Case: Port of Melbourne Authority v Anshun Pty Limited [1981] HCA 45 ; (1981) 147 CLR 589
Outcome: applied
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. 4 The Commissioner's case for the summary relief sought against each of the taxpayer applicants was advanced on the footing of issue estoppel, Anshun estoppel and/or abuse of process, by reason of the outcome of the earlier concluded Spassked proceedings in this Court arising out of the disallowance of objections to the income tax assessment issued to Spassked in respect of the year of income ended 30 June 1992. The Commissioner acknowledged that there has never existed any agreement to the effect that the outcome of those earlier concluded Spassked proceedings relating to the 1992 year of income would bind the taxpayer applicants to an outcome in favour of the Commissioner in relation for instance to the present appeals. The taxpayer applicants deny the availability of any such summary relief. They point to the circumstance that objections of the taxpayer applicants respectively involved in relation to those further fiscal years 1991, 1993, 1994 and 1996 had not been determined by the Commissioner at the time of conclusion of the Spassked 1992 fiscal year, and assert that 'the issue for determination in each year is essentially different'. That assertion was based upon, or at least largely upon, what the taxpayer applicants assert to have been 'repeatedly held by the Privy Council', and upon 'factual differences between the 1992 fiscal year and those fiscal years presently in dispute, and moreover that 'save as to Spassked, the present applicants were not and could not have been party to the earlier proceedings', and therefore it cannot be said that the taxpayer applicants' claims should have been raised in the earlier proceedings if they were to be raised at all. 5 The issues arising for present determination were summarised by the taxpayer applicants' so-called 'Amended Statement of Facts, Issues and Contentions' filed in the proceeding, involving in each case challenges to the correctness of assessments of the Commissioner to primary tax: (i) as to proceedings NSD94 of 2005 whereof Spassked is the applicant, whether interest incurred by Spassked in the 1994 fiscal year was lawfully deductible by Spassked. (ii) as to proceedings NSD539 of 2004 whereof IEF is the applicant, whether losses sustained by Spassked by way of interest expense and purportedly transferred to IEF in respect of the 1993 fiscal year were lawfully incurred for income tax purposes; (iii) as to proceedings NSD540 of 2004 whereof QTH is the applicant, whether losses sustained by Spassked by way of interest expense and purportedly transferred to QTH in respect of the 1991 fiscal year were lawfully incurred for income tax purposes; (iv) as to proceedings NSD543 of 2004 whereof IEF is the applicant, whether losses sustained by Spassked by way of interest expense and purportedly transferred to IEF in respect of the 1996 fiscal year were lawfully incurred for income tax purposes; 6 Put in terms of monetary significance, the findings sought by the respective taxpayer applicants are as follows: (i) QTH seeks a finding that Spassked was entitled to a deduction of $774,746,526 for interest incurred on IEF loans for the 1991 year of income pursuant to s 51(1) of the Tax Act; (ii) IEF seeks findings that: &#8226; first, Spassked incurred a loss available under s 79E of the Tax Act for the 1993 year of income of $465,626,785; &#8226; secondly, Spassked incurred a loss of $545,943,416 for the 1994 year of income; (those findings sought by QTH and IEF turn on the issue as to whether Spassked was entitled to deductions pursuant to s 51(1) of the Tax Act for the interest it incurred on the IEF loans in prior years of income, including 1991, 1992, 1993 and 1994); (iii) Spassked seeks a finding that it was entitled to an allowable deduction pursuant to s 51(1) of the Tax Act of $79,284,023 for interest incurred on the IEF loan in respect of the 1994 year of income. The issues arise from complex circumstances which will be later explained and have been debated widely and in terms which need to be largely recorded. For that reason I will set out the submissions in particular of the taxpayer applicants, in many instances by way of citation of the terminology actually used. 7 The Commissioner contended that it was 'clear', from the manner in which the earlier concluded Spassked proceedings (that is for the 1992 fiscal year) were conducted by and between the Commissioner and Spassked, that 'Spassked understood that the decision in those earlier proceedings would determine the question of deductibility of the interest in all the other years of income presently in issue'. In that regard, in each year of income involved, it was explained that interest was incurred in relation to the same set of loans by Spassked as borrower. Hence the present summary judgment applications were brought by the Commissioner upon the basis of abuse of process, and additionally or alternatively upon the basis of issue estoppel and Anshun estoppel. I have of course already identified the earlier concluded Spassked proceedings as related to the 1992 fiscal year, and which were resolved in favour of the Commissioner in the Federal Court, at first instance by Lindgren J on 14 February 2003, and on appeal by all members of a Full Federal Court comprising Hill, Gyles and Lander JJ on 8 December 2003. In the Full Court, the leading judgment was that of Hill and Lander JJ jointly, the outcome wherewith Gyles J agreed for relatively brief reasons of his own. A subsequent application by Spassked for leave to appeal to the High Court was dismissed. 8 Whether Spassked so 'understood' the significance of those earlier Spassked decisions to be that contended by the Commissioner was contested by the taxpayer applicants. So much would therefore need to be established by the Commissioner as a matter of inference arising in and from the events which happened in relation to the context to, the conduct of and the subsequent determination of the earlier concluded Spassked proceedings. The Commissioner drew attention, for one matter, to what appeared in the written submissions of Spassked's counsel to the Full Court, as follows ( inter alia ): 'At issue in this appeal is whether a deduction is allowable to Spassked under sec 51(1) of the Income Tax Assessment Act 1936 ... for interest incurred by it to IEF in the years of income ended 30 June 1988 to 1994'. The Full Court at least implicitly acknowledged the significance of that description of the issue arising in the earlier concluded Spassked proceedings in the joint judgment of Hill and Lander JJ observing at [4] as follows: 'The total of deductions claimed in the years of income 1988 to 1994 inclusive, by the various companies in the IEL Group, which deductions were disallowed by the commissioner, totalled $6,527,082,709.00. The present appeals will resolve not only the issues of deductibility which they raise of amounts disallowed to the three taxpayers which are the appellants in them, but also the deductibility of losses claimed by the other companies in the IEL group.' My description of the specific issues arising in the proceedings the subject of the present strike-out application relate to losses sustained by Spassked within those six years of income ended 30 June 1988 to 30 June 1994. The present case of the Commissioner was that deductibility of interest incurred by Spassked on its IEF borrowings for each of the fiscal years 1988 to 1994 was resolved and determined against Spassked and in favour of the Commissioner in the earlier concluded Spassked proceedings, and accordingly the taxpayer applicants were seeking impermissibly to relitigate that issue. 9 The foregoing observation of the joint judgment of the Full Court in Spassked accorded with that which elsewhere appeared in the Full Court's reasons, as well as the reasons at first instance to which I have elsewhere made reference. Although it was mutually accepted by the parties that there was no formal agreement that the outcome of the earlier concluded Spassked proceedings would operate or prevail as well in relation to other fiscal years of relevance in the present dispute, the Commissioner asserted that there existed at all material times a mutual understanding that so much would be the case. The Commissioner's contention, as I have foreshadowed to similar effect, was that '[i]t is clear from the manner in which it conducted the earlier proceedings that Spassked understood that the decision in those proceedings would determine the question of deductibility of the interest [commitment or liability] in all the years of income, including the years of income in these proceedings'. In that regard, in the Commissioner's Statement of Facts Issues and Contentions filed in the earlier concluded Spassked proceedings, the following appeared: '11. During the period of 1 December 1987 to 30 June 1992, interest expense was incurred by Spassked and accrued due to IEF on the borrowed amounts outstanding. These interest expenses were capitalised and debited in the books of IEF (and, conversely credited on the books Spassked) to the loan account, thereafter themselves, attracting further interest. 