DFC of T v CAPRONJudges:
Supreme Court of Victoria
The Deputy Commissioner of Taxation alleges that William Rupert Capron is indebted to the Commonwealth of Australia in the sum of $277,594.98 for income tax, additional tax imposed to Part VII of the Income Tax Assessment Act and for additional tax for late payment imposed pursuant to s. 207 of the Act.
The proceeding was instituted in 1990 but for reasons which do not appear the plaintiff made application for summary judgment only in May 1992. That application was dismissed but the plaintiff was given leave to issue a further application for summary judgment. On the return of that second application before the Master, the Master referred the application to a Judge because it was said to raise important matters of general application concerning the way in which the Deputy Commissioner sought to prove that the taxpayer had been liable to pay instalments of provisional tax. The application came on for hearing before me in the Practice Court.
By far the largest part of the claim made in the proceeding is for tax assessed to be due in respect of the years of income ended 30th June 1984 to 30th June 1990 (inclusive) and additional tax under Part VII. In support of the application for summary judgment the plaintiff produced a certificate under Regulation 67 of the Income Tax Regulation certifying that the defendant is a taxpayer, that assessments of income tax were duly made against him in respect of the years in question, that the particulars of the assessment were as set out in the certificate, that notices of each assessment had been duly served on the defendant on or about the date of issue of the assessments and that the sums specified in the certificate were due by the defendant to the Commonwealth of Australia in respect of income tax. Regulation 67 provides that a certificate of this kind shall be prima facie evidence of the facts stated in it. There being no evidence in answer to the certificate, the plaintiff would be entitled to judgment for the amount of tax and additional tax under Part VII that has been assessed to be due in respect of these years together with the amount of additional tax due under s. 207 of the Act for late payment of those sums. But the point is put beyond argument when, as here, the plaintiff also produces copies of notices of assessment. Section 177 of the Act provides that the production of a document under the hand of a Deputy Commissioner purporting to be a copy of a notice of assessment ``shall be conclusive evidence of the due making of the assessment and'' [except in review or appeal proceedings] shall be conclusive evidence ``that the amount and all the particulars of the assessment are correct''. The section is ``intended to make it impossible for a taxpayer, in proceedings other than appeal against it, to challenge an assessment on any ground''. (
McAndrew v. FC of T (1956) 11 ATD 131 at 140-141; (1956) 98 C.L.R. 263 at 281-282;
F.J. Bloemen Pty. Ltd. v. FC of T 81 ATC 4280 at 4288; (1981) 147 C.L.R. 360 at 375;
DFC of T v. Cameron 91 ATC 4056 at 4060; (1990) 21 A.T.R. 1091 at 1095.)
Although counsel for the defendant did not formally concede that the plaintiff was entitled to judgment for at least this part of his claim, I did not understand there to be any argument to the contrary. Rather, the dispute centred upon that part of the Deputy Commissioner's claim in which he seeks to recover amounts as s. 207 late payment penalty on instalments of provisional tax which it is alleged were not paid by the due date of payment.
The defendant contended that the evidence tendered by the plaintiff in support of the application for summary judgment, and which was put forward to prove that instalments of provisional tax had been payable by the defendant and were not paid by their due date for payment, was inadmissible or was inadequate to prove the facts necessary to establish the plaintiff's claim. Further, the defendant contended that even if the evidence tendered by the plaintiff was admissible and sufficient to establish the facts relied upon, the amount claimed for s. 207 penalty was excessive insofar as it sought to claim late payment penalty for periods after an assessment had been made in respect of the tax payable in respect of the year to which the provisional tax amount related.
The Rules of Court require an application for summary judgment to be supported by an affidavit verifying the facts on which the claim is based and stating that in the belief of the
ATC 4147deponent there is no defence to the claim (Rule 22.03(1)). The Rule goes on to provide:
- ``(2) Where a statement in the document tends to establish a fact within paragraph (1) and at the trial of the proceeding the document would be admissible by or under the Evidence Act 1958 or any other Act to verify the fact, the affidavit under paragraph (1) may set forth the statement.
- (3) An affidavit under paragraph (1) may contain a statement of fact based on information and belief if the grounds are set out and having regard to all the circumstances the Court considers that the statement ought to be permitted.''
