Case: Effem Foods Pty Ltd v Trawl Industries of Australia Pty Limited (1993) 43 FCR 510
Outcome: referred to
Finance Limited v Commissioner of Taxation [2006] FCA 267 (21 March 2006) [ Home ] [ Databases ] [ WorldLII ] [ Search ] [ Feedback ] Federal Court of Australia You are here: &nbsp; AustLII &gt;&gt; Databases &gt;&gt; Federal Court of Australia &gt;&gt; 2006 &gt;&gt; [2006] FCA 267 [ Database Search ] [ Name Search ] [ Recent Decisions ] [ Noteup ] [ Download ] [ Help ] IEL Finance Limited v Commissioner of Taxation [2006] FCA 267 (21 March 2006) Last Updated: 22 March 2006 FEDERAL COURT OF AUSTRALIA IEL Finance Limited v Commissioner of Taxation [2006] FCA 267 INCOME TAX large corporate group inter-group transactions undertaken over six consecutive fiscal years transactions involving inter-group interest bearing borrowings principally by one group member and transfers of tax losses arising out of those borrowings to other group members prior primary and appellate claims by proceedings in Federal Court made by borrowing member against the Commissioner for interest deductibility in respect of one fiscal year decision at first instance and on appeal in relation to that fiscal year adverse to that single group member findings made in context of those proceedings as to assessability to tax of that group member in respect of some transactions for differing fiscal years after conclusion of single fiscal year further proceedings commenced by the same corporate group member together with other corporate group members in respect of transactions involving borrowings and transfers of tax losses in respect of antecedent as well as subsequent fiscal years to that resolved by Federal Court in favour of Commissioner whether issue estoppel, Anshun estoppel and/or abuse of process should operate in favour of Commissioner in respect of deductions for losses of antecedent and subsequent fiscal years meaning of privies authority in Australian Courts of earlier decisions of Privy Council and House of Lords summary judgment application of Commissioner granted Income Tax Assessment Act 1936 (Cth) ss 51(1), 79E and 80G and Part VII Tax Administration Act 1953 (Cth) Part IVC Federal Court Rules O 20 r 2 subrule 2(1)(b) and (c) and Order 52B Spassked Pty Ltd v Commissioner of Taxation (No. 5) (2003) 197 ALR 553 cited and applied Spassked Pty Ltd v Commissioner of Taxation [2003] FCAFC 282 ; (2003) 136 FCR 441 cited and applied General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125 applied Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1948-1949) 78 CLR 62 applied Jackson v Goldsmith [1950] HCA 22 ; (1950) 81 CLR 446 referred to Effem Foods Pty Ltd v Trawl Industries of Australia Pty Limited (1993) 43 FCR 510 referred to Blair v Curran [1939] HCA 23 ; (1939) 62 CLR 464 applied Rogers v The Queen [1994] HCA 42 ; (1994) 181 CLR 251 referred to Trawl Industries of Australia Pty Ltd (in liquidation) v Effem Foods Pty Limited (1992) 36 FCR 406 referred to Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 applied Walton v Gardiner [1992] HCA 12 ; (1993) 177 CLR 378 applied Sea Culture International Pty Ltd v Scoles [1991] 32 FCR 275 referred to Hoysted v Federal Commissioner of Taxation [1921] HCA 56 ; (1921) 29 CLR 537 discussed Hoysted v Federal Commissioner of Taxation [1925] HCA 51 ; [1926] AC 155; (1925) 37 CLR 290 discussed Henderson v Henderson (1843) 3 Ha 100 discussed Murphy v Abi-Saab (1995) 37 NSWLR 280 applied Johnson v Gore Wood &amp; Co [2000] UKHL 65 ; [2002] 2 AC 1 cited Port of Melbourne Authority v Anshun Pty Limited [1981] HCA 45 ; (1981) 147 CLR 589 applied Taylor v Ansett Transport Industries Limited [1987] 18 FCR 342 cited Mohamed Falil Abdul Caffoor, The Trustees of the Abdul Gaffoor Trust v Commissioner of Income Tax Colombo [1961] AC 584 discussed and distinguished Broken Hill Proprietary Company Limited v The Municipal Council of Broken Hill [1925] HCA 44 ; (1925) 37 CLR 284 discussed and distinguished The Council of the Municipality of Broken Hill v The Broken Hill Proprietary Company [1922] HCA 15 ; (1922) 30 CLR 400 discussed and distinguished Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21 ; (1987-1988) 164 CLR 502 discussed Chamberlain v Commissioner of Taxation (1991) 21 FCR 21 cited Federal Commissioner v Wade [1951] HCA 66 ; (1951) 84 CLR 105 referred to Society of Medical Officer of Health v Hope [1960] AC 551 discussed and distinguished Federal Commissioner of Taxation v A.N.Z. Savings Bank Ltd [1994] HCA 58 ; (1994) 181 CLR 466 referred to Falk v Haugh [1935] HCA 35 ; (1935) 53 CLR 163 cited and discussed Viro v The Queen [1978] HCA 9 ; (1978) 141 CLR 88 referred to Orica Ltd v Federal Commissioner of Taxation (2001) 182 ALR 77 not followed Queensland Trustees Limited v Commissioner of Stamp Duties [1956] HCA 75 ; (1956) 96 CLR 131 applied Commissioner of Taxation v Dulux Holdings Pty Ltd [2001] FCA 1344 ; (2001) 113 FCR 436 referred to re Sharpe (1944) QSR 26 referred to Cook v Cook [1986] HCA 73 ; (1986) 162 CLR 376 cited and discussed Skelton v Collins [1966] HCA 14 ; (1966) 115 CLR 94 