowing a taxpayer a full opportunity to have the general provisions of the Act affecting tax liability applied by invoking the review or appeal procedures provided in Part IVC of the Taxation Administration Act; and, the term `due making of the assessment' in s.177(1) extends to every purported exercise of the power to ascertain the taxable income and tax liability of a taxpayer which satisfies the criteria expressed by the Hickman principle." THE COMMISSIONER'S APPEAL ON THE ORDER FOR PARTICULARS As a consequence of holding that he had jurisdiction to entertain Sunrise's claims, Spender J. ordered the Commissioner to provide particulars of his assessment. In the light of our earlier conclusions, it would seem (although it is not yet certain) that this point will become of academic interest only. Accordingly, we would stand this appeal (No. QG163 of 1994) over generally, but reserve liberty to either party to restore it to the list on 28 days' notice. COSTS We would reserve liberty to either party to apply for costs by written submission filed and served within 28 days of publication of reasons in these appeals. I certify that this and the preceding forty-nine (49) pages are a true copy of the Reasons for Judgment herein of their Honours Justice Beaumont and Justice Beazley. Associate Dated: 28 November 1995

IN THE FEDERAL COURT OF AUSTRALIA) No. QG 122 of 1994 QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: SUNRISE AUTO LIMITED Appellant AND: DEPUTY COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA) No. QG 129 of 1994 QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: DEPUTY COMMISSIONER OF TAXATION Appellant AND: SUNRISE AUTO LIMITED Respondent IN THE FEDERAL COURT OF AUSTRALIA) No. QG 163 of 1994 QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION )

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: DEPUTY COMMISSIONER OF TAXATION Appellant AND: SUNRISE AUTO LIMITED Respondent

Coram: Beaumont, Drummond and Beazley JJ Place: Brisbane Date: 28 November, 1995 REASONS FOR JUDGMENT DRUMMOND J: I have had the benefit of reading, in draft, the reasons of Beaumont J. I agree, for the reasons given by his Honour, that an affirmative answer should be given to the first question "Were the assessments served in accordance with the regulations?" and that the appeal by Sunrise Auto Limited ("Sunrise") on this question should be dismissed. The second question raised by the Deputy Commissioner of Taxation's ("the Commissioner") appeal is: "Was it open to Sunrise to have determined in these proceedings the question whether the provisions of s. 128B(3)(h)(ii) applied to the income earned by Mr. Radisich by way of the interest payable by reason of the subject transactions?" In its further amended statement of claim, Sunrise alleges: "12.Further, or alternatively, Radisich was not, for the purposes of s. 218 a taxpayer as defined by the provisions of the Income Tax Assessment Act in that the provisions of s. 128B(3)(h)(ii) did not, at any material time, apply.

Particulars (a) Radisich was a non resident; (b) Radisich was not carrying on business in Australia at or through a permanent establishment in Australia. 13. In the premises the notice issued pursuant to s. 218 was of no force and effect."

In its amended defence, the Commissioner responded as follows: "10.In answer to the matters alleged in Paragraphs 12 and 13 of the Amended Statement of Claim the First Respondent says that he objects in point of law to those matters on the grounds that the matters alleged therein may only be raised in proceedings pursuant to Part IVC of the Taxation Administration Act and may only be raised by the Second Respondent Radisich and not by the Applicant. 11. Further the First Respondent does not admit the matters of fact alleged in Paragraphs 12 and 13 of the Amended Statement of Claim."