12. In the period from 1 July 1987 to 30 June 1994, (the "Period") the following total amounts of interest were capitalised in the books of account: Year Ended Interest ($) 30 June 1998 113,184,428 30 June 1989 293,220,636 30 June 1990 658,487,229 30 June 1991 774,746,526 30 June 1992 888,165,526 30 June 1993 465,626,741 30 June 1994 79,284,023 TOTAL 3,272,715,109 13. The interest expenses incurred by Spassked during the Period were incurred for the purposes of furthering its present and prospect of income producing activities, being the acquisition and holding of shares in GIH in respect of which Spassked has received and anticipates receiving in the future, substantial assessable income in the form of dividends. 14. The interest expenses incurred by Spassked and claimed as an allowable deduction in each of the years of income during the Period returned by IEF as assessable income in the same years of income and treated as such by the respondent.' 10 It appears that the reason why the duration of the years of income deductibility of interest at the instance of Spassked in the first place was specified by the reasons for judgment in the earlier Spassked proceedings in relation to the 1988 to 1994 fiscal years was explained by the primary judge (at [27]-[28]) as follows: '[27] In 1994 the Spassked structure as "wound up" when Spassked borrowed from GIH, and to a small extent from IEL, in both cases interest free, and used the borrowed funds to pay out its debt to IEF in full, that is to say, to pay both the capital sums it had borrowed from IEF and the capitalised interest on its borrowings. From that time, GIH was Spassked's creditor in place of IEF, but, unlike IEF, was not charging Spassked interest. [28] The parties having an interest, in practical terms, in the outcome of the three proceedings are certain banks as creditors of the members of the Adsteam Group, and, of course, the commissioner.' The reference above to 'GIH' is to Group Investment Holdings Pty Ltd, a member of the subject corporate group referred to in these reasons immediately below. 11 Further reasons for judgment of Lindgren J at first instance contained the following findings at [193]-[194]: 'SPASSKED'S GENERAL COURSE OF BORROWING FROM IEF [193] ... the last of Spassked's borrowings from IEF occurred on 28 June 1990. It was on the total amount borrowed, $3,737,142,866 down to that date plus subsequently accrued and capitalised interest, that the 1992 interest of $888,165,526 must have been calculated. The parties proceeded on the basis that no distinction was to be drawn between Spassked's various borrowings from IEF and investments in GIH, or between the various investments by GIH in the Subcos, all over the years 1988-90, or between the seven annual amounts of capitalised interest for the years 1988-94... Accordingly, I need not distinguish between the various sums borrowed on which the interest accrued, or between the uses to which those sums were put. [194] Nor is it suggested that there was any relevant change of circumstances, including a change in the motivation or the subjective purpose of the directors of Spassked, throughout the 3 years of income in which the borrowings were made and the borrowed amounts invested in GIH.' The reference above to 'Subcos' was to an abbreviation adopted for the IEL group subsidiary companies in whose favour GIH in turn placed group funds for purported investment. 13 Moreover in addition to what I have already extracted, the joint reasons for judgment of Hill and Lander JJ recorded the following observations at [77], [110]-[111] and [113]: '[77] ... Income tax is an annual tax. Hence the question whether interest was incurred in gaining or producing assessable income or in carrying on a business the purpose of which was the gaining of assessable income is a question which is required to be determined from year to year. The present case was argued and determined by the learned primary judge on the basis that the relevant facts were those which existed at the time the Spassked proposal was implemented. It seems to have been common ground between the parties that there was no relevant factual change in any relevant year of income. We are content to adopt the same course while noting that had there been a relevant factual change so that Spassked would no longer be precluded from deriving assessable income indefinitely the outcome would then be different. ... [110] The evidence of these two witnesses leads clearly to the conclusion that the interest incurred was not, in any year of income, incurred in gaining or producing assessable income, but rather that it was a part of the structure planned that in the foreseeable future Spassked would not, deliberately, derive assessable income. Further, it leads to the conclusion that any plan to wind up the structure and thus bring about the result that thereafter Spassked would derive assessable income was only fleetingly considered, if at all. [111] It demonstrates, that far from being a case where interest was incurred on a loan to acquire shares which it was hoped would be dividend producing in the future (where the interest would be prima facie deductible), this was a case on its own facts, those being that interest was incurred on a loan to acquire shares where, in all the years of income in question and for the foreseeable future from the time the structure was established steps would be taken to ensure that the shares acquired would not produce anything but a nominal amount of assessable income. ... [113] ... the present was a case where the proposal was that Spassked should be deliberately non-income producing for the foreseeable future. Far from it being wrong in law to have regard to the evidence to which reference has already been made that evidence makes it clear that far from there being an "expectation" or even hope that the shares in Spassked would be income producing the proposal was designed to ensure and its implementation did ensure that at no relevant time could it be said that Spassked incurred in the years of income interest on moneys used by it to acquire shares in the course of any activity carried on by it in the course of gaining or producing assessable income. Rather the occasion of each outgoing of interest was to be found in those shares deliberately being non-income producing.' The 'two witnesses' referred to in [110] extracted above were Mr Daniels and Mr Cottam, each being senior executives of IEL. 14 In his reasons for judgment for likewise dismissing the Spassked appeal, Gyles J expressed his agreement with the conclusion of Hill and Lander JJ that the findings by Lindgren J were ' open to him and... not affected by any operative error' . His Honour continued at [127]-[128] as follows: '[127] Some business decisions are good, some are bad. Indeed, with the benefit of hindsight some may be seen as negligent or even profligate. The point may be made by considering the arm's length external borrowing by the IEL Group to make the corporate acquisitions in question. Some of those acquisitions might have been successful and some might have failed. In hindsight, some may have been doomed to failure. However there would be little doubt as to the deductibility of interest on all of those borrowings. [128] The same principle does not apply to purely intra-group arrangements with no external aspect. All of the relevant arrangements were between companies with the same beneficial ownership. Many of the companies involved, including Spassked, had no external role at all. The arrangements involving those companies were inherently variable at the will of the ultimate board of directors. They do not reflect the exercise of business judgment in the relevant sense. Thus, the requisite connection or relationship between the outgoing and the earning of assessable income is not to be inferred but must be positively established. The trial judge found that that had not been done. I agree. Further, the inherently variable nature of the arrangements explains why the one error by the trial judge was of no consequence in the result.' 15 As I have foreshadowed, each of the taxpayer applicants in the Part IVC proceedings the subject of the Commissioner's present application for summary judgment was at all material times a wholly owned subsidiary of IEL, as were a large number of other subsidiary companies, IEL being at one time a listed public company. If I may be repetitive by reason of the complexity of the context to the present strike-out proceedings, those earlier Spassked proceedings, which concluded in consequence of Spassked's unsuccessful application for special leave to appeal to the High Court, related solely to the fiscal year ended 30 June 1992, whereas the issues the subject of the present proceedings concern the other fiscal years prior and following 1992 which I have identified. Taking as a starting point my outline of the substance of the present proceedings earlier described, the implications of that outline may be further described in the following terms: (i) whether IEF and QTH are entitled to deductions under s 80G of the Income Tax Assessment Act 1936 (Cth) (as amended) ('the Tax Act') for losses transferred by Spassked in relation to the years of income ended 30 June 1991, 1993 and 1996; (ii) whether the Spassked is entitled to deductions under s 51(1) of the Tax Act for interest incurred by it in favour of IEF in relation to the years of income ended 30 June 1991, 1993 and 1994; and (iii) the liability of each of those three applicants to penalties by way of additional tax under Part VII of the Tax Act, in the context of the Commissioner's negative decision as to remission of those penalties. 