ELLISON v DFC of T

Members: Wallwork J
Murray J

Steytler J

Tribunal:
Supreme Court of Western Australia (Full Court)

MEDIA NEUTRAL CITATION: [1999] WASCA 5

Decision date: Judgment delivered 6 May 1999

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Steytler J

55. I have had the advantage of reading the reasons for decision of Wallwork J. That being so it is unnecessary for me to restate the circumstances giving rise to this appeal.

56. I will deal first with the appellant's contention that the amended notice of assessment issued on 6 September 1996 was issued outside the four year period provided for by s 170(2)(b)(ii) of the Income Tax Assessment Act 1936 (``the Act'') and is thereby invalid. That section relevantly reads as follows:

``(2) Subject to this section, where there has been an avoidance of tax, the Commissioner may:

• (a)...
• (b)...
  • (i)...
  • (ii)... within 4 years from the date upon which the tax became due and payable under the assessment;

amend the assessment by making such alterations in it or additions to it as the Commissioner thinks necessary to correct the assessment.''

57. The original notice of assessment was issued on 10 August 1992, more than four years prior to the date upon which the amended notice was issued. That, according to counsel for the appellant, is enough to invalidate it.

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58. Counsel for the respondent, on the other hand, relies upon s 204(1) of the Act in contending that the amended assessment was issued within the four year period. That section provides that:

``(1) Subject to the provisions of this Part, any income tax assessed shall be due and payable by the person liable to pay the tax on the date specified in the notice as the date upon which tax is due and payable, not being less than 30 days after the service of the notice, or, if no date is so specified, on the thirtieth day after the service of the notice.''

59. In this case no date was specified in the original notice. Consequently, counsel for the respondent submitted, the income tax the subject thereof became due and payable on 9 September 1992, within the four year period.

60. To this counsel for the appellant makes the reply that no date was specified in the original notice because that notice showed that the income tax specified in it had already been paid. The notice said that the income tax payable by the appellant for the year ended 30 June 1992 was $5,911.90 but the appellant was credited with an amount of $8,907.40 in respect of tax stamps or group certificates and, after allowing for the Medicare levy, rebates and other credits, there was due to him an amount of $4,021.94. A cheque for that amount was attached. In these circumstances, counsel for the appellant contended, it would be nonsense to suggest that the tax the subject of the notice was due and payable on 9 September 1992 as it had already been paid.

61. He referred, in this respect, to s 221H of the Act. That section provides, by subs (2), that subss (3) to (5) thereof apply if an employer has made any deductions in respect of an employee under the Division in which that section is contained or a person has purchased one or more tax vouchers during a year of income and an assessment has been made of the tax payable, or the Commissioner is satisfied that no tax is payable, by the employee or purchaser in relation to the year of income.

62. Subsections (3) to (5) read as follows:

``(3) If the sum of the deductions or amounts of purchases is less than or equal to the tax payable, the Commissioner must credit the sum in payment or part payment of the tax.

(4) If the sum is more than the tax, the Commissioner must:

• (a) credit so much of the sum as is required in payment of:
  • (i) firstly, the tax; and
  • (ii) secondly, any other liability of the employee or purchaser to the Commonwealth that arises under or because of an Act of which the Commissioner has the general administration; and
• (b) pay to the employee or purchaser an amount equal to any excess.

(4A) ...

(4B) The employee or purchaser is taken to have paid any amount credited by the Commissioner in payment of the tax or other liability, at the time at which the Commissioner credits the sum or at any earlier time that the Commissioner determines.

...''

63. Counsel for the appellant submitted that, when the Commissioner applies s 221H(4) of the Act, the tax payable by the taxpayer under the assessment is paid at the moment upon which the Commissioner credits the taxpayer with an amount sufficient to extinguish the tax payable by that taxpayer. He submits, consequently, that the date upon which such a taxpayer's tax became due and payable could not be later than the date upon which the tax was paid in this way. He submitted that the fact that the issue of the notice of assessment must necessarily follow the giving of these credits cannot alter that circumstance.

64. He contended that it necessarily follows that, when the Act is read as a whole, s 204 thereof contains an implied term to the effect that that section has no application in circumstances in which the Commissioner, pursuant to s 221H(4), has applied credits in full payment of the tax due and payable, in which case the date when the tax is due and payable is the date upon which the assessment was made or, at the latest, the date of the notice of assessment.

65. I am unable to accept these contentions.

66. It will be apparent from what I have said that s 204(1) of the Act performs a dual function. Firstly, it tells the taxpayer when, in a case in which no date is specified in the notice,

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the income tax assessed is due and payable by that taxpayer. Secondly, it fixes the commencing date of the four year period specified in s 170(2).

