FEDERAL COURT OF AUSTRALIA

Jewiss v Deputy Commissioner of Taxation [2006] FCA 1688

ABUSE OF PROCESS – proceedings instituted by applicant under Part IVC of the Taxation Administration Act 1953 (Cth) – applicant filed Amended Application and Amended Statement of Claim alleging fraud and improper conduct of Commissioner and officers in relation to the issuing of assessment notices – same issues raised and determined adversely to applicant in proceedings in State Courts – application by Commissioner for summary dismissal of Amended Application and Amended Statement of Claim

HELD – Amended Application and Amended Statement of Claim dismissed

Taxation Administration Act 1953 (Cth)

Federal Court of Australia Act 1976 (Cth) s 31A

Income Tax Assessment Act 1936 (Cth)

Migration Litigation Reform Act 2005

Judiciary Act 1903 (Cth)

MZXJN v Minister for Immigration and Multicultural Affairs [2006] FCA 1624 referred to

NAKX v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1559 referred to

Commissioner of Taxation v Dalco (1990) 168 CLR 614 cited

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 cited

Tepperova v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 1147 referred to

Briglia v Commissioner of Taxation [2000] FCA 443 discussed

R v Hickman; Ex parte Fox (1945) 70 CLR 598 referred to

Deputy Commissioner of Taxation (Cth) v Richard Walter Pty Ltd (1995) 183 CLR 168 referred to

Plaintiff S157/2002 v The Commonwealth of Australia (2003) 211 CLR 476 referred to

Shumack v Commissioner, Australian Federal Police [2005] FCA 1476 cited

Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers appointed – in Liquidation) (1993) 115 ALR 377 referred to

Blair v Curran (1939) 62 CLR 464 referred to

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 cited

HENRY WILLIAM JEWISS v DEPUTY COMMISSIONER OF TAXATION

SAD 197 OF 2005

MANSFIELD J

5 DECEMBER 2006

ADELAIDE

THE COURT ORDERS THAT:

1.                  The Amended Application dated 15 August 2006 and the Amended Statement of Claim dated 15 August 2006 be dismissed.

2.                  The applicant pay the costs of and incidental to the claims made in the Amended Application and the Amended Statement of Claim and the earlier version of those claims made in the “Statement of Claim” filed on 7 July 2006, as well as the costs of the directions hearings on 13 June 2006, 30 June 2006, 18 July 2006 and 21 August 2006, and the costs of and incidental to the Commissioner’s Notice of Motion of 15 September 2006.

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

REASONS FOR JUDGMENT

Introduction

1                     Mr Jewiss was assessed for income tax for the years 30 June 1998 to 30 June 2001 inclusive.  Notices of Assessment in respect of those years of income were issued on 29 October 2002 and served on Mr Jewiss on 30 October 2002 (the Notices).  He did not pay the income tax on or before the due date specified in the Notices.  By notice of objection dated 28 September 2004, Mr Jewiss objected to each of the Notices.  The Deputy Commissioner of Taxation (the Commissioner) by decision of 10 August 2005 disallowed each of the objections.

2                     In the meantime, the Commissioner brought proceedings in the District Court of South Australia on 14 February 2003, seeking recovery of the outstanding taxation debts the subject of the Notices, together with interest charged on the outstanding tax (the District Court proceedings). 

3                     It is the nature of Mr Jewiss’ defence and counterclaim in the District Court proceedings, and allegations in the proceedings in this Court, which give rise to the present motion.

4                     On 19 August 2005 Mr Jewiss appealed to this Court against the objection decisions of 10 August 2005.  That application is under Pt IVC of the Taxation Administration Act 1953 (Cth) (the TAA).  It is presently listed for hearing to commence on 11 December 2006.  I shall call those appeals “the Assessment Appeals”.  There is no issue as to the validity of the Assessment Appeals, nor as to their continuance.

5                     In the Assessment Appeals, however, Mr Jewiss, however, did not let matters rest there.  In response to the Commissioner’s Statement of Facts, Issues and Contentions filed in accordance with Court directions in relation to the Assessment Appeals, on 19 May 2006 Mr Jewiss filed a Statement of Facts, Issues and Contentions.  It related to the issues arising on the Assessment Appeals.  However, in the course of doing so, and in the course of the subsequent directions hearing, Mr Jewiss said that he may wish to attack the Notices because they were invalid by reason of improper conduct on the part of certain officers of the Commissioner.  On 13 June 2006 I directed that, if he wished to amend his Application to allege that the assessments were invalid on such a ground, he should do so by a specified time.  He did not do so.  On 30 June 2006 I extended the time for him to amend his Application, if he wished to do so, to 7 July 2006.  He did not do so, but filed a “Statement of Claim”.  In an unsatisfactory way, that document seemed to suggest improper conduct on the part of officers of the Commissioner, leading to the invalidity of the assessments.  On 18 July 2006, at a further directions hearing, I made an order extending the time within which Mr Jewiss could file and serve an Amended Application and an Amended Statement of Claim to allege the invalidity of the Notices by reason of purported improper conduct on the part of officers of the Commissioner to 11 August 2006.  At that time, it was pointed out that the document filed on 7 July 2006 was quite inadequate and unsatisfactory.