The plaintiff relied upon two affidavits sworn by an officer of the Australian Taxation Office to which were exhibited documents said to contain statements tending to establish facts on which the claim is based and said to be documents which would be admissible under the Evidence Act to verify those facts. The affidavits also contained statements of fact which it was said were based on information and belief. The plaintiff contends that the grounds of that information and belief are set out in the affidavits and that in all the circumstances I ought to permit the statement.
The defendant made a number of arguments challenging the admissibility of parts of these affidavits and although it is necessary to deal with these arguments in more detail it is enough for present purposes to say that the arguments were directed principally to contending that the plaintiff might not rely on the Evidence Act provisions in support of the admission of various documents and that the Court should not act on the statements of fact made by the deponent which were based on information and belief because the grounds of information and belief were not sufficiently set out.
In order to prove any liability to pay additional tax on instalments of provisional tax that had not been paid by their due date for payment, the plaintiff must first show that the defendant was liable to pay instalments of provisional tax. Section 221YBA(4) provides that:
``An instalment of provisional tax is not payable unless the Commissioner has served an instalment notice in respect of the instalment.''
Section 221YD(2A) provides that:
``An instalment of provisional tax is due and payable on the date specified in the instalment notice as the date on which the instalment is due and payable.''
Thus, the plaintiff sought to establish that the defendant had been served with instalment notices in respect of various instalments of provisional tax, each of which specified the date on which the instalment was due and payable.
The claim arose from instalments of provisional tax alleged to be due and payable in the years ended 30th June 1989 and 30th June 1990.
In relation to instalments alleged to be due for the year ended 30th June 1989 the deponent produced four documents ``being copies of microfiche record of information contained in the notices of instalments of provisional tax'' for that year. Each of those documents was ``a copy of the relevant page of the computer file held on microfiche records''. Each of those documents appears to have recorded details relating to a number of taxpayers. (The details concerning taxpayers other than the defendant were obliterated in the exhibits, no doubt to comply with the secrecy provision of the Act.) The information recorded included the number of the instalment, and ``issue date'', the taxpayer's name and address, the instalment amount and the due date. The deponent swore that these documents contained ``all material information forwarded to the taxpayer in the notice'' (scil. the instalment notice contemplated by s. 221YBA(4)) but it is plainly not a copy of the notice that was sent to the taxpayer. Not only does the original contain information relating to a number of other taxpayers, other exhibits (relating to the year ended 30th June 1990) which are copies of instalment notices sent to the defendant, take a very different form.
Section 221YH(1) provides that:
``The production of a notice of assessment or other notice on which an amount of provisional tax payable by any person is specified, or of a document under the hand of the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of any such notice of assessment or other notice, shall be prima facie evidence that the amount of provisional tax and all particulars relating thereto are correct.''
The plaintiff contended that the copies of the relevant page of the computer file held on microfiche records were, having been certified by a delegate of the Deputy Commissioner, documents of a kind described in s. 221YH(1) and that they therefore constituted prima facie evidence ``that the amount of provisional tax and all particulars relating thereto are correct''. Counsel for the plaintiff submitted not that the documents were copies of a notice of assessment but that each was a copy of an ``other notice''. Even accepting that these documents contain ``all material information forwarded to the taxpayer in the notice'' I do not consider they are properly described as copies of ``other notices'' on which an amount of provisional tax payable is specified. The originals (of which the exhibits are copies) are not documents that were ever sent to the taxpayer let alone sent to him by way of notice. Rather, as the affidavit itself describes them, they are ``records of information contained in the notices of instalment of provisional tax''. Accordingly, I do not consider that the copy microfiche records (Exhibits M, N, O and P) are receivable as prima facie evidence under s. 221YH(1) of the Act. However, Exhibits Q, R and S, which relate to the later year, are receivable under s. 221YH(1) because they are certified as copies of notices of instalment of provisional tax. Therefore they are prima facie evidence that the amount of provisional tax ``and all particulars relating thereto'' (which would include the due dates for payment of the instalments) are correct. The defendant did not submit to the contrary.
Anticipating that the copy microfiche records may not be receivable under s. 221YH(1) counsel for the plaintiff submitted that these exhibits were receivable either under s. 55(1)(b) or s. 55B of the Evidence Act 1958. (A submission that they were receivable under s. 58B was but faintly pressed for there being no proof of the matters required by s. 58E, it could not be maintained.)