Counsel for Sunrise explained the point raised as follows: Mr. Radisich was assessed to tax at ordinary rates under s. 25(1) the Income Tax Assessment Act 1936 (Cth); he should not have been so assessed because he was a non-resident and the interest-income in question was not derived by him in carrying on business in Australia from a permanent establishment here. Assuming (contrary to what was alleged in Sunrise's pleading) that it was Mr. Radisich and not Sunrise who was beneficially entitled to the moneys on deposit with the bank, he was liable to pay only withholding tax and it was said that the Commissioner cannot use a s. 218 notice to collect withholding tax. I do not accept this argument. Division 11A of Part III the Income Tax Assessment Act deals with, among other things, withholding tax payable on interest income derived by non-residents from sources in Australia. By s. 128B(5), a person who derives interest income to which s. 128B applies is liable to pay "income tax" upon that interest income. That "income tax" is described in s. 6(1) as "withholding tax". By force of s. 128B(2)(b)(i), s. 128B subjects to withholding tax the interest income of a non-resident paid by an Australian resident [which would include the Commonwealth Bank of Australia: s. 128B(1A)]. As a general rule, interest income derived in Australia by a non-resident on which withholding tax is payable is not assessable to income tax under the general provisions of the Income Tax Assessment Act: s. 128D. However, if interest income paid by an Australian resident bank to a non-resident consists of income derived by the non-resident in carrying on business in Australia at or through a permanent establishment of the non-resident in Australia, s. 128B does not apply and withholding tax is not payable on such interest: s. 128B(3)(h)(ii). That interest income would be assessable as income of the non-resident under the general provisions of s. 25(1)(b) and taxable at ordinary rates. Division 4 of Part VI makes provision for the collection of withholding tax. The bank, in the circumstances of this case, was obliged by s. 221YL(2A) of Division 4 of Part VI to deduct withholding tax before paying any of the interest in question to Mr. Radisich. But the primary liability to pay withholding tax is imposed by s. 128B(5) on the non-resident recipient, Mr. Radisich. Contrary to what was submitted, s. 218(6B) does not exclude a person liable to pay withholding tax from the operation of that section: this sub-section contains a definition of "tax" for the purposes of s. 218 that extends the meaning of that term as defined in s. 6(1) to liabilities that would not otherwise fall within it. For example, s. 218(6B) defines "tax" to include, for the purposes of s. 218, penalty interest payable under s. 207A on unpaid tax (para. (ba) of the definition) and a judgment for costs in respect of tax (para. (c)(i) of the definition). Section 218(6B) also extends the term "tax" in respect of which a s. 218 notice can be issued to include, by para. (b) of the definition, the amount of withholding tax which a person in the position of the bank here is required, by s. 221YL(2A) of Division 4 of Part VI, to deduct from interest payable by it to Mr. Radisich, as a person shown in the bank's books as having an address outside Australia; s. 218(6B) thus defines "tax" in such a way as to entitle the Commissioner, by a s. 218 notice issued to a stranger, to collect from that stranger the amount which a person in the position of the bank here is obliged, by s. 221YL(2A), to deduct from interest payable to a person like Mr. Radisich, provided the stranger owes money to the bank. The mirror definitions of "tax" and "taxpayer" in s. 218(6B) do not exclude from the reach of s. 218 persons liable under s. 128B(5) to pay withholding tax. I reject the submission by counsel for Sunrise that s. 218 is not available to the Commissioner as a tool for collecting withholding tax, if that is payable by Mr. Radisich pursuant to s. 128B(5): s. 128A(4) expressly declares withholding tax to be "tax" which the Commissioner can collect from a third party by way of statutory garnishee under s. 218. The allegations pleaded in paragraphs 12 and 13 of Sunrise's statement of claim, if made out, cannot, in my opinion, assist Sunrise in attacking the s. 218 notice on the ground pleaded. Even if Sunrise could prove the facts pleaded in sub-paragraphs (a) and (b) of paragraph 12 of its statement of claim, that would not establish that Mr. Radisich was not a "taxpayer" for the purposes of s. 218: he was a taxpayer within the meaning of that term in s. 218 of the Act, either because he was a person who derived income and who was liable, by force of s. 128B(5), to pay income tax, in the form of withholding tax, on that income or he was a taxpayer who derived income assessable under s. 25(1)(b) and was taxable accordingly. The matters raised by Sunrise in its pleading which are said to show that the s. 218 notice is ineffective to compel the bank to pay to the Commissioner the moneys held by it in Mr. Radisich's name, are thus irrelevant to that issue.