6                     On 15 August 2006 Mr Jewiss filed an Amended Application and an Amended Statement of Claim.  Those documents were confined to his claim that the Notices were invalid by reason of impropriety on the part of officers of the Commissioner.  They attracted further criticism from the Commissioner that the allegations were not sufficiently precise as to be able to be responded to.  Accordingly, on 21 August 2006 Mr Jewiss was given leave to file and serve by 4 September 2006 a Further Amended Application and a Further Amended Statement of Claim which responded more particularly to the apparently legitimate concerns of the Commissioner.  He did not file any Further Amended Application or any Further Amended Statement of Claim within that time.  On 17 October 2006, Mr Jewiss purported to file a further document called “Amended Statement of Claim”, but he had no leave to do so and did not seek that leave.  That was pointed out to him at a directions hearing.  That document is in largely the same terms as the Amended Statement of Claim, and if it were the current document expressing Mr Jewiss’ claims it would be dismissed for the same reasons as those for making orders on the Notice of Motion.

7                     On 15 September 2006, that is a little time after the expiry of the last period by which Mr Jewiss could file and serve a Further Amended Application and a Further Amended Statement of Claim in relation to the validity of the Notices, the Commissioner by Notice of Motion applied for summary judgment in respect of the matters pleaded in the Amended Application and the Amended Statement of Claim filed on 15 August 2006.  The Motion is brought pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) and to O 20 r 2 of the Federal Court Rules.  Alternatively, the Commissioner seeks orders under O 16 r 11 that the whole of the Amended Statement of Claim be struck out as disclosing no reasonable cause of action, and as having a tendency to cause prejudice, embarrassment or delay in the proceedings, and as otherwise being an abuse of process.  The Motion also seeks in the further alternative an order that Mr Jewiss provide security for costs to the Commissioner under O 28 r 5 of the Federal Court Rules.

8                     That Motion was listed for hearing on 20 November 2006.

AN ADJOURNMENT?

9                     In the days preceding the hearing, Mr Jewiss through a corporation sent to the Court (but not to the Commissioner’s legal representatives) medical certificates indicating that he was unfit for work by reason of illness for the period from 6 to 20 November 2006.  He did not attend the hearing.  He sent a letter to the Court indicating that he would be unable to do so because of illness.  There is no further medical evidence to indicate his ongoing incapacity for work after 20 November 2006, or more importantly, any medical evidence stating that he was unfit to appear in Court on 20 November 2006 to conduct the proceedings or to appear in Court to support any application for an adjournment:  see e.g. the remarks of Middleton J in MZXJN v Minister for Immigration and Multicultural Affairs [2006] FCA 1624 at [13]-[14], adopting the words of Lindgren J in NAKX v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1559.  There is no detailed medical report from any medical practitioner.

10                  In those circumstances, I determined to proceed with the hearing of the Motion of the Commissioner, and to give Mr Jewiss the opportunity to respond to the submissions of the Commissioner by 1 December 2006.  He has been notified of that decision, and has been provided with a copy of the Commissioner’s written submissions and of the transcript of my remarks in respect of his imputed adjournment application.  The balance of the transcript of the hearing was, as usual, available for purchase by Mr Jewiss. 

11                  Mr Jewiss has made no further submission.

12                  In those circumstances, in my view it is appropriate to deal with the Motion on the material now before the Court.

THE BASIS OF THE MOTION

13                  In essence, it is submitted that Mr Jewiss in the District Court proceedings opposed the Commissioner’s claim, and counterclaimed against the Commissioner, on the grounds that the Notices were each made improperly as a result of wrongful conduct on the part of officers of the Commissioner so that the Notices themselves were invalid.  It is then submitted that the facts relied upon by Mr Jewiss were the same in substance as those he now asserts in the Amended Application and in the Amended Statement of Claim, so that the resolution of those claims adversely to Mr Jewiss in the District Court proceedings gives rise to an estoppel in these proceedings.  In addition, the Commissioner contends that it is an abuse of the process of the Court to attempt to re-litigate those issues, which have been decided against him.