The defendant submitted that neither s. 55(1)(b) nor s. 55B applies in proceedings brought by the Commissioner to recover income tax. It was said that because the Income Tax Assessment Act makes provision for certain documents or copy documents to be prima facie evidence (or in some cases conclusive evidence) of some matters bearing upon the recovery of taxation, Evidence Act provisions or Rules of Court touching the same general subject matter had no application and could not be relied upon by the plaintiff. The submission was founded (and founded only) on the application of s. 79 of the Judiciary Act 1903. The defendant expressly disavowed any reliance upon any argument alleging inconsistency between State and Commonwealth laws under s. 109 of the Constitution.
Section 79 of the Judiciary Act 1903 provides:
``The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all courts exercising Federal jurisdiction in that State or Territory in all cases to which they are applicable.''
The defendant submitted that s. 221YH(1) of the Income Tax Assessment Act (and presumably other similar evidentiary provisions in the Act) were laws of the Commonwealth otherwise providing for matters of evidence in this kind of proceeding.
DFC of T v. Moorebank Pty. Ltd. 88 ATC 4443; (1987-1988) 165 C.L.R. 55 it was held that s. 64 of the Judiciary Act 1903 did not apply limitation periods imposed by the Limitation of Actions Act 1974 (Qld) to an action brought by a Deputy Commissioner of Taxation in the Supreme Court of Queensland for recovery of income tax and additional tax. The Court held that:
``where a Commonwealth legislative scheme is complete upon its face, sec. 64 will not operate to insert into it some provision of State law for whose operation the Commonwealth provisions can, when properly understood, be seen to have left no room.''
(88 ATC 4443 at 4446; (1988) 165 C.L.R. 55 at 64.)
Thus the question that was said to arise in Moorebank was described as being:
``whether the relevant provisions of the Assessment Act have effectively covered the field and left no room for the direct or indirect intrusion of provisions of State Limitation Acts to limit the time in which an action can be brought on behalf of the Commissioner of Taxation for unpaid
ATC 4149income tax or additional tax.''
(88 ATC 4443 at 4446; (1988) 165 C.L.R. 55 at 64.)
The Court held that upon examination of the general scheme of the Income Tax Assessment Act provisions dealing with collection and recovery of tax it was clear that there was no room for the importation into them of State Limitation Act provisions because the provisions of the Income Tax Assessment Act relevantly covered the field.
Moorebank's Case has been applied in a number of cases dealing with whether a State Court has power to make an order for the payment by instalments of a judgment debt obtained by the Deputy Commissioner of Taxation against a taxpayer. It has been held in several cases that State provisions dealing with paying judgment debts by instalments do not apply in taxation recovery action. (See
DFC of T v. Zarzycki 90 ATC 4707,
Re Mazuran; Ex parte DFC of T 90 ATC 4814;
Re Pollack; Ex parte DFC of T 91 ATC 4925;
DFC of T v. Homewood 91 ATC 4633.)
Moorebank and each of the other cases I have mentioned concerned the operation of s. 64 of the Judiciary Act and each concerned the operation of State and Commonwealth legislation where it was clear that the intention of the Commonwealth legislation was to cover the relevant field. Section 221YH(1) (and other certificate or evidentiary provisions of the Income Tax Assessment Act) show no similar intention. Each of those sections is intended to assist the Commissioner in proof of a claim to recover tax due but there is nothing in s. 221YH(1) (or in other provisions of the Act) that shows any intention on the part of the Parliament of the Commonwealth that such provisions should be the exclusive means of proving particular facts.
