FEDERAL COURT OF AUSTRALIA

Engler v Commissioner of Taxation (No 3) [2003] FCA 1571

PRACTICE AND PROCEDURE – pleadings -  whether any reasonable cause of action – whether statement of claim should be struck out – litigants in person – long running proceedings – unsupported allegations of bad faith and fraud – audit of taxation affairs – issue of amended assessments – statement of claim struck out – application dismissed – no issue of principle

Income Tax Assessment Act 1936 (Cth)

Engler v Commissioner of Taxation (No 2) [2003] FCA 411 cited

Engler v Commissioner of Taxation [2002] FCA 226 cited

CLAUDIA CHARLOTTE ENGLER and JEFFREY KENNETH GATES v COMMISSIONER OF TAXATION

W245 OF 2001

FRENCH J

23 DECEMBER 2003

PERTH

THE COURT ORDERS THAT:

1.         The statement of claim be struck out.

2.         The application be dismissed.

3.         The applicants are to pay the respondent’s costs of the proceedings.

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

REASONS FOR JUDGMENT

ON MOTION TO STRIKE OUT STATEMENT OF CLAIM

Introduction

1                     Claudia Engler and Jeffrey Gates sue the Commissioner of Taxation in respect of audits of their taxation affairs and the issue of various amended assessments in September 1998.  They have however had great difficulty in formulating a viable statement of claim despite assistance from three different legal practitioners, two of whom acted on a pro bono basis.  Their pleadings and their submissions disclose a firm belief that they have been the subjects of systematic and continuing dishonesty by the Commissioner of Taxation and his office under the protection of the Court, the government and the Taxation Ombudsman. 

2                     The Commissioner of Taxation now moves for an order that the latest version of their statement of claim be struck out and that the proceedings be dismissed generally.  In respect of this motion I directed the filing of written submissions on the basis that I would decide the motion on the papers.  For the reasons that follow, in my opinion, the statement of claim should be struck out and the application dismissed generally with costs.

History of the Proceedings

3                     This long running application has been brought by the applicants, as litigants in person, against the Commissioner of Taxation.  They relate to the conduct of an audit of their tax affairs and the issue, in September 1998, of notices of amended assessment of their liabilities to income tax.  The proceedings were commenced on 18 June 2001.  Their history, up to this point, is set out in my reasons for judgment delivered on 6 May 2003 when I ordered that the applicants’ previous statement of claim be struck out – Engler v Commissioner of Taxation (No 2) [2003] FCA 411.  It is not necessary to repeat that history here. 

4                     The judgment of 6 May 2003 was the second interlocutory judgment delivered in these proceedings.  In the first judgment, given on 8 March 2002, I ordered that the application be struck out subject to leave to file an amended application following the determination of proceedings then pending in the Administrative Appeals Tribunal – Engler v Commissioner of Taxation  [2002] FCA 226.  The orders made on 6 May 2003 were in the following terms:

‘1.        The statement of claim filed on 5 March 2003 is struck out.

2.         If it be the applicants’ contention that the notices of amended assessment referred to in paragraph 9 of the statement of claim were issued other than in good faith, there is liberty to amend the statement of claim on or before 6 July 2003 to raise such an allegation.

3.         Any additional pleading of want of good faith will not exceed two pages inclusive of particulars.

4.         The applicants are to pay the respondent’s costs of the motion of 25 March 2003.

5.         The applicants’ motion filed 31 March 2003 is dismissed.

6.         The applicants’ motions filed 6 December 2002 and 14 March 2003 are adjourned to the next directions hearing.

7.         The directions hearing is relisted for 11 July 2003 at 9am.’

5                     On 12 May 2003, Mr Birmingham QC agreed to accept a referral, under O 80 of the Federal Court Rules to act on a pro bono basis for the applicants.  This was the second referral to a pro bono practitioner.  The first practitioner, Ms Searle, obtained leave from the Registrar to withdraw her pro bono services on 5 March 2003.  Mr Birmingham was given leave to cease to provide legal assistance on 18 June 2003. 