THE DISTRICT COURT PROCEEDINGS

14                  By his Defence dated 7 April 2003 in the District Court proceedings, Mr Jewiss alleged that he was not liable to pay the outstanding taxation debts, inter alia, because the Commissioner had made the assessments without proper investigation and had fraudulently relied upon certain documentation obtained in his absence; that the Commissioner by issuing the assessments had abused the processes prescribed under the Income Tax Assessment Act 1936 (Cth) (the ITAA); and that the Notices were knowingly false, fraudulent and erroneous.  The Defence alleged:

“The plaintiff has acted in making the assessments against me on which its claim is made beyond its powers under the Income Tax Assessment Act 1936 as amended and has purported to exercise powers in making the said assessments which cannot be granted to the plaintiff or any other persons pursuant to the Constitution of the Commonwealth of Australia.”

15                  Mr Jewiss also filed a counterclaim in which he alleged against the Commissioner and officers of the Commissioner:

“The Plaintiff acted firstly beyond its powers in making an assessment of taxation against the defendant pursuant to the Commonwealth Income Tax Assessment Act 1936 as amended or alternatively secondly by recklessly, carelessly or fraudulently in a criminal or quasi criminal manner in making an assessments (sic) of taxation against the defendant. …  Thirdly acted through its officers, servants or agents with the intent to injure the defendant in his business and reputation.

…

4.         The plaintiff its officers, servants or agents have acted recklessly carelessly (sic) in the extreme to the extent of quasi criminality against the defendant with the extent (sic) to injure the defendant in his reputation and with intent to injure or destroy his lawful business.

5.         The plaintiffs (sic) by its officers servants or agents have acted in a manner against servants or agents of the defendant which amounts to common assault with threats against the defendants (sic) servants or agents.

6.         The plaintiff has failed to disclose to the defendant in spite of his many repeated requests for information on what manner or on what documents, writings or other papers the figures or sums purported to be the income of the defendant the amounts of income alleged to be earned by the defendant supported the assessment made against [him].”

The counterclaim was for $10 million by way of damages against the Commissioner based upon those assertions.

16                  The Commissioner filed a Reply and Defence to the Counterclaim on 24 April 2003. 

17                  In the course of the conduct of the District Court proceedings, Mr Jewiss objected to the Notices being tendered by the Commissioner as proof of their contents, pursuant to s 177 of the ITAA.  On 1 October 2004, the learned District Court judge ruled that, notwithstanding s 177 of the ITAA, Mr Jewiss could attack the Notices on the ground that they were issued in bad faith.  Then, his Honour conducted a voir dire hearing on whether bad faith as alleged was made out.  On 14 October 2004, the District Court judge ruled that the allegations of bad faith were not made out, so that the Notices were admissible on the Commissioner’s claim.  His Honour published reasons for that ruling.

18                  It is not necessary to refer in detail to the evidence given on that voir dire hearing.  Mr Jewiss gave evidence in support of his allegations, including communications with officers of the Commissioner, of the “raids” when documents were seized and the like.  His Honour concluded:

“54.     I find that the far-ranging complaints contain no evidence of conduct that could be treated as ‘bad faith’ on the part of the Deputy Commissioner of Taxation.  I find that there is no evidence that the relevant assessments were made in ‘bad faith’.

55.       Accordingly, it is unnecessary to decide whether the assessments should be excluded because they were made in ‘bad faith’ because there is no evidence of ‘bad faith’ on the part of the Deputy Commissioner.

56.       Importantly, there is just no evidence which implicates the Deputy Commissioner of Taxation or the Australian Taxation Office.  It is unnecessary to determine whether the matters of which evidence was given occurred or not, because taken at its highest the evidence does not implicate the plaintiff.  For example, it does not matter whether a ‘Mr P’ made a threat or not if there is no connection between the plaintiff and the income tax assessments.  By itself, the threat does nothing to establish that the plaintiff was biased against Mr Jewiss.” 

19                  The hearing then proceeded and resulted in judgment on 9 December 2004.  Having admitted into evidence the certificates issued pursuant to s 177 of the ITAA, his Honour concluded that those certificates were conclusive evidence of the due making of the Notices, and that the amount and all particulars of the Notices were correct.  His Honour confirmed that he rejected the defence of impropriety in the making of the assessments and his dismissal of the counterclaim.  His Honour said, inter alia, in those reasons:

“13.     I had already rejected the claim that the assessments which are referred to in the Notices of Assessment were made in ‘bad faith’ when the notices were admitted into evidence …

…

15.       I accept that exhibits P4 and P5 are evidence of the defendant’s tax related liability.  By reason of section 177 of the Income Tax Assessment Act 1996 [sic] I find that Exhibit P4 is conclusive evidence of the due making of the assessment and that the amount and all the particulars of the assessment are correct …

            …

            22.       Without descending to deal with each ground seriatim I reject the grounds of the Defence.  The allegations are far reaching, but there is simply no evidence which supports the Defence.  I also dismiss the counterclaim which is unsupported by evidence.  Both defence and counterclaim were effectively abandoned by the defendant after I ruled that the issue of bad faith had already been resolved by the decision on the voir dire.