Even if Sunrise were to amend its statement of claim to raise for determination whether Mr. Radisich should be assessed to tax at the lower rate at which withholding tax is assessed, rather than at general rates at which the Commissioner has assessed him, that would not be an issue of any relevance to the bank's obligation to pay to the Commissioner the full amount demanded by the s. 218 notice. Sunrise acknowledges that s. 177(1) prevents Mr. Radisich challenging the assessments otherwise than in Part IVC proceedings, but contends that Sunrise itself is free to challenge them. Even if this contention is correct, that could not, I think, assist Sunrise here: the bank will still be obliged by the s. 218 notice to pay over to the Commissioner all the moneys demanded by the notice. Section 218 does not impose an obligation on the bank to pay to the Commissioner only so much of the moneys demanded as the bank holds on behalf of Mr. Radisich as are truly exigible from him for tax: the section obliges the bank to pay to the Commissioner so much of the moneys it holds for Mr. Radisich as are sufficient "to pay the amount due by the taxpayer in respect of tax" i.e., due in the sense of owing, although not necessarily presently payable, at the time the s. 218 notice is served - Clyne v Deputy Commissioner of Taxation (1981) 150 C.L.R. 1 at 10, 17, 23, 24 - and which remains owing by the taxpayer from time to time - Commissioner of Taxation v Government Insurance Office (NSW) (1993) 45 F.C.R. 284 at 299. It has long been recognised that what is truly exigible from a person for tax may be quite different from the tax that is due, in the sense referred to, by that person at a particular time: for example, it is well-established that the fact that the Commissioner assesses two different persons to tax on the same income in circumstances in which those assessments are mutually inconsistent provides no evidence of bad faith on the part of the Commissioner in exercising his power of assessment and each is legally obliged to pay the amount assessed. See Deputy Commissioner of Taxation v Richard Walter Pty. Ltd. (1995) 69 A.L.J.R. 223 at 240-241, 250 and 256-7. This is a consequence of the fact that the Commissioner can make a valid assessment, even though he is not in possession of all the material facts that govern the particular person's true liability to tax: see Richard Walter, supra, at 240. Money is due, in the sense of owing, by a taxpayer in respect of tax once the Commissioner makes an assessment under the provision here relevant, s. 167, and serves the taxpayer with notice of that assessment (although it only becomes payable on the date fixed by the notice or by s. 204, if no date is so fixed). See ss. 204(1), 208(1) and Commissioner of Taxation v Prestige Motors Proprietary Limited (1994) 181 C.L.R. 1 at 13; Clyne, supra, at 16. The legal consequence given by s. 204(1) to service of a notice of assessment on a taxpayer has been described as completing the process of assessment provided for by provisions such as ss. 166 and 167 by bringing about "an `ascertainment' of the taxable income and of the tax, in the sense that thereafter it is possible to say what could not have been said before: that amounts have been fixed so that they are to be taken for all purposes (except those of appeal: see s. 177) to be the result flowing from the application of the Act in the particular case": per Kitto J in Batagol v Commissioner of Taxation (1963) 109 C.L.R. 243 at 252, cited by Mason CJ and Brennan J in Richard Walter, supra, at 229 and 235, respectively. The agreed facts include the fact that assessments were made under s. 167 by the Commissioner of Mr. Radisich's taxable income and of the tax payable by him thereon, which tax totals the amount referred to in the s. 218 notice given to the bank; notice of that assessment was validly served on Mr. Radisich, prior to service of the s. 218 notice on the bank. Mr. Radisich can contest the amount he is truly liable to pay to the Commissioner in proceedings which he can bring under Part IVC the Taxation Administration Act 1953 (Cth). He has objected to each of the assessments; the Commissioner has not yet made his decision on any of these objections. But until such a challenge is determined, the amounts stated in the notices of assessment served on Mr. Radisich remain "due by the taxpayer in respect of tax" within the meaning of that expression in s. 218: see ss. 14ZZM and 14ZZR the Taxation Administration Act (which replaced s. 201 the Income Tax Assessment Act). Even if Sunrise has evidence showing that these assessments were wrong and that Mr. Radisich owed nothing, or only lesser amounts than those set out in the notices of assessment, the amounts assessed would still remain due at law by Mr. Radisich in respect of tax. (The Commissioner might encounter difficulty enforcing any judgment he might obtain against Mr. Radisich before the issue of Sunrise's entitlement to the income in question was determined or before Mr. Radisich's own challenge under Part IVC to the assessments, foreshadowed by his objections to them, was finalised. Cf. Richard Walter, supra, at 241; Snow v Deputy Commissioner of Taxation (1987) 70 A.L.R. 672 at 692-3 and Ahern v Deputy Commissioner of Taxation (1987) 76 A.L.R. 137 at 148. But that would not affect Mr. Radisich's liability to tax created by the Commissioner making the assessments in question and serving the relevant notices of assessment.) Of course, if a challenge by Mr. Radisich to the assessments under Part IVC were successful, the final order made in the proceedings under Part IVC upholding the challenge would determine "the amount due by the taxpayer in respect of tax" for all purposes, including s. 218: Commissioner of Taxation v Government Insurance Office (NSW), supra, at 298-9. The Commissioner would be bound, once the matter was finally determined as between the Commissioner and Mr. Radisich, to amend any s. 218 notice the Commissioner may have issued in respect