6                     A statement of claim was filed on 7 July 2003 purportedly pursuant to the orders which I made on 6 May 2003.  It was filed by the applicants in person.  On 8 July 2003, Murfett & Co, Solicitors, filed a notice of appointment as solicitors for the applicants.  At a directions hearing on 11 July 2003, a motion filed on 13 May 2003, seeking my removal from the proceedings on the grounds of bias, was dismissed by consent without prejudice to the applicants’ rights to renew the motion.  On the same day orders were made pursuant to a motion filed on 10 July by Murfett & Co on behalf of the applicants in the following terms:

1.         The applicants be at liberty to file and serve a substituted statement of claim prepared by their solicitors and/or counsel on or before 8 August 2003.

2.         The directions hearing is adjourned to 21 August 2003 at 9.30am.

3.         The costs of the motion be in the cause.

7                     On 6 August 2003, the applicants filed a ‘Notice of Change of Appearance’ notifying the Court that they appeared on their own behalf.  On 7 August 2003, their solicitors filed a notice that their authority had been determined by the applicants. 

8                     On 21 August 2003, at a directions hearing I made orders in the following terms:

‘1.        The application is to stand dismissed unless on or before 21 October 2003 the applicants have filed and served a new substituted statement of claim on the basis of, and limited to, their contentions that the amended assessments and assessments the subject of the application were issued other than in good faith.

2.         The parties are referred to mediation before the District Registrar or such other person as he may direct.

3.         The directions hearing is adjourned to 28 October 2003 at 9am.

4.         Costs today are reserved.’

9                     On 21 October 2003, a statement of claim some 57 pages long together with three schedules of particulars comprising a total of 24 pages was filed.  At the same time the applicants filed an affidavit sworn by Mr Gates.  On 29 October 2003 the Commissioner of Taxation filed a motion seeking an order that the statement of claim be struck out pursuant to O 11 r 16 and O 20 r 2 of the Federal Court Rules.  The motion also sought an order that the amended application dated 31 January 2003 and the proceedings generally be dismissed or permanently stayed. At a directions hearing on 31 October 2003 I made the following orders:

‘1.        The respondent is to file and serve written submissions in support of his motion within 14 days.

2.         Any submissions in response to be filed and served within 14 days thereafter.

3.         Judgment will be given on the papers and the written submissions.’

10                  The applicants filed written submissions on 4 November 2003, in advance of any submissions filed by the respondent.  The submissions make no attempt to address the motion.  Rather they allege that the Commissioner, through the Australian Government Solicitor, has ‘wilfully lied’ in this Court about the second applicant’s taxation affairs.  They allege that the Court ‘has simply aided the Respondent by refusing to grant discovery, thereby making the Respondent’s deceptions even harder to work out by the Applicants’.  They allege a ‘continual trail of deceit and lies’.  They assert that the Commissioner is being protected by the Court, the government and the Taxation Ombudsman.  They say that ‘the evidence is clear and unambiguous’ that since 1992 the Commissioner’s delegated officers have been dishonestly dealing with their taxation affairs.  They say:

‘If this Court is intent on aiding the Respondent to further defraud the Applicants, then the Applicants would rather have it happen right now and the Court get on with it.’

Other allegations and contentions in similar vein were contained in this ‘submission’. 

11                  The respondent filed a substantive submission on 14 November 2003 setting out its reasons for contending that the statement of claim should be struck out and the application dismissed.  On 17 November the applicants filed a further written submission asserting that the respondent’s submission was ‘ridiculous’ and  failed to deny any of their substantive claims.   

12                  On 3 December 2003, the applicants attempted to file a motion seeking ‘an urgent decision’ on the strike out motion.  The motion also sought interim orders ‘… including a minimum amount of interim losses and damage so (sic) protect the rights of the Applicants from suffering further unnecessary losses and damages’.  I directed the Registry not to accept the motion for filing.

The Statement of Claim

13                  The content of the statement of claim is outlined in the following paragraphs.  The outline is not intended to be comprehensive but to capture the essentials of the pleading.