23.       I have already given reasons which explain my ruling that the assessments were not made in bad faith.”

Consequently, the Commissioner recovered judgment on the claim for the outstanding tax and interest, and the counterclaim was also dismissed.

20                  Mr Jewiss appealed to the Full Court of the Supreme Court of South Australia.  The notice of appeal specifically asserted that the voir dire decision that the officers of the Commissioner did not act in bad faith and did not abuse their power, was erroneous.  On 30 November 2005 the Full Court of the Supreme Court dismissed the appeal.  Duggan J (with whom Perry ACJ and Anderson J agreed) held that there was no connection established between the alleged improper conduct of the officers of the Commissioner in the investigation process and those officers who carried out and made the relevant assessments.  Their Honours also rejected other complaints going to the validity of the assessments, including those in support of the Counterclaim.  Duggan J said:

“22.     …  The additional matters relating to bad faith which the appellant claims he was prevented from raising at the trial suffer from the same difficulty as those which were raised at the trial.  No connection was established between the alleged conduct and the conduct of the officers who carried out the relevant assessments.

23.       The remainder of the complaints relate to issues which go to the merits of the assessments …  It should also be noted that the appellant has challenged the assessments in other proceedings which are presently before the Federal Court on appeal.  This challenge was made pursuant to Pt IVC of the Taxation Administration Act 1953 …

…

26.       The allegations in support of the counterclaim were the same as those put forward to establish bad faith on the part of the ATO.  The counterclaim was dismissed on the ground that it was unsupported by the evidence.

27.       The grounds of appeal do not appear to contest the dismissal of the counterclaim.  The trial judge commented in his judgment that the defence and counterclaim were effectively abandoned by the appellant after the finding that the issue of bad faith had been resolved by the decision on the voir dire.

28.       I think it would have been appropriate for the judge to raise the issue of the counterclaim during the discussion he had with the appellant which is quoted above.  However, the evidence which the appellant wished to call at the trial has now been identified in detail and, in my view, it could not have established the basis for a successful claim of the nature pleaded in the counterclaim.” 

21                  Mr Jewiss then applied for special leave to appeal to the High Court of Australia.  That application for special leave to appeal was heard and dismissed on 5 September 2006.  Gummow J, in giving reasons for the decision of himself and Heydon J refusing special leave to appeal, said that there were no prospects of success on any appeal to the High Court.

22                  It was the final disposition of the District Court proceedings on 5 September 2006, and coincidentally the elapse of the last date by which Mr Jewiss may have amended the Amended Application and the Amended Statement of Claim in these proceedings which cleared the way for the Commissioner’s present Motion.

23                  As can be seen, the proceedings in the District Court and the appeal processes, including the special leave application to the High Court, were running in tandem with the proceedings in this Court which included both the Assessment Appeals under Pt IVC of the TAA, as well as the more general allegations of invalidity of the Notices.  The operation of s 177 of the ITAA, which treats the Notices as conclusive evidence of the amount of the assessments and the particulars specified therein, does not apply to the Assessment Appeals brought under Pt IVC of the TAA.  As noted, they are presently listed for hearing commencing 11 December 2006.

THE CONTENTIONS OF THE COMMISSIONER

24                  The Commissioner, correctly in my view, identifies the principal issue for determination on the present motion as being whether the Commissioner is entitled to summary judgment in relation to the allegations in Mr Jewiss’ Amended Application and Amended Statement of Claim filed on 15 August 2006 by reason of the matters so raised being identical to, or substantially similar to, matters which have been addressed and decided in the District Court proceedings.  If that issue is not resolved in the Commissioner’s favour, issues then arise as to whether Mr Jewiss has a reasonable prospect of success in prosecuting the claims as expressed in the Amended Application and the Amended Statement of Claim; whether, alternatively, all or parts of the Amended Statement of Claim should be struck out as being improperly pleaded and embarrassing so that the proceedings outstanding should simply be the proceedings under Pt IVC of the TAA; and alternatively and ultimately whether there should be an order for security for costs against Mr Jewiss.

25                  The Commissioner contends that there is now no basis upon which the claims asserted in the Amended Application and the Amended Statement of Claim could succeed because:

1.                  those issues have been ventilated and determined in the District Court proceedings, and

2.                  in any event, s 177 of the ITAA precludes all challenges against the “due making of an assessment”, and the nature of the allegations are in fact in substance challenges to the due making of the assessments the subject of the notices:  see Commissioner of Taxation v Dalco (1990) 168 CLR 614.

CONSIDERATION

26                  It is plain that s 31A of the FCA Act is intended to relax the test imposed by General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 as to the circumstances in which a proceeding may be struck out or summarily dismissed.

