Case: Commissioner of Taxation v Queensland Trading and Holding Company Limited [2006] FCAFC 112
Outcome: discussed
paragraph 17 of the reasons for judgment, delete the quotation mark that appears after the words 'primary tax'. I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. Associate: Dated: 6 October 2006 FEDERAL COURT OF AUSTRALIA IEL Finance Limited v Commissioner of Taxation [2006] FCA 1293 PRACTICE AND PROCEDURE summary judgment entered upon strike-out of initiating processes comprising statements of facts, issues and contentions pleaded by three corporately related taxpayers in complex revenue disputes partial dismissal of taxpayers' appeals primary ground of dismissal being abuse of process secondary ground of dismissal Anshun estoppel appropriate form of orders as to dismissal of parts of initiating processes of each applicant order to be made as to costs Taxation Administration Act 1953 (Cth) ss 14ZZO , 14ZZP , 14ZR (1), 14ZU , 14ZW , and 14ZZ Federal Court of Australia Act 1976 (Cth) ss 22 and 23 Federal Court Rules O 20 subrule 2(1) IEL Finance Limited and Others v Commissioner of Taxation (2006) 62 ATR 165 referred to Commissioner of Taxation v Queensland Trading and Holding Company Limited [2006] FCAFC 112 discussed Hunter v Leahy and Others [1999] FCA 1075 ; (1999) 91 FCR 214 cited 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 29 SEPTEMBER 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 539 OF 2004 BETWEEN: IEL FINANCE LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: CONTI J DATE OF ORDER: 29 SEPTEMBER 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Paragraphs 5 to 16, 18, 21, 26 to 51, 60 to 62 and 65 to 67 of the applicant's amended statement of facts issues and contentions be struck out. 2. The applicant's appeal against the respondent's taxation objection decision so far as it relates to the assessment of the applicant's taxable income for the year ended 30 June 1993 be dismissed. 3. The applicant pay the respondent's cost of this motion and of the application to date. 4. The applicant be granted leave to file a further amended statement of facts, issues and contentions on or before 21 days from the date of this order. 5. The respondent have leave to file any reply to the applicant's further amended statement of facts, issues and contentions on or before 21 days from the date of service of the applicant's further amended statement of facts, issues and contentions. 6. The applicant be granted leave to file an application for leave to appeal and a notice of appeal from the judgment of Conti J dated 21 March 2006 and the foregoing orders on or before 20 October 2006. 7. The applicant's application for leave to appeal from the judgment of Conti J dated 21 March 2006 and the foregoing orders be heard concurrently with the applicant's appeal against such judgment and orders by a Full Court of this Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules . IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 540 OF 2004 BETWEEN: QUEENSLAND TRADING AND HOLDING COMPANY LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: CONTI J DATE OF ORDER: 29 SEPTEMBER 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Paragraphs 4 to 18, 20, 23, 30 to 59, 63 to 67 and 69 to 72 of the applicant's amended statement of facts, issues and contentions be struck out. 2. The applicant's appeal against the respondent's taxation objection decision so far as it relates to the assessment of the applicant's taxable income for the year ended 30 June 1991 be dismissed. 3. The applicant pay the respondent's costs of this motion and of the application to date. 4. The applicant be granted leave to file a further amended statement of facts, issues and contentions on or before 21 days from the date of this order. 5. The respondent have leave to file any reply to the applicant's further amended statement of facts issues and contentions on or before 21 days from the date of service of the applicant's further amended statement of facts, issues and contentions. 6. The applicant be granted leave to file an application for leave to appeal and a notice of appeal from the judgment of Conti J dated 21 March 2006 and the foregoing orders on or before 20 October 2006. 7. The applicant's application for leave to appeal from the judgment of Conti J dated 21 March 2006 and the foregoing orders be heard concurrently with the applicant's appeal against such judgment and orders by a Full Court of this Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules . IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 543 OF 2004 BETWEEN: IEL FINANCE LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: CONTI J DATE OF ORDER: 29 SEPTEMBER 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Paragraphs 5 to 16, 18, 21, 26 to 51, 59 to 51 and 65 to 68 of the applicant's amended statement of facts, issues and contentions be struck out. 2. The applicant's appeal against the respondent's taxation objection decision so far as it relates to the assessment of the applicant's taxable income for the year ended 30 June 1996 be dismissed. 3. The applicant pay the respondent's costs of this motion and of the application to date. 4. The applicant be granted leave to file a further amended statement of facts, issues and contentions on or before 21 days from the date of this order. 