16 From the outset of the present strike-out proceedings, the Commissioner emphasised that the test of deductibility in each year of income, at least of present relevance, turned on the purpose of the borrowings and the use to which the borrowed funds were put, the decisions in Spassked at first instance and on appeal being summarised by the Commissioner to the effect that the borrowings were not made at any time material to Spassked for the purpose of deriving assessable income, and further that in none of the successive fiscal years in which it incurred an interest expense did Spassked use the borrowed funds in any activity carried on in the course of gaining or producing assessable income. 18 At first instance in the earlier Spassked proceedings relating to the 1992 fiscal year, Lindgren J made comprehensive findings which may be summarised as follows: (i) by late 1986, the shareholding and debt lines within the IEL Group were complex, partly because of a group policy adopted as from 1978 that any new investment should be acquired by a specific subsidiary dedicated to that purpose; this practice led to a proliferation of IEL subsidiaries which was exacerbated by the IEL takeover of other corporate groups having already complex structures; (ii) there was created so-called ' dividend traps ' within the IEL Group, arising from the circumstances that intermediate holding companies within the Group had substantial interest commitments in relation to borrowings, against which dividends receivable had to be applied before the amount of any profit or loss for that subsidiary could be determined; one so-called ' potentially damaging ' consequence for the IEL Group arising from the corporate structure thus in place was that the free flow of dividends from subsidiaries up to IEL (being then a listed public holding company) was adversely affected; hence if the taxable income otherwise of any such recipient subsidiary company would be less than the amount of the dividend receivable, the remaining part thereof otherwise available for rebate under s 46 of the Tax Act would be ' lost ', and that amount of dividend would be ' trapped ' within the recipient company and its qualification for a s 46 rebate in tax foregone; (iii) by late 1987, a new corporate structure was created within the IEL Group in which Spassked became centrally involved as a Group member; changes were made in order to obviate the fiscal disadvantage involved in the group corporate restructure whereby two IEL subsidiaries, one being Spassked and the other GIH, were interposed between IEL and IEF on the one hand, and the relevant investment subsidiaries (so-called Subcos) on the other; Spassked became the borrowing member of the Group, and GIH an intermediate parent company within the Group; (iii) IEL moreover became the owner of the issued shares in Spassked as well as in IEF, and IEL and Spassked became the owners of the following issued shares in GIH with the following consequences; Spassked held the A class shares, which entitled it to franked and unfranked dividends, full voting rights and participation in any surplus on a winding up; IEL held the B class shares, which entitled it to franked dividends only, limited voting rights and no right to participate in any surplus on a winding up; (v) between 30 December 1987 and 28 June 1990, Spassked borrowed principal moneys from IEF at interest, and claimed that as a result of the interest incurred by it on the IEF loans, at least during the 1988 to 1994 years of income inclusively, it sustained losses for tax purposes during those years of income; those losses were progressively transferred by Spassked to other members of the IEL Group, pursuant to s 80G of the Tax Act, up to and including the 1998 fiscal year; (iv) Spassked used the loan funds from IEF to capitalise GIH, and in the meantime deposited funds with IEF at interest; GIH in turn subscribed for shares in the Subcos which, in turn, acquired further investment group subsidiaries. Those inter-company movements were diagrammatically represented in the reasons for judgment of the Full Court by annexure 'A' thereto (headed 'Pre-Spassked Structure') and annexure 'B' thereto (headed 'Post-Spassked Structure'). 19 Lindgren J summarised the Spassked structure as ' tax neutral ', because the interest claimed by Spassked as a deduction was shown as assessable income in the hands of IEF, and if that had not been so, IEF would have suffered losses which it, instead of Spassked, could have transferred to other members of the Industrial Equity Group. His Honour concluded however that the interest expense incurred by Spassked in respect of the year ended 30 June 1992 was not a loss or outgoing incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for any such purpose, and was thus not deductible under s 51(1) of the Tax Act, and as I have already further recorded, Spassked's appeal to a Full Federal Court from his Honour's decision at first instance was dismissed, as was the subsequent application made by Spassked to the High Court for special leave to appeal. Following the resolution of the earlier Spassked proceedings by the Federal Court in 2003 in relation to the 1992 income year, the Commissioner determined, by way of disallowance, the objections to tax of the other IEL Group companies involved in the corporate restructure and other inter-company arrangements, being partly the present taxpayer applicants, and hence did so in relation to years of income additional to the 1992 income year. It is in the context of the present proceedings that the taxpayer companies IEF, QTH and Spassked have sought to propound distinctions from the concluded Spassked proceedings, and to do so by reference to the circumstance that the latter related to the determination of assessable income concerning Spassked in relation to the 1992 fiscal year, whereas the present proceedings relate to the determination of assessable income in relation to different fiscal years. 20 At the forefront of the Commissioner's present case is the proposition that there exists sufficient commonality between the issues raised and determined in the earlier Spassked proceedings and the issues arising for determination in the present proceedings. The Commissioner's contention is that in the case of each fiscal year presently in issue, as well as in the case of the 1992 fiscal year, interest was incurred on the same set of borrowings, and the Federal Court has determined, at first instance and on appeal in relation to the 1992 fiscal year, that those borrowings were not made in the course or for the purpose of derivation of assessable income, and further that in none of the subject fiscal years presently in dispute did Spassked use the borrowed funds in any activity undertaken in the course or for the purpose of gaining or producing assessable income. As a consequence, the Commissioner submitted that the taxpayer applicants (being of course respondents to the present strike-out proceedings brought at the instance of the Commissioner) cannot succeed unless they are able to persuade the Court that the conclusions of the Federal Court in the earlier concluded Spassked proceedings were incorrect. 21 I should also record that the Commissioner provided, by way of annexures to written submissions in chief, first an eight page summary setting out facts pleaded in the taxpayer applicants' amended statements of facts, issues and contentions that were asserted to be at least largely the subject of findings of the primary judge and of the Full Court in the context of the earlier Spassked proceedings, and secondly, a seven page summary comprising what was described as facts pleaded by each taxpayer applicant inconsistently with or contrary to facts already found by the Federal Court in the earlier Spassked proceedings. The taxpayer applicants have not exposed any material misstatement in respect of that restatement of facts and findings. The Commissioner pointed out that each taxpayer applicant has pleaded that it was the intention of the Adsteam Group (and thus of course the IEL Group) that GIH would pay dividends to Spassked at the earliest possible time after the dividend trap affecting Spassked would be removed, but the Commissioner emphasised that the contention that there was an intention and expectation that GIH would ever pay dividends to Spassked was rejected 'squarely' by both the primary judge and by the Full Federal Court. Instead it was found, as a fact, so the Commissioner emphasised, that there was no plan or intention to remove the dividend trap in relation to Spassked. The Commissioner emphasised moreover that the explanation provided by Mr Ryan, an executive of Bankers Trust, for the non-payment of dividends to Spassked, as to 'potential and threatened tax liabilities', was rejected by this Court in the earlier Spassked proceedings, and further that nowhere did Mr Ryan allege in his affidavit that the intentions and expectations of the controllers of the Adsteam Group should be attributed to IEL, Spassked and GIH. Nor did that allegation, so the Commissioner further pointed out, appear in the affidavits of Mr Daniels (whom I have earlier identified), filed in the earlier concluded Spassked proceedings. Moreover the Commissioner emphasised that the primary judge found that so long as Spassked was incurring an interest liability to IEF, or had undistributed profits attributable to it, Spassked would not receive dividends from GIH. Yet those losses, his Honour further found, continued to be utilized within the IEL group until 1998. 