14                  The Statement of Claim begins by identifying the parties, including a ‘third applicant’ not named in the heading. This is evidently a reference to the applicants trading in partnership (SC 1-3).  The ‘POSITION OF THE RESPONDENT’ is pleaded under that heading.  This is a series of contentions about various duties and powers of the Commissioner (SC 4).  The ‘position of the First Applicant’ is set out in par 5 of the statement of claim.   This alleges representations and warranties by officers of the respondent on a variety of matters expressed, for the most part, with a high degree of generality.  It includes an alleged warranty that if the first applicant were to be audited the Commissioner’s officers would not normally take very long as most things were known even before an audit was started, any errors made in the past were required to be brought to her attention if substantive changes were required and that sometimes audits just ended without the taxpayer being notified (SC 5.13).

15                  The ‘position of the Second Applicant’ is the heading for pars 6 to 8.  These assert that the second applicant received ‘limited training as a delegated officer of the Respondent’ between 1989 and 1992.  They allege various representations and warranties made to the second applicant by ‘delegated officers of the Respondent’ during that time including a representation that, within about three years of the second applicant resigning (from the ATO), ‘the Respondent would come and give him a good going over’. 

16                  Paragraphs 9 to 12 of the statement of claim deal with what is called ‘the Third Applicants position’ (sic).  This part of the statement of claim refers to the partnership formed by the first and second applicants, their goals expressed in fairly general terms and their intention that the structure of the partnership would allow each of them to earn an income outside its framework.  It is also alleged that the first and second applicants entered into the partnership on the faith of the representations pleaded in the earlier parts of the statement of claim.

17                  Paragraphs 13 to 15 appear under the title ‘THE 1992 TO 1994 LODGEMENT HISTORY’.  Subparagraphs 13.1 and 13.2 allege that the first applicant lodged her income tax return and later, ‘self-assessments’ for the financial years ended 30 June in the years 1992 to 1994 inclusive.  These subparagraphs include particular references to checking specific details or documents relating to each of those years.  All of the returns and self- assessments referred to are said to have been processed.  The first applicant also pleads, in par 13.2, that she applied to the Department of Social Security, using her tax file number, for the assessment of family benefits in 1992 and 1993.  The second applicant lodged his income tax return and self-assessments for the years 1992, 1993 and 1994 and they were all processed.  He also used his tax file number to apply to the Department of Social Security for benefits in 1993 and 1994.  This meant that all his details were forwarded to the respondent. In par 13.5 there is reference to the lodgment by the partnership of its income tax return and self-assessments for the years 1992, 1993 and 1994. 

18                  The next heading which covers pars 14 and 15 is entitled ‘THE 1992 TO 1994 ISSUED ASSESSMENT HISTORY’.  In par 14 it is said that from about 10 September 1992 the respondent issued notices of assessment to the first applicant for the years 1992, 1993 and 1994 .  The respondent also issued a notice to the second applicant in accordance with the 1992 return and the 1993 and 1994 self-assessments for the years 1992 to 1994 inclusive.  On or about 28 October 1992 the applicants received a private ruling.  Within the relevant periods no notices of assessment were issued to the third applicant (par 14.4).  The applicants say that at all material times acting on the faith of the various representations and warranties alleged earlier, they ‘continued throughout those years 1992, 1993, 1994 and 1995 as normal and using the TFN referred to in paragraph 13.5a(i) herein’.

19                  Paragraphs 16 to 21 appear under the heading ‘THE AUDIT, ASSESSMENT PROCESS AND ISSUED ASSESSMENT’.  The section begins with an allegation that, in 1995, the respondent’s officers warranted to the first applicant that he had decided to audit her taxation affairs for the years 1992 to 1994 with respect to primary production (PP) claims and record keeping.  The applicants say, inter alia, that this notification or representation meant that the respondent had commenced the process of assessment and that the partnership was under audit as it was engaged in the PP activities to be assessed.  Relying upon these representations the applicants agreed not to lodge any further self-assessments until the audit was over.  The first applicant complied with the audit as requested and supplied further information concerning herself and the partnership and did not hear from the respondent again (SC 18).