27                  Section 31A(2) provides that the Court may exercise that power if the Court is satisfied that the applicant has no reasonable prospect of successfully prosecuting the proceeding or the relevant part of the proceeding, and s 31A(3) explains to a degree when a proceeding should be found to have no reasonable prospect of success.

28                  Section 31A commenced operation on 1 December 2005.  It applies only in relation to “proceedings commenced on or after the commencement day”: see item 44 of Sch 1 to the Migration Litigation Reform Act 2005, and item 7 of that Act which inserted s 31A into the FCA Act.  The Commissioner has submitted that s 31A applies in this instance because the Amended Application and the Amended Statement of Claim were filed only on 15 August 2006, and that the assertion in this proceeding seeking to invalidate the Notices by reason of improper conduct on the part of officers of the respondent was first made only by the “Statement of Claim” filed on 7 July 2006.  The effect of the “Statement of Claim” first filed on 7 July 2006 would appear, by O 13 rr 3(3) and 3A of the Federal Court Rules, to operate from that day as a proceeding commenced on or after that day:  see Tepperova v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 1147 at [27].  I do not need, however, to decide that question.

29                  In my judgment, the Amended Application and the Amended Statement of Claim should be dismissed, whether one applies the test prescribed by s 31A of the FCA Act, or whether one applies O 20 r 2 of the Federal Court Rules, as explained in General Steel Industries.  In my view, there is simply no real question to be tried on the issues raised by the Amended Application and by the Amended Statement of Claim in the circumstances of this matter.

30                  It is appropriate first to advert briefly to the statutory background or context in which the assessments came to be made and the Notices issued.  Section 166 of the ITAA requires the Commissioner to make an assessment of the taxable income of a taxpayer and of the tax payable thereon.  If the Commissioner is not satisfied with the tax information provided by the taxpayer in the tax return furnished by the taxpayer, the Commissioner is empowered by s 167 to make an assessment of the amount upon which, in the Commissioner’s judgment, income tax ought to be levied.  Section 174(1) then requires that a notice of assessment of the tax to be paid be served on the taxpayer.  Section 175 provides that the validity of any assessment shall not be affected by reason that any of the provisions of the ITAA have not been complied with.  Relevantly to the District Court proceedings, for the reasons which are referred to above, s 177 provides that the production of the Notices under the hand of the Commissioner is conclusive evidence of the due making of the assessment, and (other than in respect of proceedings under Pt IVC of the TAA by a review or appeal relating to the assessment) is also conclusive evidence of the amount and particulars of the assessments as being correct.  The procedure to be followed by a taxpayer dissatisfied with an assessment is the objection and appeal process available under Pt IVC of the TAA. 

31                  In Briglia v Commissioner of Taxation [2000] FCA 443 at [6], Kenny J pointed out that, although s 177(1) of the ITAA may operate to preclude a Court from examining the validity of an assessment once a notice of assessment is tendered, it can only operate provided there has been a bona fide attempt by the Commissioner to exercise the power of assessment, the attempt to exercise the assessment power relates to the subject matter of the ITAA, and the exercise of the assessment power is reasonably capable of reference to the Commissioner’s power of assessment.  That expression of the limitations upon the apparent scope of s 177(1) is derived from the observations of Dixon J in R v Hickman; Ex parte Fox (1945) 70 CLR 598 at 614.  It is clear from Deputy Commissioner of Taxation (Cth) v Richard Walter Pty Ltd (1995) 183 CLR 168 that s 177(1) does not, and cannot, deprive the High Court of its constitutional jurisdiction, and to the extent to which this Court is conferred with such jurisdiction under s 39B(1) of the Judiciary Act 1903 (Cth) cannot deprive this Court of its jurisdiction under that provision.  The so called Hickman principles, based upon the decision in Hickman, and which formed the basis of Kenny J’s observations in Briglia, were considered by the High Court in Plaintiff S157/2002 v Commonwealth of Australia (2003) 211 CLR 476.  I do not think it is necessary to explore whether the result of the decision in Plaintiff S157/2002 is to explain the application of the Hickman principles in a way which may broaden the capacity of the taxpayer to challenge the due making of an assessment notwithstanding s 177(1).  That is simply because, in my view, on any analysis of the allegations made by Mr Jewiss in the Amended Application and in the Amended Statement of Claim, they cannot establish relevantly a failure on the part of the Commissioner in the due making of the assessments.

32                  There is a clear parallel between the allegations in the Amended Application and the Amended Statement of Claim and the allegations made in the District Court proceedings.

33                  The Amended Application asserts that the Notices were issued for a particular purpose, namely “to close down the accounting practice of the applicant and to make the applicant bankrupt by virtue of a fraudulent excessive assessment”.