22 In the result, the taxpayer applicants as respondents to the present strike-out proceedings were required to address a number of findings at first instance, and confirmed by the Full Court on appeal, made in the context of resolution of the evidentiary issues the subject of the earlier concluded Spassked proceedings, being findings which bore directly as well as indirectly on the case raised and pleaded by the taxpayer applicants in the present proceedings. The taxpayer applicants were thus confronted with the present case for summary judgment framed on the basis of the doctrines as to issue estoppel, Anshun estoppel and abuse of process. To meet that case, the taxpayer applicants undertook extensive recourse in particular to authority of the Privy Council and the House of Lords for what was contended to constitute a long established exclusion of those doctrines operation in circumstances such as here involved. Unavoidably these reasons have rendered it to be expedient to extract a great deal of judicial dicta in order to adequately portray the thrust of the authorities respectively relied upon by both parties. 33 Moreover in upholding the decision of Lindgren J in Spassked at first instance, the Commissioner also emphasised that the joint reasons for judgment of Hill and Lander JJ in the Full Court had concluded at [113] that the occasion of each outgoing of interest was to be found in those shares being deliberately non income producing. If I may be repetitive, their Honours there explained that ' ... the evidence ... makes it clear that far from there being an "expectation" or even hope that the shares in Spassked would be income producing, the proposal was designed to ensure and its implementation did ensure that at no relevant time could it be said that Spassked incurred in the years of income interest on moneys used by it to acquire shares in the course of any activity carried on by it in the course of gaining or producing assessable income '. In his brief reasons in the Full Court for reaching consistently the same conclusion as Hill and Lander JJ, Gyles J identified the absence, in the circumstances of the earlier concluded Spassked proceedings, of the existence there of ' a bona fide business expense having a connection with or relation to potential assessable income, even if the outcome is uncertain or even speculative... ' 34 It was asserted accordingly by the Commissioner that if the taxpayer applicants were to be permitted to raise for determination in the present proceedings what the Commissioner described as 'the same issues that were raised, considered and determined in the earlier Spassked proceedings (namely what was the purpose of the borrowings and whether the borrowed funds were used in an activity carried on in the course of gaining or producing assessable income) and the [taxpayer] applicants are successful, there will then be on record inconsistent judgments of the Federal Court.' 35 By way of demonstration of that broadly framed contention of the Commissioner, I was referred to the following findings made by the primary judge, being findings in essence or substance acknowledged by the Full Court: (i) Spassked was a dividend trap and a tax loss repository; (ii) whilst operating as a dividend trap and repository of tax losses, Spassked would not receive dividend income; (iii) it was not part of the plan, purpose or expectation of the Spassked structure that GIH would pay dividends to Spassked; (iv) there was no plan, mechanism or time-frame according to which Spassked would cease to be a 'dividend trap', and cease to be a repository of tax losses, and instead would begin to receive dividend income from GIH; (v) the receipt of dividend income by Spassked was inimical to the objectives and operation of the Spassked structure; GIH was committed instead to a course of not paying dividends to Spassked; (vi) the receipt by Spassked of dividends from GIH formed no part of the motivation, subjective purpose or impetus underpinning the Spassked structure; (vii) it was the intention of the directors of Spassked that the Spassked structure should remain in place indefinitely; (viii) the so-called miniscule dividends Spassked did receive were nominal or cosmetic, and whatever the precise reasons were for the payment of the two dividends declared, those payments arose spontaneously and may have been an attempt to create an appearance; (ix) at no relevant time between 1988 to 1994 did Spassked incur interest on moneys used by it to acquire shares in the course of any activity carried on by it in gaining or producing assessable income; (x) there was no expectation or even hope that the shares in GIH would be income producing; (xi) the occasion of each outgoing of interest (as I have already foreshadowed) was to be found in the shares acquired in GIH deliberately being non income producing. Upon the footing of those outlined findings of the primary judge and explicitly or implicitly of the Full Court, the Commissioner's case was that the taxpayer applicants could not conceivably succeed in the present proceedings, and the strike-out application should therefore be granted. 39 Lindgren J recorded in his reasons for judgment at [2] that '... I was informed that similar circumstances also prevailed in each of the six years ended 30 June 1988, 1989, 1990, 1991, 1993 and 1994', and further at [193] that '[t]he parties proceeded on the basis that no distinction was to be drawn between Spassked's various borrowings from IEF and investments in GIH, or between the various investments by GIH in the Subcos, all over the years 1988-1990 or between the seven annual amounts of capitalised interest for the years 1988-1994...' , and further that '[a]ccordingly, I need not distinguish between the various sums borrowed on which the interest accrued, or between the uses to which those sums were put' . The reference to 'Subcos' was to investment subsidiaries, as I have earlier indicated, the involvement of which is more conveniently illustrated in the diagram to the reasons for judgment of the Full Federal Court. To not dissimilar effect were the observations made in the course of the joint judgment of Hill and Lander JJ of the Full Court in Spassked, at [4] and subsequently at [77], each of which I have already extracted in these reasons. Those observations were reflected in the conclusions of the joint judgment in the Full Court which I have also earlier extracted, which may be seen to focus upon expressions such as 'in any year of income', and 'in all the years of income in question' , and further upon the theme for instance in [113], which I have also extracted but which bears repetition, that 'the proposal was designed to ensure and its implementation did ensure that at no relevant time could it be said that Spassked incurred in the years of income interest on moneys used by it to acquire shares in the course of any activity carried on by it in the course of gaining or producing assessable income [but that] [r]ather the occasion of each outgoing of interest was to be found in those shares deliberately being non income producing' . 41 It is difficult to conceive of room in principle for excluding the operation of the doctrine of issue estoppel in relation to findings upon the nature and purpose of business activity undertaken for a period of time by a corporation relevantly to the decision falling for resolution irrespective of a context as here of annual income tax assessment. In fiscal contexts such as those arising for resolution in the present principal proceedings, the facts the subject of those findings to my understanding were fundamental to the decision in the earlier concluded Spassked proceedings. Nevertheless the taxpayer applicants referred at length to authoritative dicta submitted to be inconsistent with that preliminary observation on my part, and which I will later review. I should record, at this threshold stage of examination of authority, that the theme of the doctrine of issue estoppel lies in the public interest in the finality of litigation, and the concern with injustice inherent in permitting a litigant to be twice vexed with the same claim. The present circumstances tend to reflect a factor of public interest here conceivably involved, given the considerable length of time and therefore the amount of cost as to what would eventuate by way of largely repetitive proceedings of similar length and factual complexity to that of the earlier concluded Spassked litigation, where the substance of the proceedings would be likely to be essentially the same. So much may be reasonably said of the IEF/QTH/Spassked proceedings presently on foot, in the light of the context of the earlier concluded Spassked proceedings, albeit in the present case in relation to different, though nevertheless closely proximate, fiscal years, and perhaps the additional factor of taxpayer applicants additional to Spassked. Moreover in the light of what I have already recorded from dictum of Lindgren J at first instance and subsequently from dicta of the Full Court joint judgment of Hill and Lander JJ, in the context of course of the earlier concluded Spassked litigation, the thrust of the Commissioner's strike-out case gains significant momentum. 