of the tax originally demanded and which then remained due but unpaid, pursuant to the power to amend in s. 218(1). Sunrise, as the entity claiming beneficial ownership of the funds held by the bank in Mr. Radisich's name, has standing to challenge the validity of the s. 218 notice. One issue it raises is that the notice cannot require the bank to pay any of the moneys demanded by the notice to the Commissioner because those moneys do not belong to Mr. Radisich, who alone has been assessed to tax, but to Sunrise. It is open to Sunrise to attack the notice on that ground, as the learned primary judge held. Such an attack, if successful, would deprive the notice of its compulsive effect on the bank, provided it could be said that, for that reason, no moneys were "due", within the meaning of that term in s. 218(1)(a), by the bank to Mr. Radisich and that the bank did not hold the moneys in question "for or on account of" Mr. Radisich, within the meaning of that expression in s. 218(1)(b). But, even if Sunrise has evidence sufficient to show in the present proceedings it has instituted against the Commissioner that Mr. Radisich was not truly liable to pay any tax or only liable to pay a lesser amount of tax than that referred to in the notice, that could not alter the operation of ss. 204 and 208 the Income Tax Assessment Act and Part IVC, including ss. 14ZZM and 14ZZT, the Taxation Administration Act, as between Mr. Radisich and the Commissioner: the full amounts referred to in the notices of assessment served on Mr. Radisich would continue to be "due by the taxpayer in respect of tax" within the meaning of that expression in s. 218(1) the Income Tax Assessment Act unless and until Mr. Radisich could show in proceedings brought by him under Part IVC the Taxation Administration Act that nothing or only some lesser sum was so due by him. Any evidence going only to Mr. Radisich's own liability to pay tax, if tendered by Sunrise, would therefore be inadmissible in the present proceedings as irrelevant to any of the issues which it is open to Sunrise to rely on to attack the validity of the notice. It is thus unnecessary, in order to dispose of this appeal, to determine whether s. 177(1) operates to prevent not only a taxpayer, but also a third party from challenging the amount truly due by a taxpayer for tax in any proceedings other than proceedings brought by the taxpayer under Part IVC the Taxation Administration Act, including proceedings brought by the taxpayer or a third party to challenge the validity of a s. 218 notice. I note that it is not suggested by Sunrise in its pleading that the Commissioner issued the s. 218 notice here in question for any improper purpose. The power conferred by s. 218, like any statutory power, can only lawfully be used for the purposes authorised by the statute. It cannot lawfully be used by the Commissioner for "improper or collateral purposes": see F.J. Bloemen Proprietary Limited v Commissioner of Taxation (1981) 147 C.L.R. 360 at 375. In particular, it cannot be used to obtain payment, not of the tax payable by the taxpayer in question, but of tax payable by another person: see Edelsten v Wilcox (1988) 88 A.T.C. 4,484 at 4,496. The absence of any allegation of bad faith affecting the issue of the s. 218 notice may be explained by the factual situation recorded in the statement of agreed facts, which would make it difficult to sustain such a challenge: the funds were deposited by Mr. Radisich himself in his own name and interest earned was either credited to another account in Mr. Radisich's name or re-invested with the capital sum in Mr. Radisich's name; there is no reference in the bank's records to Sunrise having any interest in either the capital sum or any of the interest earned. It was against this background that the default assessments under s. 167 were made and notices of assessment served on Mr. Radisich. It was not until delivery of Mr. Radisich's objections to the assessments that there was any reference to Sunrise or to it having an interest in the moneys in question. The second question was raised by the Commissioner's appeal against the decision of the learned primary judge striking out paragraph 10 of his amended defence. For the reasons given, I consider that paragraph 12 of the applicant's further amended statement of claim, to which paragraph 10 of the Commissioner's amended defence was the response, does not raise for determination any issue which could, if found in Sunrise's favour, entitle it to the relief sought (or which might be sought), viz., a declaration of the ineffectiveness of the s. 218 notice to compel the bank to pay to the Commissioner the whole of the amount demanded by that notice. This paragraph of Sunrise's statement of claim should itself be struck out under O. 11, r. 16(a). Paragraph 10 of the amended defence can therefore be seen to be irrelevant to any of the issues for determination in the litigation. It is for this reason only that I would therefore dismiss the Commissioner's appeal. The Commissioner also appealed, with leave, the order of the learned primary judge directing the Commissioner to provide particulars of the assessments against Mr. Radisich. It follows from what I have said about the issue of the true extent of Mr. Radisich's indebtedness for tax being irrelevant to the issue of the validity of the s. 218 notice that this appeal should be allowed. I certify that this and the preceding 13 pages are a true copy of the reasons for judgment herein of the Honourable Justice Drummond.

Counsel and Solicitors Ms. E.M. O'Reilly for Appellant instructed by Hopgood & Ganim (Sunrise Auto Limited): Counsel and Solicitors Mr. G. Nettle Q.C. with for Respondent Mr. P.E. Hack instructed by (Deputy Commissioner of Australian Government Taxation): Solicitors Office Date of hearing: 27 April 1995 Date Judgment delivered: 28 November 1995

Assessment Act 1936(Cth)

Part IVC the Taxation Administration Act 1953(Cth)

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