67. As has been pointed out by Merkel J (with whose reasoning Burchett and French JJ were in agreement) in
FC of T v Ryan 98 ATC 4323 at 4344; (1998) 153 ALR 300 at 324 , that part of s 204(1) which provides that if no date is specified then the income tax assessed is due and payable on the thirtieth day after the service of the notice was inserted by an amendment made by the Income Tax and Social Services Contribution Assessment Act 1954 (Cth) (No 43 of 1954) and, in explaining the amendment in his Second Reading Speech, the then Treasurer, Sir Arthur Fadden, said:

``The only other provision that it is necessary to mention is a proposed amendment to section 204 of the principal act. As now enacted, that section provides that income tax assessed shall be due and payable on a date specified in the notice of assessment but not less than 30 days after service of that notice. By reason of credits for provisional tax paid or for tax instalments deducted from earnings, many notices of assessment show, instead of an amount payable by the taxpayer, a refund due to him. As it is inappropriate in such instances to specify in the notice a due date for payment, the proposed amendment will authorize the omission of this particular from the notice. However, the omission would affect the operation of those provisions of the principal act that authorize the amendment of assessments within three years - or, in some instances, six years - from the date on which the tax became due and payable under the assessment. I refer to both amendments that have the effect of increasing the tax in the original assessment, and those that have the effect of reducing that tax. If no date was specified in the notice of assessment, there would be no commencing point for the period within which the assessment might be amended. It is proposed, therefore, that, where no date is specified in the notice of assessment, the thirtieth day after service of the notice shall be a notional due date for payment, from which the period for amendment of the assessment may be reckoned.''

68. It seems to me that it is at least open, on the language of ss 170(2)(b)(ii) and 204 of the Act, to construe those provisions so as to have the consequence that, in a case such as the present where the tax assessed is exceeded by the amount of the credits, that tax is nonetheless deemed to be due and payable on the thirtieth day after the service of the notice for the purposes of the operation of the former section.

69. That being so, this construction should be preferred to that advanced on behalf of the appellant having regard for the fact that it plainly gives effect to what was the legislative purpose (see ss 15AB and 15AA of the Acts Interpretation Act 1901 (Cth) and FC of T v Ryan , supra , at ATC 4345; ALR 325).

70. It follows, in my opinion, that the learned Judge below was correct in his conclusion that no triable issue was shown on this ground.

71. That being so it is unnecessary for me to consider the contention, advanced on behalf of the respondent, that the appellant is in any event precluded from raising this ground of appeal in this Court by reason of the operation of s 177(1) of the Act.

72. I am likewise not persuaded that any triable issue has been shown with respect to the appellant's contention that the respondent is estopped from proceeding with recovery action until the appellant's appeals against the 1992 and 1993 notices of amended assessment are heard by the Federal Court.

73. If it be assumed that an estoppel was otherwise open in a case of this kind it seems to me to be plain that there is nothing, in the evidence, to establish that the appellant has in any way relied upon the representation alleged by him, to his detriment, should the respondent now depart from the assurances which, the appellant says, he was given. Indeed, there is nothing to suggest that he did anything at all in reliance upon the representation asserted by him. That representation was one to the effect that the respondent would not take legal action against the appellant until appeals to be instituted by the appellant against the amended assessments had been heard and determined by the Federal Court. The appellant contended below that he lodged appeals at the Federal Court in reliance upon that representation. However, it is difficult to see how that could be so. The appellant lodged his appeals in the Federal Court on 6 June 1997. The writ filed by the Commissioner in these proceedings was

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ATC 4587

issued on 18 March 1997 and served on 23 April 1997. The appellant lodged an appearance on 24 April 1997. It was consequently plain to the appellant, prior to lodging his appeals, that the respondent had not foregone taking legal action against the appellant in relation to the assessments until the appeal process had taken its course.

74. In any event it is difficult to see what detriment might arise from the fact that the appellant has lodged the appeals in the Federal Court. If he believes that the appeals have substance, as he apparently does, then he can hardly contend that the fact of their lodgment gave rise to any relevant detriment.

75. While counsel for the appellant sought to contend, on the hearing of the appeal, that it is enough that there was a dashed expectation that the Commissioner would wait until the appeal processes had been exhausted I am quite unable to accept that, in the circumstances of this case, that is enough to give rise even to an arguable claim of estoppel. While counsel for the appellant sought to draw some support for his contentions in this respect from what was said by the members of the High Court in The Commonwealth of Australia v Verwayen (1990) Aust Torts Reports ¶ 81-036; (1990) 170 CLR 394 I am unable to find anything in what was there said which could even arguably be taken to support the proposition that a mere dashed expectation of the kind contended for in this case, without anything more, is a sufficient detriment for the purpose of founding an estoppel. (See also
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 482-489 ).

76. Nor has the appellant made out his contention, advanced on the hearing of the appeal, that the respondent has waived his right to proceed with the recovery action pending the disposition of the appeals. Nothing has been pointed to which, in my opinion, discloses any arguable case in that regard. Counsel for the appellant relied, in this respect, primarily upon the judgments of Toohey and Gaudron JJ in Verwayen , supra , at Aust Torts Reports 67,996 and 68,000-68,004; CLR 473-474 and 481-487 respectively. However, on my understanding of what their Honours have there said there is nothing in their reasoning which lends any support to the appellant's contention. This is not the kind of case in which one party to litigation has unequivocally and deliberately renounced a particular right available to it against the other in the course of legal proceedings in train between them (see Toohey J, in Verwayen at Aust Torts Reports 67,996-67,997; CLR 472-475) or has, in the course of litigation, deliberately failed to plead a matter, take an available objection or pursue a particular point of law, notwithstanding that it has come to that party's notice (see Gaudron J, in Verwayen at Aust Torts Reports 68,001; CLR 482). Rather, it is one in which there has been no more, in effect, than an expression of a present intention not to take legal action against the appellant while the appellant pursued his ``appeal rights'' (see para 10 of the appellant's affidavit dated 2 December 1997). That, in my opinion, is insufficient to give rise to any arguable defence of waiver, if it be assumed that a defence of waiver would otherwise be open.

77. I would consequently dismiss the appeal.