48 In any event as to the Commissioner's asserted reliance upon Anshun estoppel, additionally or alternatively to issue estoppel, and also to abuse of process, the Commissioner invoked the as the governing precepts what appears in the following well known passage in the joint judgment of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Pty Limited [1981] HCA 45 ; (1981) 147 CLR 589 at 602-603: '... there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few'. Given the Commissioner's case as to the wider context in which the earlier concluded Spassked proceedings were litigated, the Commissioner demonstrated at least a persuasive basis for proposition that reliance also upon Anshun may be invoked in the present context relating to the taxpayer applicants' claims for income tax deductibility concerning the 1991, 1993, 1994 and 1996 fiscal years, given of course the juxtaposition of the text of the foregoing dictum to the situation of raising a claim instead of a defence. 49 The Commissioner concluded submissions in outline in chief as follows: (i) the deductibility of Spassked's interest outgoings in all of the applicable years was central to Spassked's case in the earlier concluded Spassked proceedings; (ii) Spassked was given a full opportunity to litigate its claim to deduct the interest incurred on its IEF borrowings in the earlier Spassked proceedings; (iii) the Full Court made explicit findings concerning the deductibility of Spassked's interest outgoings in all applicable years, and made orders consequential upon those findings; each of the taxpayer applicants have sought findings and orders contrary to findings and orders previously made by the Federal Court below and on appeal; (iv) there would be manifest oppression and unfairness to the Commissioner, if the present application for summary judgment was to be dismissed; in the dictum cited earlier in Murphy , the Commissioner would thereby '... be vexed twice with the same claim'; (v) the balancing of justice overall favours the conclusion that it would be unduly oppressive to the Commissioner, and wasteful of the Federal Court's resources, for Spassked and the other taxpayer applicants to be given 'an opportunity to re-litigate' the earlier concluded Spassked proceedings. I should add that the Commissioner also addressed in chief, in anticipation of the contrary view of the taxpayer applicants, that IEF and QTH were privies of Spassked for the purpose of the operation of the doctrines of issue estoppel and Anshun estoppel, since each acquired income tax losses from Spassked in their capacity as wholly owned subsidiaries of IEL, as was also Spassked. It is appropriate that I address that less relatively complex issue for the most part in my final segment of conclusions to these reasons for judgment. 52 The taxpayer applicants' case in the present proceedings therefore was that it is enough for the taxpayer applicants to point to the circumstance, and the implications thereof according to law, that any such perception that the earlier concluded Spassked proceedings was of the nature of a test case based on the 1992 fiscal year could not elevate the decision to cover matters which were not before the Court as part of the proceedings, referring thereby to any significance of the earlier proceedings in relation to the 1991, 1993, 1994 and 1996 fiscal years. There has not been distilled however by the taxpayer applicants any materially differentiating factor involved in relation to those other fiscal years, other than the per se factor they propound as to a different fiscal year (ie 1992). In making that observation, I do not overlook the observation of Hill and Lander JJ in the Spassked appeal (at [77]), which I have earlier extracted, that ' [i]ncome tax is an annual tax [and] [h]ence the question whether interest was incurred in gaining or producing assessable income or in carrying on a business the purpose of which was the gaining of assessable income is a question which is required to be determined from year to year '. What is not to be also overlooked, in my opinion, are the findings of the Full Court on appeal, and the significance thereof, concerning the events and circumstances of what were the continuing business operations of the IEL corporate group both antecedent to and following upon the 1992 fiscal year, in line and consistently with those of the 1992 fiscal year, and concerning relevantly IEF and QTH as well as Spassked as members of the IEL corporate group. 63 The Commissioner's submission in relation to Chamberlain was to point out that in the earlier concluded Spassked proceedings, Spassked had sought and obtained a determination of facts and issues which necessarily resolved the liability of the taxpayer applicants to pay the primary tax assessed to them, and that the Federal Court's jurisdiction to prevent a re-litigation of those issues was confirmed by the Full Federal Court in its decision upon the initial appeal ( Chamberlain v Commissioner of Taxation (1991) 28 FCR 21), where Davies, Ryan and Foster JJ at [26] purportedly applied the doctrine of estoppel as exemplified in Hoysted , and thereby prevented the Commissioner of Taxation from seeking to re-litigate in the Federal Court upon the basis of a mistaken assumption upon which a consent judgment had been entered earlier in the Supreme Court. Incidentally, in the course of the reasons for judgment of Deane, Toohey and Gaudron in Chamberlain at 509, there was reproduced the first sentence of the dictum in Henderson I have earlier extracted, it being explained that ' Henderson was not concerned with res judicata in its strict sense but rather with its implications when an issue is sought to be raised which could and should have been litigated in the earlier proceedings ', referring thereby to what was established by the High Court's decision in Anshun. I would add for completeness that the success of the taxpayer in the High Court in Chamberlain was seemingly treated in any event as based on res judicata : see the joint reasons for judgment of Deane, Toohey and Gaudron at 507, and also the reasons of Brennan J at 504 and of Dawson J at 512. However the subsequent proceedings brought by the Commissioner in the Federal Court, also resolved as above indicated in favour of the taxpayer, turned on Anshun estoppel, by reason of the omission of the Commissioner to raise the issue of mistake in the earlier High Court proceedings. In the result I do not think that Chamberlain provides the assistance, at any rate decisively, for which the taxpayer applicants' case for denial of the operation of an estoppel in the present circumstances was propounded. On the other hand and for what it may matter, I think that the taxpayer applicants were correct in their rejection of the characterisation of Chamberlain as 'revenue proceedings', in the sense of involving an issue as to liability to tax and/or as to the assessable quantification of that liability as such. 83 The next further issue raised by the taxpayer applicants concerns the status of IEL and QTH as privies of Spassked in relation to the assessments in contest as to the fiscal years 1991, 1993 and 1996 whereof IEF and QTH respectively are applicants. I have earlier referred to authority generally regarding the notion of privies in so far as concerns the operation of the doctrines of res judicata and estoppel. There does not appear to be any juridical dicta as to privies bearing upon the doctrine of abuse of process, at any rate to which the taxpayer applicants were able to refer. In any event, the submission of the taxpayer applicants on the controversial subject of privies was that since IEF and QTH were not parties to the earlier Spassked proceedings, '... they cannot be subject to any claim of issue estoppel'. Though not so expressed in terms, I will assume that the contention is intended to relate also to Anshun estoppel. 84 The taxpayer applicants repudiated the Commissioner's case as to satisfaction of the notion of privy, as espoused in the joint judgment of Northrop and Lee JJ in Effem, on account of IEF and QTH being effectively successors to the relevant losses of Spassked within the scope of s 80G. That contention of the Commissioner was said to be misstated in the following ways. (i) any so-called right which Spassked may have to an interest deduction is one which arises under s 51(1) of the Tax Act, being a right which, when taken in combination with any other deductions and any income received, will determine Spassked's income or loss position for a particular year; (ii) the election to transfer all or part of any available loss within a wholly-owned corporate group gives rise to a completely different and independent so-called right from Spassked's right to claim an interest deduction, being a new statutory right available to the transferee under s 80G of the Tax Act conferred in circumstances where the provisions of the Tax Act are satisfied; and (iii) even if it could be shown that all the losses transferred under s 80G of the Tax Act the subject of the present proceedings arose because of Spassked's claim for interest, that could not mean that Spassked and the transferee were privies, and the Commissioner's attempt to equate the two rights constituted an inflation of a claimed economic equivalence into an identity of legal rights. 85 The taxpayer applicants therefore contended that the rights presently asserted by IEF and QTH constitute those arising under Part IVC of the Administration Act by reason of an appeal against the objection decision made by the Commissioner, being rights independent from, and not derived from, any right or cause of action 'which Spassked had or has', it being clear that QTH and IEF did not act as agents for the parties to the earlier concluded Spassked proceedings; moreover it was asserted that 'the mere fact that [QTH and IEF] are wholly owned subsidiaries of IEL is not a basis for [QTH and IEF] being privies for the purpose of issue estoppel'. It would be however at least surprising that in the circumstances postulated, any such conclusion should follow. 