20                  On the faith of the respondent’s silence since about April 1995 the applicants say they believed the audit had ended so that the partnership concluded its books for that financial year and the first applicant lodged her ‘self-assessment’ for the year 1995 (SC 19).  On or about 26 July 1995 the respondent issued the first applicant with a notice of assessment which was not objected to.  This was said to mean that the process of assessment had been completed and that because of ss 175 and 177 of the Income Tax Assessment Act 1936  (Cth)‘… the First Applicant’s 1992 to 1994 assessments … were deemed the Respondent’s assessments’.  The first applicant and the partnership were said to have had ‘certainty and finality’ that their past assessments had complied with the Act as did the second applicant in respect of income distributed to him from the third applicant.  The notice of assessment was said to be in effect a private ruling (SC 21).

21                  Paragraphs 22 to 32 encompass what is called ‘THE POST AUDIT HISTORY’.  The sequence of events set out in these paragraphs is lengthy and convoluted.  They may be summarised as follows:

1.         Mr Peter Sullivan, an officer of the respondent, contacted the first applicant in November 1995 and told her that he and Mr Peter Dwyer, another officer, had been delegated to take over the audit of her tax affairs which were still in effect (SC 22-24).

2.         Between November 1995 and January 1996 there were further conversations between officers of the respondent and the first and second applicants and there were documents exchanged.  On 11 January 1996, the respondent’s officers notified the applicants that their taxation affairs for the years of income 1992 to 1995 were subject to audit.  This notification is said to have been a representation and warranty.  It was a representation which meant, inter alia, that the respondent had dealt with the applicants since 1992 ‘… in accordance with the Act’ and had issued notices of assessment to the second applicant for the years 1992 to 1994 which the respondent was seeking to review for the purposes of the Act.  Moreover it is said to have  involved a representation that, if the respondent were aware of any irregularities in the affairs of the second and third applicants prior to that time, these would be brought to their attention and explanations sought.  The respondent would comply with his statutory duty and the applicants should believe they were undergoing a normal audit (SC 27).  On the faith of these representations and earlier representations pleaded the applicants say they ‘continued as normal and did as required’. 

3.         On or about 18 January 1996, the first applicant spoke to Mr Sullivan who made a number of statements to her.  He allegedly told the first applicant that the reason she had been chosen for audit was because of a PP project and that she had received distributed losses from the partnership, which was also the subject of audit.  She said she wanted to get all the necessary documents and only visit auditor’s offices once ‘….where all matters of concern were raised at that time’.  Various representations were said to arise out of this conversation (SC 30).

4.         On 13 February 1996, Mr Sullivan and a Ms Sabre from the Australian Taxation Office conducted a recorded audit interview with the first applicant in the presence of the second applicant.  This took about one and a half hours and covered many matters upon which, it is said, the respondent was able to make an assessment additional ‘to all the First, Second and Third Applicants (sic) returns and self assessments since 1992…’.  Particulars are given of matters raised in the audit interview (SC 31).  In par 32 it is said that there are ‘representations and warranties referred to in paragraph 31’.  No representations or warranties are pleaded in par 31.

5.         On 19 February 1996, the first applicant sent a fax to Mr Sullivan stating that she had received board from the second applicant and that for the relevant years she did not claim car expenses she believed that she had, but they might have been included under another section of the returns.  In the fax she allegedly asked Mr Sullivan if he wanted to list her role in the partnership.  She provided information concerning the rent from her house which was not rented in the review period.  She pointed out that the second applicant had asked about six times for a copy of a s 169A ruling which had never been provided.

6.         On 26 February 1996 officers of the respondent allegedly conducted a recorded audit interview with the second applicant ‘and thereafter the Third Applicant in the presence of the First Applicant’.  Full and true disclosures of matters and information are said to have been made.  Subparagraphs of par 34 set out various matters and documents disclosed and provided by the applicants to the respondent at that time.   Mixed up in this paragraph is an allegation that the respondent was deceiving the applicants about their taxation affairs and that the purported notice of assessment issued in 1992 was not a notice of assessment or that the respondent had not been complying with s 17 of the Act.  Particulars are set out at some length. 

7.         Acting on the faith of the representations and warranties earlier pleaded, the applicants say they ‘continued as done since 1992’. 

8.         The applicants allege that, from July 1996, they ‘legitimately and reasonably’ expected the audits had been completed and that they had not heard from the respondent for about four months.  They finalised their 1996-year accounts and proceeded into 1997.  The second applicant got in touch with the respondent and was told what amount of carry forward losses were available to him from the 1994 year. 