In this respect the provisions stand in marked contrast with the provisions of the Commonwealth Evidence Act considered by the Full Court of the Federal Court in
Arnotts Ltd. & Ors v. Trade Practices Commission (1990) 97 A.L.R. 555. That Court held that s. 79 of the Judiciary Act required the application of the Commonwealth Evidence Act provisions relating to admissibility of business records in proceedings heard in the Federal Court and did not permit reliance upon State provisions concerning the admissibility of business records. Given that Part IIIA of the Commonwealth Evidence Act expressly deals with the admissibility of business records ``in a proceeding'' i.e. in a proceeding before the High Court or a court created by or under an Act of the Commonwealth Parliament, the conclusion that those provisions were intended to cover the field of admissibility of business record evidence in proceedings in those courts is readily understood. There is, however, nothing in s. 221YH(1) (or the other similar provisions of the Act) that is of a similar kind. What is the field which it is said is covered by these provisions? The terms of the provisions do not suggest that they are intended to be the only means of proof that the Deputy Commissioner might adopt. On their face, they are facultative and in no way do they purport to prohibit the Deputy Commissioner from adopting other means of proving his case. Nor is there anything in the scheme of the Act taken as a whole to suggest that the Income Tax Assessment Act is intended to regulate questions of procedure, evidence or competency of witnesses to the exclusion of State laws on these subjects. Rather, the intention is to take the State Courts and their procedures and laws of evidence as they may be found including the business records and computer provisions.
To deal with the further arguments made on behalf of the defendant about admissibility of the evidence tendered by the plaintiff it is necessary to notice in a little more detail some aspects of that evidence. The deponent stated that he had been informed by a valued officer of the plaintiff who was ``Assistant Director, Individual Business Systems'' of the plaintiff and by ``various other officers of the plaintiff having responsibility for the operation of the computer system'' which the Australian Taxation Office had for recording data relating to taxpayers, that the computer system in operation at the issue of notices of instalment of provisional tax for the years of income ended 30th June 1989 and 30th June 1990 was as he set out in some little detail in the affidavit. The deponent swore that:
``Instalment notices are generated by computer and, after printing, issued in large batches. This involves a series of computer programs, each of which performs a specific task, the printing of the notices and their subsequent postage.''
He then described the work done by five different computer programs. One of those programs:
``... transferred the information on the file relating to instalment notices to a magnetic tape which was taken by an officer of the plaintiff to an independent contractor, Multiform Australia Pty. Ltd. (`Multiform') to print, envelope and post the instalment notices throughout Australia under the supervision of officers of the plaintiff.''
That tape was inserted into Multiform's computers which operated printing machines, the notices were printed, bundled in separate batches, placed in envelopes by a machine, and then despatched by post. Another program took a file produced by an earlier program and transferred that to a magnetic tape which was then forwarded to the Australian Government Publishing Service for production of the microfiche notices, copies of which were Exhibits M, N, O and P. The system described in the affidavit included various steps intended to check whether the system was operating properly. So, to take one example, various counts were made of notices and envelopes to ensure that the same number of envelopes were produced as the number of notices and that the same number of envelopes were bundled into post-bags as had been produced originally.
The deponent swore that no records were kept by Multiform in relation to issuing or posting particular batches of notices but that he believed that notices had issued to the defendant in accordance with the system that he had described because
- (a) the defendant's name was on the lists of notices to be issued;
- (b) there is nothing in the Tax Office files or computer records to suggest that any of the notices the subject of the plaintiff's claim were withdrawn before being posted or that new notices had been issued;
- (c) there was nothing in the Taxation Office's relevant files or computer records about the defendant to suggest that the relevant information was not extracted from the computer system and sent to Multiform for issuing notices against the defendant in accordance with the usual system and there was no record of any problem with the issuing of those notices and their posting; and
- (d) since the proceeding was instituted the defendant had not contacted the deponent nor, so far as the Tax Office files revealed, any other member of the Tax Office to advise that he had not received any or all of the notices.
The deponent then produced a certificate by an officer who certified that he holds a position of Assistant Director, Individual Business Systems, in the Australian Taxation Office and is
``... familiar with the operation of the computer system used by the Australian Taxation Office for the storing of information in relation to taxpayers and in particular of information relating to the production of notices of instalment of provisional tax and the generation of magnetic tapes which are used to print those notices, update taxpayer records and produce microfiche files.''
The certificate then deals with each of the matters specified by s. 55B of the Evidence Act in relation to the documents which are exhibits M to S (i.e. both the copy microfiche records and the copy notices of instalment of provisional tax).
In presenting her argument counsel for the plaintiff dealt first with the s. 55B certificate and it is convenient to turn now to that evidence. It was contended that the documents, if admissible, contained statements tending to establish the facts that the notices of instalment of provisional tax had been issued in respect of the defendant in particular amounts on particular dates and specifying due dates for payment. It was not contended that any of the documents Exhibits M to S contained statements tending to establish the fact of service of the notices upon the defendant.