34                  There are three general categories of allegation.

35                  The first overall category of allegation concerns the seizure of materials at Mr Jewiss’ premises.  It is asserted that certain officers of the Commissioner entered the office of Mr Jewiss without duly authorised written authority and took documents from that office without having or producing a written authority to do so.  It asserts that following the search and seizure of material on that occasion, the premises were sealed and the locks were changed, so that Mr Jewiss’ staff could not enter the premises and so that clients were intimidated and Mr Jewiss was embarrassed.

36                  The second general category of conduct alleged is that the issue of the Notices was an abuse of power because they were constructed from records by a “deliberate series of contrived events designed to place the applicant in an invidious financial position”.

37                  The third category of allegation is that the subsequent debt recovery was pursued vigorously to the intent of making Mr Jewiss bankrupt, and so denying him the opportunity of presenting his rights of objection and appeal.  That third general assertion may be dealt with at this point.  It cannot be correct.  Mr Jewiss has exercised his rights under Pt IVC of the TAA to challenge the disallowance of the objections to the Notices.  Those challenges are listed for hearing commencing on 11 December 2006.  Mr Jewiss has not been prevented from exercising those statutory rights.  Moreover, that impugned conduct occurred after the Notices were issued, and so cannot lead to the Notices having been issued in bad faith.

38                  The Amended Statement of Claim simply expands upon those categories of allegations.

39                  It refers again to the search and seizure of documents from Mr Jewiss’ office on 29 May 2002 when, he claims, the officers concerned behaved in an aggressive manner and without a duly executed written warrant.  Reference is made to a circumstance prompting the investigation, namely the association of Mr Jewiss with a former officer of the Commissioner, but the reason underlying the investigation of Mr Jewiss’ records in my view is not a relevant matter at all.  Whatever the reason for the investigation, it is the issue of the Notices which is impugned for bad faith.  Further assertions are made about the way in which the investigation on the occasion of the search and seizure of documents was carried out, generally asserting aggressive behaviour on the part of the relevant officers.  It is said that their aggression was “inexcusable, intimidating and excessive”.  The Amended Statement of Claim also asserts that access was had to a computer without Mr Jewiss’ knowledge, and the computer was unlawfully removed from the office.  It asserts that the documents removed from the premises should have been photocopied, and the copies taken.  It is then further claimed that neither Mr Jewiss nor any of his clients were given any opportunity to claim legal professional privilege in respect of any of the documents in that office which were then taken.  It is further claimed that, during the investigation and seizure over several days, the powers of search and seizure under ss 263 and 264 of the ITAA were exceeded because locks were changed at the premises and doors were taped so as to preclude access for work purposes during the search and seizure.  The Amended Statement of Claim is somewhat repetitive, but that is the essential nature of the allegations concerning the search and seizure in the investigation into Mr Jewiss’ affairs.

40                  The second general category of claim is also expanded in the Amended Statement of Claim.  It asserts that the Notices were constructed in a fraudulent way because those who engaged in the assessments were informed of “flaws in the information they were accessing in the records” which had been seized, and the Notices were made without full discussion with Mr Jewiss or members of his staff.  It is asserted that the Notices were made upon the basis of officers of the Commissioner knowing that the assessments were being made on flawed records. 

41                  The Amended Statement of Claim also expands on the third category of allegations in the Amended Application by asserting, perhaps as evidence of the intention to harm Mr Jewiss, that the process of serving the default summonses upon him has been aggressive and “adversarial”.  Part of that conduct involved a garnishee order that had been placed on Mr Jewiss’ bank account; part is the taking advantage of s 177 of the ITAA to enforce recovery; and part by denying him access to certain seized information “on grounds of national security”.  There is also a general assertion that the Commissioner through an officer tended somehow to interfere with the course of justice by making a threat to Mr Jewiss in an inappropriate way.  Whether or not those things are true, they all post-date the issue of the Notices.  They are not shown (or suggested) to have been undertaken by the officer or officers who issued the Notices.  They are not therefore capable of providing evidence that the Notices themselves were issued in bad faith.

42                  As to each of those categories of allegations, including the “raid” on 29 May 2002, those matters (including that the raid was an abuse of power) were specifically raised in the District Court proceedings.  In his Defence and Counterclaim in the District Court proceedings, Mr Jewiss asserted that the assessments were made without proper investigation and fraudulently in an attempt to destroy his lawful business activities.  He asserted that the assessments were made in reliance upon documentation obtained in the search which were not his reliable business records, but had some other character, and that the officers of the Commissioner who made the assessments were aware of that.  That is, he positively asserted that the assessments were made fraudulently, and with the intent of precluding him from carrying on his business.  Mr Jewiss specifically made complaint as to the conduct of officers of the Commissioner in the course of the investigation and search.  He specifically complained that the Notices were issued by officers who were aware that they were acting upon records which were not reliable.  He specifically complained that the officers of the Commissioner involved made threats to Mr Jewiss and his employees.  The Commissioner put all those allegations in issue.