5. The respondent have leave to file any reply to the applicant's further amended statement of facts, issues and contentions on or before 21 days from the date of service of the applicant's further amended statement of facts, issues and contentions. 6. The applicant be granted leave to file an application for leave to appeal and a notice of appeal from the judgment of Conti J dated 21 March 2006 and the foregoing orders on or before 20 October 2006. 7. The applicant's application for leave to appeal from the judgment of Conti J dated 21 March 2006 and the foregoing orders be heard concurrently with the applicant's appeal against such judgment and orders by a Full Court of this Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules . IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 94 OF 2005 BETWEEN: SPASSKED PTY LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: CONTI J DATE OF ORDER: 29 SEPTEMBER 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Paragraphs 5 to 16, 18, 24 to 49, 57 to 59 and 62 to 64 of the applicant's amended statement of facts, issues and contentions be struck out. 2. The applicant's appeal against the respondent's taxation objection decision so far as it relates to the assessment of the applicant's taxable income for the year ended 30 June 1994 be dismissed. 3. The applicant pay the respondent's costs of this motion and of the application to date. 4. The applicant be granted leave to file a further amended statement of facts, issues and contentions on or before 21 days from the date of this order. 5. The respondent have leave to file any reply to the applicant's further amended statement of facts, issues and contentions on or before 21 days from the date of service of the applicant's further amended statement of facts, issues and contentions. 6. The applicant be granted leave to file an application for leave to appeal and a notice of appeal from the judgment of Conti J dated 21 March 2006 and the foregoing orders on or before 20 October 2006. 7. The applicant's application for leave to appeal from the judgment of Conti J dated 21 March 2006 and the foregoing orders be heard concurrently with the applicant's appeal against such judgment and orders by a Full Court of this Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules . 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 AND HOLDING COMPANY LIMITED AND SPASSKED PTY LIMITED Applicants AND: COMMISSIONER OF TAXATION Respondent JUDGE : CONTI J DATE: 29 SEPTEMBER 2006 PLACE: SYDNEY REASONS FOR ORDERS On 21 March 2006 I directed the parties to the four subject proceedings ( IEL Finance Limited and Others v Commissioner of Taxation (2006) 62 ATR 165) to provide draft declarations and/or orders giving effect to the reasons for judgment delivered on that prior occasion. The first of those four proceedings, being numbered NSD 539 of 2004 and involving IEL Finance Limited as applicant, was treated by the parties as the precedent vehicle, for the most part, for implementation of orders to be made in the remaining three proceedings. The abbreviations adopted in these reasons reflect those used in the preceding principal reasons for judgment of 21 March 2006. There appears to be no controversy between the relevant parties regarding the content of the first order to be made in all four proceedings brought of course at the instance of the applicable applicant. Nor is there controversy as to consequential orders numbered 4 to 7 concerning grant of leave to the applicant in all four proceedings to file the amended pleading and to the Commissioner filing a subsequent reply. Where controversy lies is in relation to the nature and scope of the order required to give effective operation as to the implications of the strike-out of the foregoing paragraphs of amended statement of facts, issues and contentions (the proposed order 2) and to the order to be made as to costs of this motion and of the application for summary judgment (the proposed order 3). IEF contended the following in relation to the operation or implications otherwise of s 14ZZP concerning what is described therein as 'an appeal against an appealable objection decision under section 14ZZ' : (i) the text of s 14ZZP refers to the making of orders in relation to the decision, and so much usually involves the making of orders which either allow an appeal, disallow an appeal, or allow an appeal in part, often with a direction to the Commissioner as to how to assess or otherwise deal with the matter; in each of those cases however, the order disposes of the whole of the objection decision and not just part of it; and (ii) the section is expressed to operate where the appeal against the objection decision has been heard, and by necessary implication has been determined; it is only at that time that an order dealing with the whole of the objection decision may be made. In short, the contention of IEF seemingly boiled down to the proposition that since there can be only one objection decision, or more precisely in the dicta of the Full Court in Commissioner of Taxation v Queensland Trading and Holding Company Limited [2006] FCAFC 112 (Ryan, Heerey