88 Moving specifically to the Commissioner's invocation of an operation relevantly of Anshun estoppel, the taxpayer applicants contended that '[f]or the same policy reasons that taxation and rating cases are an exception to the doctrine of res judicata ' (thereby referring implicitly to res judicata in the English sense of inclusivity of the Australian notion of issue estoppel per se ), 'they must also fall outside the ambit of a claim for Anshun estoppel', the asserted reason being that '[i]f a party is not estopped in relation to a matter it has raised in proceedings relating to another year, it surely cannot be estopped in relation to a matter it did not raise in those earlier proceedings', referring thereby further to the doctrine as to privies described in Effem . Upon those purported footings, it was therefore emphasised by the taxpayer applicants once more that 'QTH and IEF were not parties to the earlier Spassked proceedings and so cannot fall within the principle of so-called Anshun estoppel... even if... QTH and IEF could be regarded as privies of the parties to the earlier proceedings'. The theme of those submissions of the taxpayer applicants is sought to be answered by the Commissioner in the first place by joinder of issue upon the proposition for which Broken Hill, Caffoor and Hope are said by the taxpayer applicants to espouse. If that proposition be not sustainable in circumstances such as the present, the case for the operation of Anshun estoppel upon the basis of the findings of the Federal Court in the earlier Spassked proceedings referrable to the six fiscal years 1988 to 1994 presents at least prima facie as a viable proposition. In this further context the applicant taxpayers once more placed emphasis on the circumstances that 'issues as to liability to income tax in respect of years other than 1992 could not have been litigated in the earlier proceedings, even by the parties to those proceedings', by reason of course of the apparent absence of determination of those objections by the Commissioner until after the conclusion of the earlier Spassked proceedings, a proposition which I think cannot survive juridical analysis as I have earlier opined. It is true that '... [i]t can hardly be said that at the time of the earlier Spassked proceedings the [taxpayer applicants] were delinquent in not prosecuting an appeal against a decision which had not then been made, or that the opportunity to contest that decision was available, and should have been pursued in the earlier proceedings'. However as I have consistently emphasised, the parties mutually contested critical issues, in the context of the earlier concluded Spassked proceedings, which involved and related entirely to the circumstances relevantly prevailing throughout those critical six fiscal years. Moreover it can scarcely be said reasonably that IEF and QTH were not privies of Spassked, each being wholly owned subsidiaries of IEL (and thus having threshold qualification for Part IVC purposes) and being subject at all material times together to the same at least ultimate controlling and governing parent corporate mind. 91 I think that there is something to be said for the view that in the present context to the present proceedings, for the taxpayer applicants to be permitted to contest the issues the subject of the critical findings of the primary judge and the members of the Full Court, to which I have earlier referred as to Spassked's circumstances relevantly from 1988 to 1994, would bring the administration of justice into dispute, given the nature and extent of those findings which the Commissioner would presently invoke as the basis for the Commissioner's contention as to abuse of process, as well as for issue estoppel and Anshun estoppel. The particular context involved in Saffron was of course distant to that involved in the earlier concluded Spassked proceedings and presently involved, but nevertheless not to the extent of entirely excluding a useful illustration as to the operation of the doctrine of abuse of process here invoked by the Commissioner. 100 If the IEL corporate group, whereof the taxpayer applicants were wholly owned subsidiaries at all material times, had not originated and thereafter pursued to conclusion the earlier concluded Spassked proceedings (related of course specifically to the 1992 fiscal year), implicitly in order to obtain judicial precedent for corporate group member exposure to income tax liability in relation to the remaining proximate fiscal years in dispute with the Commissioner, it may be conceivably inferred that related proceedings would have been contemporaneously put in place by the Commissioner in relation to the other fiscal years in controversy at the instance of Spassked, and correspondingly of the relevant IEL related companies involved in the transfer of Spassked's tax losses, subject of course to the Commissioner having first responded formally to the objections lodged in respect of those other fiscal years. However it is unnecessary for me to draw that inference, at least in the light of the conclusions I have otherwise reached. For some unexplained reason, any such further steps did not eventuate until at least some later time prior to the commencement of the present proceedings. However the apparently unexplained delay of the Commissioner in responding to those outstanding objections does not in my opinion produce any adverse significance to the operation of issue estoppel, Anshun estoppel or abuse of process, if otherwise established upon the footing of findings of the Federal Court in the context of the earlier concluded Spassked proceedings, whether at first instance or on appeal. In that regard there was no finding of the Full Court inconsistently with any finding at first instance, at least of significance. The taxpayer applicants have not distilled the existence of any distinguishing factor, relevant to the resolution of the proceedings presently on foot in relation to the 1991, 1993, 1994 and 1996 fiscal years, that was not material or would not have been material to the circumstances falling for resolution in the context of the earlier concluded Spassked proceedings. Of course as I have foreshadowed, the taxpayer applicants contended that the critical and pervading circumstance, said to answer the present summary application of the Commissioner, is that each of those fiscal years other than 1992 involved a distinct and discrete issue to that the subject of the earlier concluded Spassked proceedings, in that an income tax assessment is conclusive and final only for and in relation to the fiscal period for which it is made, given the reasoning of the Privy Council and House of Lords authorities in particular of Broken Hill, Caffoor and Hope . Yet as I have indicated already, the earlier concluded Spassked proceedings were determined in the context of, and in explicit reliance upon evidentiary material covering relevantly the commercial activities of Spassked and other members of the wider corporate IEL group undertaken in respect of at least the six fiscal years 1988 to 1994 inclusively, and thus inclusive of the 1992 fiscal year, being evidentiary material upon which the Commissioner placed specific reliance in support of its application for summary judgment in each of the subject four proceedings falling for present resolution. 102 Having regard to the complexity and consequently the length and likely cost of the earlier concluded Spassked proceedings involved in litigating the 1992 fiscal issues, which would have been readily apparent from the outset to IEL group interests and to the Commissioner alike, and to the absence of any evident distinction of material significance here between the issues arising in relation to the 1992 fiscal year from those arising in relation at least to each of the 1991, 1993 and 1994 fiscal years (the 1996 fiscal year seemingly involving a varied situation), it is seemingly unlikely that either party would have entered upon such a lengthy and expensive process involving the resolution of the 1992 fiscal year alone, without an appreciation that a similar curial process would fall to be undertaken and pursued in relation to those further fiscal years, in the absence of an effective estoppel. Both parties must reasonably be taken to have had an appreciation of the principles as to abuse of process, and of issue estoppel and Anshun estoppel, such as to have rendered the need objectively to have drawn the other's attention to the existence of an intention not to be bound by the Federal Court's decision-making upon the 1992 fiscal year assessment in relation to any subsequent assessments in respect of the remaining fiscal years the subject of the then unresolved taxpayer objections. In any event, no such intention was apparently communicated. 