43                  During the voir dire hearing, as the reasons of the learned judge indicate, Mr Jewiss’ assertions included the assertion of conduct engaged in relation to him by reason of his association with a former officer of the Commissioner, a threat to his life, and the conduct engaged in during the search at his offices.  Evidence was given by Mr Jewiss as well as by one of his employees about the circumstances of that search.  She also gave evidence about the garnishee order in relation to Mr Jewiss’ bank account. 

44                  As noted earlier, the learned judge, having reviewed the whole of the evidence, rejected the assertion of bad faith.  His Honour said (as quoted above):

“I find that the far-ranging complaints contain no evidence of conduct that could be treated as ‘bad faith’ on the part of the Deputy Commissioner of Taxation.  I find that there is no evidence that the relevant assessments were made in ‘bad faith’.

Accordingly, it is unnecessary to decide whether the assessments should be excluded because they were made in ‘bad faith’ because there is no evidence of ‘bad faith’ on the part of the Deputy Commissioner.”

45                  His Honour specifically rejected the complaints that the assessments were made on the basis of information (obtained during the search of his premises) which the Commissioner or the Commissioner’s officers knew to be unreliable.  His Honour observed that there was simply no evidence to support the claim that that information was unreliable.

46                  Having rejected those contentions, and having admitted into evidence the Notices s 177 of the ITAA precluded the challenge to their accuracy or to their status.  As set out above, his Honour concluded in respect of the more general allegations of “bad faith” in the defence and counterclaim:

“Without descending to deal with each ground seriatim I reject the grounds of the Defence.  The allegations are far reaching, but there is simply no evidence which supports the Defence.  I also dismiss the counterclaim which is unsupported by evidence.  Both defence and counterclaim were effectively abandoned by the defendant after I ruled that the issue of bad faith had already been resolved by the decision on the voir dire.

I have already given reasons which explain my ruling that the assessments were not made in bad faith.”

47                  It is apparent that his Honour’s ruling on the allegations of bad faith on the voir dire hearing were incorporated into and formed part of the reasons for the final judgment.  It is also apparent that the appeal to the Full Court of the Supreme Court concerned both the final judgment and the voir dire hearing.  It is not necessary to refer to the grounds of appeal.  As Duggan J recorded in his reasons at [7], on the hearing of the appeal the Commissioner was content to allow the appeal to proceed on the assumption that there was a limited right to challenge the admission of the notices of assessment on the ground that the assessments were an abuse of power and were made for improper purposes.  It is clear from the reasons of Duggan J that the complaints made by Mr Jewiss in the District Court proceedings, and maintained on appeal, included complaints about the conduct of officers of the Commissioner during searches of his premises, the use or mis-use of flawed information, and inappropriate motivation for the making and issuing of the Notices.  Duggan J recorded the complaints about the conduct of ATO officers as including irregularities in the course of the searches of Mr Jewiss’ premises, the wrongful seizure of documents to which legal professional privilege attached, the seizing of documents knowing that they were not related to Mr Jewiss’ financial affairs, the use of that information, the refusal by officers to return documents, the issuing of the Notices knowing that they were calculated on the basis of income wrongfully attributed to Mr Jewiss, the imposition of penalties on the basis that Mr Jewiss was a non-cooperative taxpayer when this was not the case, publication of a record of conversation with Mr Jewiss, the making of threats to carry out unlawful acts against Mr Jewiss, and oppressive conduct including applying for garnishee orders and other orders restricting Mr Jewiss’ movements.  His Honour concluded that those matters, apart from having been rejected at the hearing, did not establish a connection between the alleged conduct and the conduct of the officers who made the relevant assessments and issued the Notices.  There remained complaints relating to the merits of the Notices, and which s 177 of the ITAA precluded the District Court judge from reviewing (and which can be reviewed in the extant part of these proceedings).

48                  In my judgment, the matters which Mr Jewiss now raises in the Amended Application and in the Amended Statement of Claim correspond with the allegations made in the District Court proceedings, including on his appeal to the Full Court of the Supreme Court of South Australia.  It would be an abuse of the Court’s processes to permit Mr Jewiss to re-litigate in this proceeding the same matters that have previously been determined by the District Court:  cf Shumack v Commissioner, Australian Federal Police [2005] FCA 1476 at [4].  There is no prospect of Mr Jewiss now succeeding on those claims because they have already been decided adversely to him.