Nothing turns on the fact that five computer programs were used in connection with the issue of these notices or upon the fact that more than one computer was used. Section 55B(3) requires all the computers used for the purpose to be treated for the purposes of Division 3 of the Evidence Act as constituting a single computer. Further, given that Multiform's involvement in the system was at all times supervised by officers of the Australian Taxation Office I consider that the certificate is a certificate which purports ``to be signed by a person occupying a responsible position in relation to the operation of the relevant device or the management of the relevant activities''.
The section provides that the certificate ``shall be evidence of any matter stated in the certificate''. In this respect it stands in sharp contrast with s. 69(1)(b) of the Police and Criminal Evidence Act 1984 (UK) considered by the House of Lords in
R. v. Shephard  2 W.L.R. 102. Under that section a Court may require oral evidence proving that the computer in question was reliable. Even so, the House of Lords held that although the evidence of reliability ``must be tailored to suit the needs of the case'' ( 2 W.L.R. at 108) ``in the vast majority of cases'' no expert evidence is required and the burden of proving reliability can be discharged by calling a witness who is familiar with the operation of the computer in the sense of knowing what the computer is required to do and who can say that it is doing it properly. Even if (which I doubt) s. 55B(4) is to be read as permitting a court to go behind a certificate that is tendered in compliance with the sub-section, there is in the present case no reason to do so.
In these circumstances I consider that each of Exhibits M to S is admissible under s. 55B of the Evidence Act insofar as those documents contain statements tending to establish the fact that notices of instalments of provisional tax were issued to the defendant at a particular address, in particular amounts, and falling due for payment on particular dates.
That being so it is strictly unnecessary to go on to consider the application of s. 55(1)(b). However, for completeness, I would add that in my opinion each of Exhibits M to S is a record relating to a business (in this case public administration) made in the course of that business from information supplied directly or indirectly by persons who may reasonably be supposed to have had personal knowledge of the matters dealt with in the information they supplied. Further, although ordinarily the person who supplied the information recorded in the statement must be called as a witness in the proceeding, it is clear that those who represent the ultimate source of the information cannot reasonably be supposed (having regard to the time which has elapsed since they supplied the information and to all the circumstances) to have any recollection of the matters dealt with in the information supplied. Thus s. 55(6) provides that the condition that the supplier of the information be called is not a condition that need not be satisfied in these circumstances.
Finally in this regard I should note that unlike the provisions considered in R. v. Shephard (supra) and in
R. v. Minors  1 W.L.R. 441, the fact that the business record is generated by a computer does not mean that it must first be shown to be admissible as a computer record before being admissible under s. 55 of the Evidence Act. The Police and Criminal Evidence Act 1984 (UK) when dealing with computer-produced documents provides that statements in such documents ``shall not be admissible'' unless certain things are shown. Both s. 55 and s. 55B of the Victorian Evidence Act provide simply that in certain circumstances a statement contained in a document and tending to establish a fact shall be admissible if certain conditions are met. If the conditions relating to computer-generated documents are met then s. 55B will apply. If the conditions relating to business records are met then the document will be admissible under s. 55. The provisions do not have a cumulative operation.
For these reasons I consider that the plaintiff has tendered admissible evidence of the facts that instalment notices were issued in particular amounts having particular due dates for payment.
The deponent deposes to his belief that the notices of instalment now in question were sent to the defendant at an address which he swears positively was the address for service supplied to the plaintiff by the defendant in his income tax returns for the years ended 30th June 1989 and 1990. His belief in this fact is founded upon his description of the system for preparation, issue and service of such notices and upon his examination of relevant Tax Office files and computer records relating to the defendant which (in effect) are sworn not to contain any entries suggesting that the system did not operate as it was intended to operate in these particular cases.