and Edmonds JJ) extracted in [10] below, 'only one decision in respect of each objection', there can only be an order of a court of competent jurisdiction made in relation to the whole of that objection decision. Absent any statutory inhibition to the contrary, more than one species or measure of relief may be available as a consequence of the exercise of what may be described as a statutory decision. The appellate proceedings in the Full Federal Court in relation to the subject litigious context have not yet of course been heard or determined. IEF submitted that the effect of the Court's ruling in relation to the Commissioner's interlocutory (strike-out) motion (the orders sought thereby being summarised in [3] of my reasons for judgment of 21 March 2006) is that IEF is estopped from challenging its liability to the primary tax controversially assessed by the Commissioner, whether by reason of the doctrine of abuse of process or of estoppel. That ruling of the Court in IEF's submission is procedural in nature, the same not having constituted the concluded determination of the Commissioner's objection decision(s) in relation to each corporate taxpayer (ie each applicant) by reason of the taxpayers' pursuit of the subsisting appeals. That being so, IEF submitted further that the respective decisions of the Commissioner in relation to the objection to each assessment, the same not being divisible or susceptible to partial setting aside in the manner contended by the Commissioner, the appeals of each of the applicants (inclusive of course of IEF) cannot be partly dismissed. I interpolate to observe, for what it may presently matter, that the primary basis for my upholding the Commissioner's application for summary judgment was that of abuse of process, albeit that I found further in favour of the Commissioner on the basis of estoppel. Support for the propositions so advanced by IEF was said to be found in the judicial reasoning of the Full Federal Court in Commissioner of Taxation v Queensland Trading and Holding Company Limited , where in the joint judgment of Ryan, Heerey and Edmonds JJ, the following appears at [20]: 'As there can only be one objection by each of the taxpayers in respect of the assessment of primary tax and additional tax notified by the notice issued to each of them, there can in our view be only one decision in respect of each objection, and that is the objection referred to in s 14ZY of the [Administration Act] . The decision can accommodate both the disallowance of the objection or an allowance of it, in whole or in part, and in the latter case irrespective of whether it values reduction of the primary tax assessed, further remission of the additional tax assessed or both.' The emphasis appearing in the third and fourth lines above was that of IEF. The issue here arising may be framed as to whether the order consequential upon a decision of the Commissioner may operate in the present context to the extent or of the scope framed by the Commissioner in [3] above, or whether expression may only be given to my findings on 21 March 2006 in the way framed by the applicants in [3] above, being a way for which incidentally no precedent was cited, doubtless because of the unusual circumstances of the present proceedings involving not just more than a single year of income but three discrete taxpayer applicants. Given the significance of the indivisibility of an objection decision for which it contended, IEF submitted further that the appropriate course for adoption, in order to give consequential effect, should be for the Court to make an order or orders which would reflect the estoppel ruling, but which would leave or postpone the formulation of an ultimate order or orders in relation to the respective objection decisions until the pending appeal has been heard and determined. That outcome was submitted to be achievable by the adoption of what IEF proposed in terms of order 2 by way of an injunction alone. As to order 3 proposed by the Commissioner, which relates of course to the costs of the proceedings at first instance, it was explained by IEF that it has adopted for the purpose of its approach the wording in the final line of my principal reasons, being 'The Commissioner must have the costs of the proceedings to date, inclusive of the costs related to the present summary application' . IEF submitted that since the dispute between the parties regarding so-called penalty tax remains on foot, and that much of the evidence in relation to that issue is common to the dispute already litigated at first instance regarding primary tax, it was IEF's understanding that the Court was intending to refer thereby to so much only of the costs of the proceedings to date as related to the determination of the applicants' taxable income for the relevant years of income, that is to say, those years of income the subject of the so-called estoppel point issue. The practical difficulty in that regard would be the resolution of what work has been exclusively referrable to the 'penalty tax' issue remaining for resolution, as distinct from what work was referrable to the estoppel issue, to the extent those distinctions were susceptible to being drawn for the particular purpose.