9.         Again, in par 38, there is reference to representations and warranties in par 37  notwithstanding that no representations or warranties are pleaded there.  Nevertheless in reliance upon representations, which are not pleaded, the second and third applicants say they completed their 1995 and 1996 self-assessments. The first applicant completed her self-assessment for the 1996 year.

10.       In October 1996, according to par 39, the applicants decided to try to start exploring new opportunities for work and agreed that the first applicant might try working in Kalgoorlie.

11.       Paragraph 40 turns to the lodgment by the first applicant of her ‘self-assessment’ for the 1996 year which was lodged on 8 October 1996.  On or about 29 October 1996 the second applicant and the partnership lodged self-assessments variously covering 1995 and 1996 years. 

12.       On 6 November 1996, the respondent issued the first applicant with a notice of assessment for that year which has not been objected to (SC 42). 

13.       Paragraph 43 alleges action on the faith of representations and warranties some of which are pleaded earlier and some purportedly identified by reference to paragraphs in which no representations are alleged.  On the strength of all of these representations it is said the applicants expected the respondent had issued notices of assessment to the second applicant for the years 1995 and 1996 and ‘… they continued as normally done since 1992 through further into the 1997 (sic).’

14.       From November 1996 the applicants prepared to move to Kalgoorlie and informed an officer of the respondent that they were doing so (SC 44).  They arrived in Kalgoorlie on or about 6 January 1997 (SC 45).  Again, allegedly acting on representations and warranties made by officers of the respondent, they ‘continued as normal throughout 1997 (sic) year and continued into the 1998 years as always done with confidence…’.

15.       On or about 13 April 1998, after hearing nothing the first applicant (it seems although it is not expressly pleaded) contacted Ms Briggs at the office of the respondent who ‘represented and warranted’ that further information had to be supplied concerning a superannuation payment and that the first applicant’s self-assessment had been sent to another section to find a missing group certificate before it could be processed and issued (SC 47).

16.       Acting on the faith of the representations and warranties referred to in the preceding paragraph it is said that the first applicant tried to obtain the relevant superannuation payment certificate and told Ms Briggs she was having difficulty getting it.  Ms Briggs represented that a missing group tax certificate had been located and attached to the first applicant’s self-assessment.  The superannuation payment certificate was the only missing information (SC 48).

17.       On or about 30 April 1998, the first applicant told Ms Briggs that she had obtained the superannuation certificate and faxed it to Ms Briggs who represented that she had received the certificate.  Ms Briggs also represented that the 1997 self-assessment would not be further processed and the first applicant would be contacted by an officer from the Australian Taxation Office in Canberra (SC 49).

18.       Acting on the faith of all previously pleaded representations it is said that the applicants ‘… continued since about 1991 to conduct there (sic) personal and business taxation affairs, lodge returns, self assessments, did all that was believed required of them, dealt with the Respondent and his delegated officers in good faith until April 1998’.  They say they reasonably believed that at all times the respondent and his officers had been dealing with them in accordance with their reasonable expectations, legitimate legal rights and under the requirements of the Taxpayers Charter (SC 50).

19.       The next event is a contact from Mr Endall of the Australian Taxation Office made with the second applicant on 7 May 1998.  In the course of this communication Mr Endall is said to have sought a written agreement from the applicants that he could complete their audits.  He said he had taken over the audits from Mr Sullivan who had left the employment of the respondent in late 1996.  The audits would proceed in any event, even if the applicants refused to enter into a written agreement.  The audits were not completed because of staff shortages in 1996.   Various other statements attributed to Mr Endall are set out in the particulars. The second applicant allegedly then told Mr Endall that the audits had been completed in 1996 and the 1995 and 1996 notices of assessment proved that Mr Endall could not legally continue.  Again, particulars were set out. 

20.       Mr Endall’s representations are said to mean, inter alia, that the audits referred to were those referred to earlier in the statement of claim and that documents referred to related to purported adjustment sheets for the applicants in the years 1992 to 1996.  It is said that, by reason of these representations, it was conveyed that the respondent was aware the applicants believed that the second applicant’s 1995 and 1996 assessments had been issued in late 1996. 

