Case: Deputy Commissioner v Richard Walter Pty Ltd [1995] HCA 23 ; (1995) 183 CLR 168
Outcome: applied
Secondly, as the reference in s 177(1) indicates, a person dissatisfied with an assessment has a full right of challenge under Part IVC of the Taxation Administration Act 1953 (Cth) and the grounds upon which an assessment may be challenged are broad. In Deputy Commissioner v Richard Walter Pty Ltd [1995] HCA 23 ; (1995) 183 CLR 168 (' Richard Walter ') Brennan J said (at 195): 'The challenge may be made before either an administrative or a judicial tribunal (at the taxpayer's election) on any ground which affects the taxpayer's liability to tax or the quantum thereof including the Commissioner's power to make the assessment to which the taxpayer has objected.' 39 In the absence of detailed submissions I will refrain from expressing a concluded view on this point, and I turn to consider the second question, namely, whether a breach of the hearing rule under the Act could arguably give rise to a successful claim for relief under s 39B of the Judiciary Act . 40 The High Court considered the effect s 175 and s 177 of the Act in Richard Walter . At least a majority of the Court considered that an assessment cannot be challenged on an application under s 39B of the Judiciary Act unless one of the three matters identified by Dixon J (as he then was) in R v Hickman; Ex parte Fox and Clinton [1945] HCA 53 ; (1945) 70 CLR 598 (' Hickman ') is established. In a well-known passage dealing with the effect of a privative clause, Dixon J said (at 615): 'Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body.' 41 In Richard Walter , Mason CJ referred to this as a principle which had gained acceptance (at 179) and Brennan J (as he then was) referred to it as a principle of construction which should be applied to s 175 of the Act (at 195). Deane and Gaudron JJ took a similar view to that expressed by Brennan J. Their Honours said (at 211): 'That approach should, in our view, be applied to the construction of s 175 of the Act. The result of its application is that s 175's protection from invalidity is applicable only if the purported "assessment" (i) is "a bona fide attempt" by the Commissioner or other authorised officer to exercise powers conferred by the Act, (ii) "relates to the subject matter" of the Act and (iii) "is reasonably capable of reference to" those powers. If a purported "assessment" does not satisfy those three requirements, the protection of s 175 will be unavailable and the purported "assessment" will be invalid. That being so, s 177(1) of the Act is inconsistent with s 75(v) of the Constitution to the extent that it purports to make a certificate of the Commissioner or a Second or Deputy Commissioner conclusive evidence of the due making of an assessment in proceedings in the original jurisdiction of this Court under s 75(v) in which it is alleged that the assessment does not satisfy one or more of those requirements. In what follows, references to an assessment (or a determination) not being "bona fide" should be understood as encompassing not only failure to satisfy the first requirement but also a failure to satisfy either the second or third.' 43 It seems to me that unless Richard Walter has been overruled by the High Court, it is binding on me and the applicant's claim for relief under s 39B of the Judiciary Act insofar as it is based on an alleged breach of the hearing rule arising at common law cannot succeed. 44 The applicant submitted that the High Court adopted a line of reasoning in Plaintiff S157/2002 v The Commonwealth of Australia [2003] HCA 2 ; (2003) 211 CLR 476 (' S157 ') which suggests a different approach will now be taken to privative clauses or the like than that taken in Richard Walter . In particular, the applicant submitted that the decision in S157 meant a breach of the rules of procedural fairness may not be protected by a privative clause or the like. In S157 , the Court held that the privative clause in the Migration Act did not prevent judicial review of decisions which involved jurisdictional error. 45 Gleeson CJ said that in the particular statutory context of the Migration Act the privative clause did not operate to exclude judicial review for breach of the requirements of natural justice (at 493-494 [35]-[38]). His Honour did not disapprove of Hickman ; he said that as a matter of statutory construction it did not contain the relevant principles for the case before him. He referred to the decision in Richard Walter on two occasions without disapproval (at 484 [11], 488 [19]). Gaudron, McHugh, Gummow, Kirby and Hayne JJ said that Hickman was not a principle but 'simply a rule of construction allowing for the reconciliation of apparently conflicting statutory provisions' (at 501 [60]). There is no general rule as to the meaning or effect of a privative clause. Their Honours said (at 501 [60]) (footnotes omitted): 'Rather, the meaning of a privative clause must be ascertained from its terms; and if that meaning appears to conflict with the provision pursuant to which some action has been taken or some decision made, its effect will depend entirely on the outcome of its reconciliation with that other provision.' 46 Their Honours cited Richard Walter without disapproval. Callinan J adopted a similar approach (at 533-534 [159]). 47 I do not think that the decision in S157 throws any doubt on the particular principles to be applied to the provisions of the Act as enunciated by the High Court in Richard Walter . That is, to successfully challenge an assessment, one of the Hickman provisos must be established. That is the view taken in other decisions of this Court: Engler v Commissioner of Taxation (No 2) (2003) 52 ATR 642 at [44] per French J; Deputy Commissioner of Taxation v Warrick (No 2) (2004) 56 ATR 371 at [77]-[86] per French J. In any event, even if there was reason to think the High Court might not follow Richard Walter , until that Court overrules the decision I am bound to follow it. I might add that the principles stated in Richard Walter have been applied by this Court on a number of occasions: see Briglia v Commissioner of Taxation (2000) 44 ATR 166; Australia and New Zealand Banking Group Limited v Commissioner of Taxation [2003] FCA 1410 ; (2003) 137 FCR 1 where Kenny J refers to the relevant authorities 48 I summarise my conclusions with respect to the applicant's fourth claim as follows. There is no arguable case of bad faith. There is no arguable case of a breach of s 166 and, even if there was, there is no arguable case that such a breach affects the validity of the assessment. Even if at common law there was an obligation to observe the hearing rule in connection with the making of an assessment the decision in Richard Walter means that there is no arguable case that a breach of such an obligation can form the basis of a successful challenge under s 39B of the Judiciary Act . 49 In my opinion, none of the applicant's claims are arguable. In those circumstances, an order should be made dismissing the proceeding. I will hear the parties as to costs and other orders. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate: Dated: 23 March 2007 Counsel for the Applicant: Mr M Hoile Solicitor for the Applicant: McNamara Business &amp; Property Law Counsel for the Respondent: Mr R Ross-Smith Solicitor for the Respondent: Australian Taxation Office Legal Services Branch Date of Hearing: 29 August 2006 Date of Judgment: 23 March 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/394.html