103 From the findings I have sought to extract or summarise concerning the context to those six fiscal years, as established by the Federal Court in the earlier concluded Spassked proceedings, I am of the opinion that aside from the case raised by the Commissioner as to the operation of the doctrines of issue estoppel and Anshun estoppel which I will later address, the principal proceedings presently in train at the instance of the taxpayer applicants, in relation to the 1991, 1993 and 1994 fiscal years, and inclusive also of the significance of losses subsequently transferred in respect of the 1996 fiscal year, constitute or involve an abuse of process on the part of the taxpayer applicants within the principles enunciated in Walton , and more recently restated comprehensively in Spalla , being principles which are susceptible to application in my opinion to circumstances beyond the scope of operation of the doctrines of issue estopped and Anshun estoppel. From what I have identified from the context of the events and circumstances attending the earlier Spassked proceedings as determined by this Court in relation to the 1992 fiscal year, it would have been inferentially or implicitly apparent to the decision-makers of the respective parties to those proceedings (of course Spassked and the Commissioner), objectively speaking, that the outcome of that Federal Court litigation would serve to resolve the remaining fiscal years additionally in dispute, and to do so irrespective of the collateral interests of the Spassked wholly related companies IEF and QTH as transferees from Spassked of losses for income tax purposes. In that latter regard, each of IEF, QTH and Spassked have had of course at all material times the same corporator, both immediately (IEL) and ultimately (Adsteam), and hence inferentially the same respective ultimate corporate group decision-makers. The basis for the inter group transfers of tax losses pursuant to s 80G of the Tax Act reflected of course the wholly owned subsidiary status of each of Spassked as transferor and of QTH and IEF as transferees of the benefit of certain of the tax losses in relation to their immediate public company parent IEL. 107 The prospect for the taxpayer applicants of successful resistance to the Commissioner's case for summary strike out of their present proceedings is further eroded, at least on the basis of abuse of process if not also of estoppel, when regard is paid to the further factors raised by the Commissioner which I have earlier recounted in these reasons, being factors which are not mutually exclusive, and which are summarised below for completeness: (i) the absence of distillation on the part of the taxpayer applicants of circumstances demonstrative of a prima facie viable basis for the entitlement of Spassked to deductibility in respect of the subject inter-company interest liabilities incurred in relation in particular to the 1991, 1993 and 1994 fiscal years; (ii) the adverse implications of that shortcoming in relation to the existence of any viable basis for an entitlement consequentially of IEF and QTH to income tax deductibility in respect of transferred losses for income tax purposes in relation to the 1991, 1993 and/or 1996 fiscal years; (iii) the scope of evidentiary material, particularly of a documentary nature, presented by the Commissioner to the Federal Court in the context of the earlier concluded Spassked proceedings in relation to the six fiscal years 1988 to 1994, being the subject of subsequent material findings of the Federal Court at first instance and on appeal in favour of course of the Commissioner; (iv) what was recorded by Lindgren J at first instance, in the context of course of his resolution of the earlier concluded Spassked proceedings at first instance, as to the similarity of fiscal significance of the circumstances relevantly of the 1992 fiscal year to those of the remaining six fiscal years 1988 to 1994 addressed by his Honour's reasoning and findings; (v) what was recorded by the Full Court on the appeal to similar effect in the earlier concluded Spassked proceedings, in the context of the Full Court's findings as to the financial results, and the implications thereof, in relation to those six fiscal years, being of course years preceding and following, as well as including, the 1992 fiscal year; moreover it is apparent, or otherwise open to be inferred, for what it may ultimately matter, from the findings and reasoning in Spassked at first instance and on appeal, that what characterised Spassked's objectives, operations and activity relevantly over that period of six years did not cease on the culmination of that period. 110 In that latter regard, in the Full Court in the earlier concluded Spassked proceedings, Hill and Lander JJ recorded (additionally of course to what I have earlier extracted of similar relevance), that '... interest was incurred on a loan to acquire shares where, in all the years of income in question and for the foreseeable future, from the time [that Spassked] structure was established, steps would be taken to ensure that the shares acquired would not produce anything but a nominal amount of assessable income'. Those 'years of income in question' so addressed were of course the six fiscal years from and including 1988 to 1994. Furthermore, as their Honours' joint judgment recorded further, '... at no relevant time could it be said that Spassked incurred in the years of income interest on moneys used by it to acquire shares in the course of any activity carried on by it in the course of gaining or producing assessable income', but that '[r]ather, the occasion of each outgoing of interest was to be found in those shares deliberately being non-income producing'. Similar findings in relation to those themes may be identified from the generality of the observations of Gyles J, in the context of his Honour's reference to '... all the years of income in question '. Those findings could not be rightly characterised merely as ' building blocks ' leading to the ratio or ratios for decision in Spassked, being the description used by McHugh J in Rogers at 283 ( supra ). I should add that in any assessment of the circumstances here prevailing concerning the Commissioner's case for abuse of process, issue estoppel and Anshun estoppel, the principal focus must be upon those circumstances affecting or relating to Spassked at least in the first instance, those relating to IEF and QTH being derived from Spassked and apparently incurred in relation to the fiscal years 1991, 1993 and 1996, and in any event incurred during the six year fiscal year period from 1988 to 1994 inclusive. 114 As to the further operation of the doctrine of estoppel generally, the earlier concluded Spassked litigation, albeit litigated in the immediate context of the 1992 fiscal year alone, extended in at least legitimate evidentiary scope to circumstances falling within relevant periods of time both preceding and following that fiscal year, such as to encompass each of the six fiscal years the subject of present critical disputation. I use that expression to describe when the operation here of s 51(1) took effect, and not when the losses sustained were transferred by Spassked to IEF or QTH (as the case may be). The Commissioner has a viable basis for the case articulated to the effect that at issue in the earlier concluded Spassked proceedings, both at first instance and on appeal, was whether '... the occasion of each outgoing of interest was to be found in those shares being deliberately non-income producing for the foreseeable future', that articulation being related to the six fiscal years from 1988 to 1994. Once that finding is open and should be made, so much operates to impute relevantly at least an Anshun estoppel in favour of the Commissioner, and I think also an issue estoppel. I have already extracted material reflective of the implementation, on Spassked's part, of that vitiating objective or purpose on Spassked's part in terms of s 51`(1) of the Tax Act. The Spassked decision at first instance and on appeal has finally and conclusively established the basis for upholding the Commissioner's strike-out application, to paraphrase to the extent in particular italicized the description of Dixon J in Blair v Curran at 532-533, albeit articulated in the context of discussion of issue estoppel. That juridical expression may be contrasted with what was described by the Privy Council in Hoysted at 304 as '... a matter... only incidentally or collaterally related to the point actually discussed and litigated'. 115 As to whether the estoppel which here took effect, strictly speaking as an Anshun estoppel or an issue estoppel, to the exclusion of one from the other, raises the initial appearance of a somewhat moot point. Consistently however with the reasoning I have thus far sought to articulate generally in my approach to the taxpayer applicants' case, I think that the preferred analysis should perhaps be that of issue estoppel rather than Anshun estoppel, if a choice between the two is mandatory. That is because what arose as the central issue in the earlier concluded Spassked proceedings, and in relation to which the general body of evidentiary material was directed, was the nature and extent of Spassked's business operations and activities for the six fiscal years 1988 to 1994, albeit in order to determine the implications of those operations and activities to the 1992 fiscal year. The business operations of Spassked from 1 July 1991 to 30 June 1992 did not of course occur in a business vacuum in any operational sense, but in the wider context of continuing business activities undertaken over at least those six fiscal years inclusive of the 1992 fiscal year. In those circumstances I would characterise as the issue in substance and reality arising, in relation to which the earlier Spassked proceedings were conducted, as related to and bearing upon the scope of those fiscal years inclusive at least of the 1992 fiscal year. The description of Dixon J in Blair v Curran accommodates the resolution of that issue in favour of the Commissioner, for the reasons I have already outlined. 