22                  The next subheading in the statement of claim is ‘THE APPLICANTS HAVE DISCOVERED SINCE MAY 1998’.  This section of the pleading begins at par 53.  It is not clear where it ends.  Parts of it do not make any sense.  It is alleged in par 53(b) that officers of the respondent were aware that he had allowed some of his officers:

‘…by defective administration and or by complicity to collaterally in bad faith in circumstances void for want of good faith, to deal with the Second Applicant, his taxation affairs, records, 1992 return and 1993, 1994, 1995 and 1996 self assessments and the notices related thereto as referred to in paragraphs 13.3, 13.4, 13.5, 14.2, 22, 25, 26, 37.1, 41.2, 41.4, 41.6 and 43 in circumstances not reconcilable to the Act, contrary to their statutory duty, his statutory public office power and position, to place the Second Applicant in a position to suffer loss, damage and detriment in the future.’

23                  In par 54 it is said that the respondent and his officers ‘in circumstances void for want of good faith, known would cause the Applicants to suffer loss, damage and detriment and unjustly enrich the Respondent’ (sic).  The applicants say in this paragraph that they could not trust the respondent to honestly and consistently deal with them and their taxation affairs concerning matters referred to in pars 53(a) and (b).  The respondent is said to have wilfully used his office to place the applicants in a position of being held in effect ‘… to ransom in circumstances where the Applicants had no certainty and seemingly no finality as the Respondent and others at all material and all relevant times continued to engage in further false, dishonest, misleading and deceptive representations and warranties to further confuse them and take further advantage of their lack of education, skills, knowledge of the Act and good faith in the Respondent’ (SC 54.2).  Then there are false representations alleged that the respondent was continuing the audits of the applicants for a proper purpose when in fact they were continued for an improper purpose.  That purpose was to attempt to induce the second or third applicants to lodge 1997 self-assessments so that the respondent could use the second applicant’s 1997 self-assessment and s 167 or s 169 of the Act to issue a 1997 notice of assessment.  This would further allow him to conceal dishonest manipulation of the second applicant’s taxation affairs since 1992.  It is also alleged that he was endeavouring to knowingly defraud the revenue by issuing to the second applicant an original 1992 notice of an assessment never issued and amended assessments for 1993 and 1994 and notices of assessment in 1995 and 1996. 

24                  There are then further false representations and warranties alleged against the respondent in par 54.4.  These relate to the purported loss of  audit interview tapes, the claim that the respondent would continue the audits and that s 170(4) of the Act had no application, that no officer had breached the Privacy Act 1988 (Cth) or had deliberately or attempted to deliberately manipulate the applicants’ taxation affairs.  Further assertions in this vein are made in the balance of par 54 generally directed at alleging improperly motivated actions by the respondent. Then in par 55 it is said the issue of various assessments and amended assessments were either in bad faith or other than in good faith.

25                  Paragraphs 56 and 57 allege negligence on the part of the respondent in failing to ensure that his officers did not misuse his public office since 1992 as they had done against the applicants.

26                  In par 58 it is said that the representations and warranties made since about 1992 and then through subsequent years, compounded by other representations and warranties were made in circumstances requiring them to be made in good faith and were in fact in bad faith and made for improper purposes and contrary to the proper intention of the Act.  Moreover they were made contrary to ‘the common law meaning of good faith and a proper purpose of the Act as reasonably expected by the First, Second and Third Applicant in accordance with their reasonable expectations and legitimate legal rights’ (SC 58.2).  Reference is made to the particulars set out in Schedules 1 and 2 to the Statement of Claim.  Paragraph 58.3 seeks to characterise the various representations and warranties as misleading or deceptive, dishonest, malicious, the result of defective administration, misfeasance in public office, without power and contemptuous. 

27                  Paragraph 59 says:

‘Further and in the alternative, the Respondent made the said representations and warranties concerning the matters and as referred to in paragraphs 13.1 to 13.5, 14.1 to 14.4, 15, 17, 20, 21, 22, 25, 26, 29.1, 29.5, 31, 34, 37.2, 38, 40, 41, 42, 43, 47.2, 49.4, 51.1, 53 and 54 herein fraudulent, either knowing them to be false or recklessly not caring whether they were true or false.’