referred to Hawkins v Clayton (1986) 5 NSWLR 109 referred to Federal Commissioner of Taxation v Cappid Pty Ltd [1970] HCA 41 ; (1970) 127 CLR 140 distinguished Saffron v Federal Commissioner of Taxation (1981) 30 FCR 578 discussed and distinguished Arthur JS Hall &amp; Co v Simons [2000] UKHL 38 ; [2002] 1 AC 615 discussed R v O'Halloran [2000] NSWCCA 528 ; (2000) 36 ACSR 315 discussed IEL FINANCE LIMITED, QUEENSLAND TRADING AND HOLDING COMPANY LIMITED AND SPASSKED PTY LIMITED v COMMISSIONER OF TAXATION NSD 539 OF 2004 NSD 543 OF 2004 NSD 540 OF 2004 NSD 94 OF 2005 CONTI J 21 MARCH 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 539 OF 2004 NSD 543 OF 2004 NSD 540 OF 2004 NSD 94 OF 2005 BETWEEN: IEL FINANCE LIMITED, QUEENSLAND TRADING &amp; HOLDING COMPANY LIMITED AND SPASSKED PTY LIMITED APPLICANTS AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: CONTI J DATE OF ORDER: 21 MARCH 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The respondent Commissioner lodge with the Court and with the taxpayer applicants draft declarations and/or orders giving effect to the reasons for judgment within fourteen days, including orders as to costs. 27 At the outset of their submissions in opposition to the present strike-out application, the taxpayer applicants cited Coke upon Littleton, (at s 365(b)), for the threshold observation that estoppels may be characterised as ' odious ', being an authority described by the Commissioner understandably as 'ancient'. The taxpayer applicants also cited Jackson v Goldsmith [1950] HCA 22 ; (1950) 81 CLR 446 at 458 (per McTiernan J) for the proposition that, estoppels are viewed ' unfavourably by the Courts, as having the effect of excluding the truth ', though in a context where his Honour was seeking only to establish the need for an asserted estoppel to be based on very clear and precise evidentiary material. The taxpayer applicants asserted moreover that the Court's power to strike out is discretionary in its exercise, and is to be undertaken with 'great caution', citing Effem Foods Pty Ltd v Trawl Industries of Australia Pty Limited (1993) 43 FCR 510 at 532 (per Burchett J as a member of a Full Court), where his Honour was speaking of the exercise of 'discretion to stay proceedings as an abuse of the process of the Court, whether on the ground of [ res judicata ] or on any other ground'. Reference was also made to what Dixon J (as he then was) described as the distinction between res judicata and issue estoppel, in the context of his Honour's reasons for judgment in Blair v Curran [1939] HCA 23 ; (1939) 62 CLR 464, as follows (at 532): 'The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order'. 29 Attention was further drawn by both parties to Rogers v The Queen [1994] HCA 42 ; (1994) 181 CLR 251 at 261, where Brennan J observed that: 'Although merger provides a distinction between res judicata and issue estoppel, both doctrines bind the parties and their privies to accept a final judicial decision of a question between the parties as correct'. The juridical notion of 'privies', or more perhaps precisely, privity in interest, was examined in Effem at first instance by Gummow J ( Trawl Industries of Australia Pty Limited (in liquidation) v Effem Foods Pty Limited (1992) 36 FCR 406). At 413-414, his Honour made the threshold observation that ' ... the doctrine of privity in interest... operates in the same way upon the doctrines of cause of action estoppel and issue estoppel... [t]he basic requirement of a privy in interest [being] that the privy must claim "under or through" the person to whom he is said to be a privy... [t[he necessary identity in interest may arise from a successive relationship in a temporal sense..., when finding the necessary privity, in a succussive or mutual relationship, the courts have looked to legal rather than economic indicia as the criterion of operation of the privity doctrine '. One example to which his Honour referred (at 414) was of holders of successive interests in the same fund, notwithstanding that they had become members of the fund subsequent to dismissal of proceedings brought by other beneficiaries. His Honour found that the applicant for relief in Effem ' ... was not claiming under or in virtue of any legal right of the other applicants in the present proceedings '. The taxpayer applicants' contended that there was an absence of satisfaction in the circumstances of this case of the requirement of privity of interest in relation to the respective claims of IEF and QTH on the one hand and that of Spassked on the other, implicitly notwithstanding that each was a wholly owned subsidiary of IEL, and moreover traced their ultimate corporate membership to the Adsteam Group. In any event, the taxpayer applicants contended in written submissions in reply as 'not disputed' that '[i]f Spassked and IEL are not estopped from pursuing appeals in other years that their privies cannot be estopped', but whether the converse of that proposition is true may be another matter, depending upon the scope of the doctrinal notions of privy and privity of interest.