49                  The parties in the District Court proceedings and in this proceeding are the same.  The allegations generally under the umbrella of bad faith are the same.  They relate to the circumstances of and conduct at the search of Mr Jewiss’ premises, conduct subsequent to the raid in respect of Mr Jewiss, and use of documents which are allegedly known to be false in making the assessments and issuing the Notices.  Those issues were all raised by Mr Jewiss in the District Court proceedings.  They have been resolved adversely to him.  There is no reason why he should be permitted to re-litigate those matters.  It is in precisely such circumstances that the Court in other matters has found there to have been an abuse of process of the Court and to have exercised the power to have dismissed the proceedings:  see e.g. Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (Receivers and Managers appointed – in Liquidation) (1993) 115 ALR 377 at 398.  As Dixon J observed in Blair v Curran (1939) 62 CLR 464 at 531:

“A judicial determination directly involving an issue of fact or of law disposes once and for all of the issue, so that it cannot afterwards be raised between the same parties or their privies.”

50                  I note that such a course was adopted in Bryant v Commonwealth Bank of Australia (1994) 51 FCR 529 on the basis of an Anshun-type estoppel:  see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.  I accept that, in many cases where the claim is made that there is an estoppel by judgment or an issue estoppel or an Anshun-type estoppel, it is more appropriate for those issues to be determined on pleadings rather than by the summary dismissal of proceedings.  But I consider that this case is a clear one, where Mr Jewiss has previously raised and had a full opportunity to ventilate the very matters which he has sought to raise by way of his Amended Application and Amended Statement of Claim and those issues have been determined against him.  There is no reason why he should be given a further opportunity to re-ventilate those issues in the present proceeding.

51                  In this matter, I do not think there is scope for the Anshun principle to be applied, simply because in my judgment the issues now sought to be raised by Mr Jewiss are the same issues as those he sought to raise in the District Court proceedings and upon which an adjudication adverse to those claims has been made.  It is not a matter of him raising matters now which he did not, but could have, raised in the earlier proceedings (cf Anshun at 602-604).  It is simply a matter of him now making the same allegations.  Perhaps to a minor degree Mr Jewiss now asserts the availability of further or different evidence in support of those allegations than that which he adduced at the hearing before the District Court, but that is to a degree speculative.  Even if it were so, the issues themselves have been determined.  They have been determined adversely to Mr Jewiss. 

52                  For those reasons, in my judgment, the claim in the Amended Application and the Amended Statement of Claim have no prospect of success.  They have already been decided against Mr Jewiss.  Those claims are therefore  an abuse of process and should be dismissed.

53                  I also accept the contentions of counsel for the Commissioner, that in significant respects the allegations now, and previously made, by Mr Jewiss could not give rise to invalidity of the assessments and of the Notices.  The power of search and seizure exists under s 263 of the ITAA.  It is not a power which is to be construed in the same way as a search warrant.  It does not require routinely the production of a written authority to support the exercise of the power.  There was no obligation to produce the written authority in support of the search unless requested, and no request was made (s 263(2)).  The fact that Mr Jewiss was not present when the search was carried out does not support any suggestion that it was an improper investigation.  The way in which that part of the investigation was carried out was not itself capable of affecting the validity of the assessments or of the Notices.  The complaint of the lack of opportunity to assert legal professional privilege in respect of the seized documents is not supported by any evidentiary allegation.  It is simply a general allegation which is not made out.  It does not in any event go to the validity of the Notices.  In addition, as noted above, there is nothing to connect the decision-making process in respect of the Notices with those involved in the search and seizure processes or the method of their implementation.

54                  The second category of allegations are those concerning the quality of the information upon which the Notices are based.  Mr Jewiss’ assertions are not supported by any evidence, but, even accepting his assertions that he informed the relevant officers of the Commissioner that they were proposing to consider unreliable information procured from his custody, those assertions would of themselves not demonstrate even on a prima facie basis that the relevant officers then acted in bad faith in proceeding to make the assessments and to issue the Notices on the basis of the material they had.

55                  The third category of allegations, as mentioned above, relates to conduct of other officers of the Commissioner after the issue of the Notices.  They are not claimed to be the same officers who issued the Notices.  As those allegations stand, they could not support a conclusion that the assessments were made and the Notices were issued in bad faith.

56                  I therefore dismiss those parts of Mr Jewiss’ claim which are expressed in the Amended Application and in the Amended Statement of Claim.  His originating application, that is the Assessment Appeals, invokes the power available under Pt IVC of the TAA to challenge the accuracy of the assessments and the Notices.  That is still on foot and is listed for hearing on 11 December 2006.

57                  Mr Jewiss should pay the costs of and incidental to the claims made in the Amended Application and the Amended Statement of Claim and the earlier version of those claims made in the “Statement of Claim” filed on 7 July 2006, as well as the costs of the directions hearings on 13 June 2006, 30 June 2006, 18 July 2006 and 21 August 2006, and the costs of and incidental to the Commissioner’s Notice of Motion of 15 September 2006.

Associate:

Dated:         5 December 2006