This picks up pleadings which are not pleadings of representations and warranties at all but of conduct on the part of the first applicant (pars 13.1 – 13.2) and the second applicant (pars 13.3 – 13.4) and the so-called third applicant (par 13.5).  Paragraphs 14.1 to 14.4 allege no warranties but rather the issue of notices of assessment involve a private ruling.  Paragraph 15 alleges reliance by the applicants on the faith of warranties referred to in pars 4 to 8 which are not mentioned in par 59 and 14 which, as already noted, contains no representations.  These examples are sufficient for present purposes to demonstrate the nature of the pleading in par 59.

28                  In par 60 it is said the respondent made the representations and warranties concerning the matters and referred to in pars 4 to 54 fraudulently.  A similar allegation is made in par 61.

29                  There follows a plea that ‘by reason of the matters aforesaid, the Applicants have suffered loss and damage’.  The sum of $3,659,500 in lost profits is claimed and the sum of $2 million in loss of opportunities.  There are unspecified losses under a variety of other heads.  A large number of declarations is sought.  These include a declaration in the following terms:

‘A declaration that the Respondent will be liable to pay to the First, Second and Third Applicants $5,000,000 within 30 days if ever in the future the Respondent or any of his delegated officers treat them differently than as set out in the Taxpayers Charter in accordance with the reasonable expectations based on a formula to be decided and the Respondent provide that guarantee and undertaking to them in writing.’

The Respondent’s Submission

30                  The respondent contends that the statement of claim does not disclose any justiciable case against the respondent within the jurisdiction of the Court under s 39B of the Judiciary Act 1903 (Cth).  The manner in which the assessments are alleged to have issued is said not to set up any factual foundation upon which the jurisdiction of the Court is invoked and the remedial relief sought could be granted. The notices of assessment themselves are conclusive evidence of their due making and preclude any challenge in the absence of bad faith.

31                  The respondent then refers in its submissions to the provisions of s 175 and 177 of the Income Tax Assessment Act.  These matters were discussed in the previous judgment and there is no need to revisit them here. 

32                  The respondent submits that after three attempts, after taking advice from legal practitioners and filing prolix statements of claim, the applicants have not pointed to any material facts upon which arguable contentions might be put that the assessments were issued other than in good faith.  It is submitted that to prevent the continuing prosecution of extended proceedings which are costly to the public and lack any factual or legal foundation the application should be dismissed or permanently stayed.  The proper means and forum for the applicants to pursue their challenge to their assessments is governed by Pt IV of the Taxation Administration Act 1953 (Cth).

33                  The applicants’ first submission, filed on 4 November 2003, did not address any matters of substance beyond unsupported assertions of dishonesty on the part of the respondent and protection of the respondent by the Court, the government and the Taxation Ombudsman.  In their response filed 17 November 2003, the applicants again did not address any matters of substance beyond criticising the respondent’s submission as ‘ridiculous’ on the basis that it did not deny any of the substantive claims arising since 1992.  The applicants asserted again that the respondent is still seeking to deny them their legal rights, denying them the opportunity to fully discover the truth.

Conclusions

34                  The outline of the statement of claim which I have just essayed indicates no basis beyond bald assertion for the contentions of bad faith action on the part of the respondent.  The statement of claim is, like its predecessors, a welter of confused and irrelevant allegations which, as the respondent submits, do not properly engage the jurisdiction of the Court. The analysis of par 59 exemplifies the ways in which the applicants will allege fraud on foundations which cannot logically support such an allegation. 

35                  In my opinion the statement of claim as a whole should be struck out.  It discloses no reasonable cause of action.  It is in many respects frivolous and vexatious. 

36                  The statement of claim cannot stand and the point has now been reached where I am not prepared to allow this proceeding to continue any further.  The applicants have demonstrated that they are unable to frame in a responsible and careful way a cause of action which is amenable to determination by the Court.  They have had the assistance of two pro bono lawyers, one of whom was Queens Counsel.  They have now had a number of opportunities to formulate a viable statement of claim. 

37                  The order of the Court will be that the application be struck out and that the applicants pay the respondent’s costs of the proceedings.

Associate:

Dated:              23 December 2003