116 Additionally or alternatively, the Commissioner contended that the requirements of Anshun estoppel have been satisfied. They are not requirements which must necessarily operate in a mutually exclusive way or to a mutually exclusive extent in relation to any other juridical notion of estoppel or for that matter to abuse of process. The conclusion of the Federal Court in the earlier Spassked proceedings, ultimately in relation to the 1992 fiscal year, was formulated in a context of findings wherein it would have been unreasonable not to rely on (to adopt the Anshun expression) the evidence related to the six yearly period of time measured by the evidence adduced in the context of those proceedings, and duly accepted by the primary judge and the Full Court. Although the incidence of income tax is normally geared to a particular fiscal year, the evidence as to a taxpayer's conduct of business operations of a longer period of time may well throw critical and decisive light upon the fiscal nature or fiscal consequences of that taxpayer's dealings or conduct related to that fiscal year. So much reflects the ultimate findings of the earlier concluded Spassked proceedings, framed as the same were by reference to the 1992 fiscal year, and based upon the evidentiary findings related to the six fiscal years from 1988 to 1994. 117 The Commissioner's case for summary judgment is required in principle to be ' clearly demonstrated ', and ' very clear indeed ', and is inhibited by the need for ' exceptional caution ' by the Court ( General Steel and Dey ). As I have earlier recorded, the Commissioner's case is not sought to be established on the footing of the doctrine of res judicata as applied in the common law of Australia, and which normally involves the merger of causes of action into judgments (compare Henderson at 114-115). Apart from abuse of process, the Commissioner's case is founded upon the doctrine of issue estoppel as well as Anshun estoppel, as those doctrines have been formulated and applied in Australia by judicial dicta . In the case of issue estoppel, I have earlier cited the well known dictum of Dixon J in Blair v Curran to the effect that it is necessary to expose ' a state of fact or law... alleged or denied the existence of which is a matter necessarily decided by the prior judgment', being a matter ' fundamental to the decision arrived at' , and not merely matters of fact or law which are ' subsidiary or collateral ', or 'concern only evidentiary facts and not ultimate facts... '. 118 Further as to the operation in Australia of both issue and Anshun estoppels, the latter having been described by Gleeson CJ in Murphy at 286 as ' a wider form of estoppel' , the Commissioner contended that the critical findings of the earlier concluded Spassked proceedings I have extracted also related to or involved 'ultimate facts which form ingredients in the cause of action' ( Blair v Curran at 532), and which were so closely connected with the subject matter of the earlier concluded Spassked proceedings that it was to be expected that the same would be subsequently relied on by the Commissioner in relation to fiscal years additional to 1992 (see again the full context of the dicta I have earlier cited from Anshun and Henderson ). I further bear in mind that issue estoppel operates in relation not just to the prior litigating parties but also to their respective privies ( Rogers ), and hence persons or entities claiming under or through or by virtue of the legal rights of such parties ( Effem ). I think that it should be concluded that each of the taxpayer applicants qualify as privies of each other, and of their common wholly owning parent IEL, for the purposes of the operation of doctrines as to issue estoppel and Anshun estoppel, being a qualification in any event not seemingly required to be fulfilled in the case of the wider and more comprehensive notion of abuse of process. Each of IEL and its wholly owned subsidiaries here involved, being of course each of the taxpayer applicants, was subjected to the evident decision-making corporate mind of IEL as parent company. 121 Other considerations and findings of the Full Court in Spassked, referrable implicitly and explicitly to circumstances prevailing both prior, during and subsequent to the circumstantial scope of the 1992 fiscal year, serve to demonstrate the unreality, as well as the misconception, inherent in the taxpayer applicants' case for the exclusion in principle of the operation of the doctrines of issue estoppel and Anshun estoppel (additionally of course to abuse of process) from consideration in relation to the Commissioner's present application for summary judgment. The complex processes of judicial consideration and findings, undertaken by Lindgren J in his reasons for judgment in Spassked at first instance, and subsequently by the Full Court on the appeal upholding his Honour's decision, demonstrate the inherent inapplicability, in relation to circumstances such as here present, of the reasoning in, and the ratios of, Broken Hill, Caffoor and Hope in the Privy Council and House of Lords respectively, based as each decision was of course on the principle there enunciated as to each new or successive fiscal year of rating or taxing in dispute constituting an inherently new or different question or issue from that the subject of any preceding (or for that matter following) fiscal year. If I may be repetitious, the rating authority in Broken Hill failed in the Privy Council upon the footing that the prior majority decision of the High Court made in its favour had related '... to a new question, namely, the valuation for a different year and the liability for that year' . 128 Apart from what I would conclude in favour of the Commissioner to have been an abuse of process, I would further find that at least the ground of Anshun estoppel has been additionally established by the Commissioner in the circumstances I have already recorded and established in these reasons. The inference is rightly open to be drawn, from the conduct and events of the earlier concluded Spassked proceedings, that it was necessary or at least appropriate for the Commissioner to require the Federal Court to decide, and indeed the Federal Court did decide, the issue as to deductibility sought by Spassked in respect of the fiscal year 1992. To paraphrase the language of Anshun, for the present proceedings to be allowed to proceed to trial would necessarily and inherently involve, as well as require, the raising once more for consideration and determination by this Court of issues and related matters cardinal to the claims and contentions which attended the earlier concluded Spassked proceedings, and in particular the claim at least inherently that the decisions the subject of those proceedings made at first instance and on appeal were erroneous. What was so resolved and determined by the earlier concluded Spassked proceedings, in relation to the context specifically of at least the six fiscal years I have identified and discussed, did not relate merely to ultimate facts. To determine and resolve income tax deductibility in respect of a single fiscal year, such as previously occurred in relation to the 1992 fiscal year in respect of Spassked, in the context of continuing business operations and activities of a given taxpayer, particularly business operations and activities conducted on a substantial scale, would normally require, necessarily as well as expediently, a broad analytical sweep of those operations and activities, and in the case of continuing businesses in particular, such as were here apparently involved, of operations and activities undertaken both prior and subsequent to that fiscal year. In the circumstances of modern business and commercial undertakings involving corporate groups which conduct continuing or repetitive business transactions inter se , that sphere of curial considerations may necessarily well require the consideration of transactions, not just of individual corporate taxpayer's activities, but also the transactions of its wholly related group companies or so-called privies. 129 It follows further of course from the foregoing conclusions I have reached in these reasons adversely, in the first place, to Spassked in relation to the fiscal years I have considered and addressed, being fiscal years apart from but placed both prior and subsequently to that of 1992, that IEF and QTH would not be entitled to deductions pursuant to s 80G of the Tax Act in respect of losses transferred to each of them respectively from Spassked in respect of any of those fiscal years the subject of my review. 130 In the result in my opinion, the Commissioner's application for summary judgment should be granted with costs. I will direct that the Commissioner bring in draft short minutes of order so framed as to give effect to these reasons, and to do so on a date to be fixed by arrangement with the parties and the Court. The Commissioner must have the costs of the proceedings to date, inclusive of the costs related to the present summary application. I certify that the preceding one hundred and thirty (130) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. Associate: Dated: 21 March 2006 Counsel for the Applicant: BJ Shaw QC, AH Slater QC with PM Fraser Solicitor for the Applicant: Blake Dawson Waldron Counsel for the Respondent: G Davies QC with SHP Steward Solicitor for the Respondent: Australian Government Solicitor Dates of Hearing: 22 September 2005 Date of Judgment: 21 March 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/267.html