Subject to one minor (and in my view immaterial) exception wherever the deponent swears that he has been informed of some matter he identifies the source of that information at least by identifying it as an officer or officers of the plaintiff. Where, as here, he is deposing to the operation of a quite complicated system dealing with many thousands of similar transactions, I do not
ATC 4152consider it necessary that he should in every such case identify, by name, the particular officer or officers who conveyed the information to him. The significant fact is that the informant was an officer of the plaintiff, not the identity of the particular officer concerned. No doubt in other cases and other circumstances the identity of the informant may be very important and an affidavit disclosing simply that the deponent was informed of a particular fact by an unnamed person described only as an ``officer of'' or ``employee of'' a party may not sufficiently disclose the source of the information. However in the present case although the defendant sought to make much of the fact that the officers concerned were not always named, I consider that insofar as this deponent speaks of matters about which he has been informed, he sufficiently identifies the source of that information. Further, where he speaks of his belief, and in particular where he speaks of his belief that the system for service of notices of instalment of provisional tax operated as it was intended to operate in these particular cases, I consider that he sufficiently states the grounds for that belief when he describes, in general terms, the operation of that system and then identifies the particular features which lead him to hold the belief which he does.
``To prove that an act has been done, it is admissible to prove any general course of business or office, whether public or private, according to which it would ordinarily have been done, there being a probability that the general course will be followed in the particular case...''
Connor v. Blacktown District Hospital  1 N.S.W.L.R. 713 at 721.
Moreover, the facts that any departure from that practice ought to be recorded in the file of the plaintiff and there is no such record in the present case are ground enough for a belief that the notices were served. In my view there is sufficient disclosure of the ground of the deponent's belief to warrant reception of his statement under r. 22.03(3) of the Rules of Court.
Accordingly, I consider that there is admissible evidence from which I may conclude that notices of instalment of provisional tax were served upon the defendant at his address for service.
Section 207 imposes additional tax by way of penalty ``if any tax remains unpaid after the time when it became due and payable''. ``Tax'' in this section includes provisional tax (s. 221A(2)).
Kinny v. DFC of T 88 ATC 4049; (1987) 11 N.S.W.L.R. 657 the New South Wales Court of Appeal held that liability to pay provisional tax for a particular year is extinguished when a notice of assessment of the actual income tax payable for that year is issued under the Act. So much is accepted by the plaintiff in the present proceeding for no claim is made for what might be called the principal amount of any instalment for provisional tax, there having been in each case a subsequent assessment of actual income tax issued.
The defendant contends that the liability to pay provisional tax having been extinguished upon issue of the assessment of the actual income tax payable for the year, no late payment penalty can be charged after the date of issue of the notice of assessment for the actual tax due (or perhaps, if the submission went so far as to say any late payment penalty tax at all).
On the application for special leave to appeal to the High Court from the decision of the Court of Appeal in Kinny's Case the High Court said in refusing that leave:
``The period during which additional tax should be computed in accordance with s. 207(1) of the Income Tax Assessment Act 1936 (Cth) is a matter for determination by Smart, J. on the remitter ordered by the Court of Appeal. The judges of that Court have expressed different views on that question but those expressions are obiter and the matter will be at large before His Honour. Accordingly the application for special leave is refused.''
(See (1988) 15 N.S.W.L.R. 701 at 702.)
Following refusal of the application for special leave, the matter came on for further hearing before Smart, J. and his Honour concluded that liability for additional tax on unpaid provisional tax did not cease on the date of service of the notice of assessment for primary tax for the following year but continued until that primary tax was paid or became due and payable, whichever occurred first (
DFC of T v. Kinny 89 ATC 4305; (1988) 15 N.S.W.L.R. 701).
It is self-evidently desirable that courts dealing with Commonwealth legislation should, so far as possible, speak with one voice about the construction of that legislation. For that reason alone I would be minded to follow the decision of Smart, J. in Kinny's Case. However I should add that in my opinion, if I may say so with respect, his Honour's judgment is right for the reasons which he gives, and even without regard to the desirability of uniformity of outcome, I would follow his Honour's reasoning and arrive at the same conclusion. Even if a contrary view to that which I have formed is arguable, the point has been exposed and debated fully in the course of the present application. In those circumstances, there being no submission to the contrary, I consider that although this is an application for summary judgment I should give effect to my view and not send the matter for trial even on this limited issue (see
Theseus Exploration NL v. Foyster (1972) 126 C.L.R. 507;
Sunbird Plaza Pty. Ltd. v. Boheto Pty. Ltd.  Qd.R. 248).
In my opinion the plaintiff is entitled to judgment in the amount which he claims.