Hyder v Commissioner of Taxation

[2022] FCA 264

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(Decision by: Greenwood J)

Elton Matthew Hyder IV
EMH IV Pty Ltd ACN 131 764 031 as trustee for The EMH IV Family Trust
ACN 603 939 939 Pty Ltd (ACN 603 939 939)
v Commissioner of Taxation

Court:

Judge:
Greenwood J

Legislative References:
Federal Court of Australia Act 1976 - 21; 23
Income Tax Assessment Act 1997 - 6-5; Part 3-1; Div 115; 115-215(3); Part 3-2; Div 105; 102-5
Income Tax Assessment Act 1936 - 92; 95; 97; 99A(4); 100A(1); 109C; 109D; 109T; 166; 166A; 170(1); 172; 173; 175A; 175; 177(1); 177F(1)(a); 177F(2)
Judiciary Act 1903 - 39B(1); 39B(1A)(c)
Taxation Administration Act 1953 - 14ZZO; 14ZW; Schedule 1; 255-5(1); 255-10(1); 350-10(3); 350-12(2)

Case References:
ARM Constructions Pty Ltd v Deputy Commissioner of Taxation - (1987) 17 FCR 19
ARM Constructions Pty Ltd v Deputy Commissioner of Taxation - (1986) 17 ATR 459
Barina Corporation Ltd v Deputy Commissioner of Taxation - (1985) 6 FCR 368
Brayson Motors Pty Ltd v Federal Commissioner of Taxation - (1983) 57 ALJR 288
Deputy Commissioner of Taxation v Moorebank Pty Ltd - (1988) 165 CLR 55
Deputy Commissioner of Taxation v Richard Walter Pty Limited - (1995) 183 CLR 168
Elias v Commissioner of Taxation - (2002) 123 FCR 499
Federal Commissioner of Taxation v Futuris Corporation Limited - (2008) 237 CLR 146
Glennan v Commissioner of Taxation - [2003] HCA 31
Harts Fidelity Pty Ltd v Deputy Commissioner of Taxation - (1999) 42 ATR 438
Minister for Aboriginal Affairs v Peko Wallsend Ltd - (1986) 162 CLR 24
Minister for Immigration and Citizenship v Li - (2013) 249 CLR 332
Nestle Australia Ltd v Commissioner of Taxation - (1987) 16 FCR 167
Rawson Finances Pty Ltd v Deputy Commissioner of Taxation - (2011) 86 ATR 108
R v Anderson: Ex parte Ipec Air Pty Ltd - (1965) 113 CLR 177
R v Toohey; Ex parte Northern Land Council - (1981) 151 CLR 170
Re Refugee Tribunal; Ex parte Aala - (2000) 204 CLR 82
Richardson v Federal Commissioner of Taxation - (1932) 48 CLR 192
Shrimpton v The Commonwealth - (1945) 69 CLR 613
SZFDE v Minister for Immigration and Citizenship - (2007) 232 CLR 189
Thurecht v Deputy Commissioner of Taxation - (1984) 84 ATC 4

Hearing date: 21-22 September 2021
Judgment date: 22 March 2022

Queensland
File Number: QUD 314 of 2020

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Decision by:
Greenwood J

ORDERS

THE COURT ORDERS THAT:

1. The applicants are directed to submit within seven days proposed orders giving effect to the reasons for judgment published today and, in particular, the matters the subject of [253] and [260] of the reasons.

2. The costs of and incidental to the proceeding are reserved for later determination.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Background

1 In these proceedings the first applicant, Mr Elton Hyder IV ("Mr Hyder"), the second applicant, EMH IV Pty Ltd (the trustee for the EMH IV Family Trust, respectively described as the "Trustee" and the "Trust"), and the third applicant, formerly described as Screaming Eagle Pty Ltd ("SEPL"), seek relief "under section 39B" of the Judiciary Act 1903 (Cth) as set out in a further amended originating application filed 31 August 2021 (the "FAOA").

2 All three applicants seek an order under s 39B for the issue of the constitutional writ of prohibition directed to the Commissioner of Taxation (the "Commissioner" and his officers) to prevent the Commissioner from:

... unlawfully seeking to recover income tax otherwise due and payable by [Mr Hyder] and otherwise due and payable by [the Trustee of the Trust] for the 2015 year of income on trust income assessed as derived by each of them in the alternative to the extent that income tax on that trust income, which has been further assessed to [SEPL] for the 2015 year of income, has already been taken by [the Commissioner] from [SEPL].

[original emphasis]

3 The essential contention said to engage the Court's jurisdiction under s 39B so as to warrant the grant of prohibition is that in seeking to recover income tax from Mr Hyder under the amended assessments, or from the Trustee of the Trust as assessed in the alternative, in circumstances where the alternative assessments to each of them includes income tax already assessed on the same source of Trust income distributed to and already paid by SEPL in the same income year, without recognising or bringing SEPL's earlier payment of tax to account, engages the Commissioner in conduct, said to be unlawful, of seeking to recover income tax twice (or thrice) over in respect of the "same source of income" for the "same period of time": FAOA, para A. The challenge goes to the validity of the exercise of the power to issue the particular assessments and recover tax under them.

4 The contended invalidity or unlawfulness of the challenged conduct is said to take the Commissioner outside the scope of the proper exercise of the power to issue each of the alternative assessments in a jurisdictional sense. Thus, it will be necessary to examine the contentions as to the conduct and the extent to which a remedy under s 39B is engaged (assuming the conduct contentions are made good), having regard to the principles identified in the authorities including Federal Commissioner of Taxation v Futuris Corporation Limited (2008) 237 CLR 146 ("Futuris"); Deputy Commissioner of Taxation v Richard Walter Pty Limited (1995) 183 CLR 168 ("Richard Walter"); and Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192 ("Richardson").

5 The conduct comprehended by para A of the FAOA is said to be unlawful by reason of principles identified in Richardson, Starke J at 197; and on appeal, Dixon J at 205 and Evatt J at 212. The principles identified at the references just mentioned which the Commissioner is said to be ignoring in exercising his statutory powers is that the Income Tax Acts of the Commonwealth in issue in Richardson (a principle which is said to equally apply to the Income Tax Assessment Act 1936 (Cth) (the "ITAA 36"); the Income Tax Assessment Act 1997 (Cth) (the "ITAA 97"); and the Taxation Administration Act 1953 (Cth) (the "Administration Act")) "do not authorise the Commissioner to take income tax twice over in respect of the same source for the same period of time". Thus, the subsequent assessments are said to be beyond power.

6 By para B of the FAOA, the applicants seek a permanent injunction in reliance upon s 39B to restrain the Commissioner from "oppressively seeking to recover income tax" [original emphasis] otherwise due and payable by Mr Hyder and by the Trustee for the 2015 year of income on income assessed as derived by each of them in the alternative, to the extent that income tax on that income, which has been further assessed to SEPL, has already been paid by SEPL to the Commissioner.

7 By para C of the FAOA, the applicants seek an injunction framed in the same terms as para B but with particular limitations. The applicants seek an injunction in the terms described at [6] of these reasons "unless and until":

(i)

the [Commissioner] refunds that income tax and interest thereon to [SEPL];

(ii)

the appeals to this Court against the [Commissioner's] objection decisions in respect of the 2015 Notices of Assessment issued to [Mr Hyder and the Trustee] have been determined and the Court's orders are final under s 14ZZO [of] Part IVC [of the] Taxation Administration Act 1953 [Administration Act].

8 By para D of the FAOA, the applicants seek the same relief as framed by paras A to C, in relation to penalties imposed on Mr Hyder and the Trustee in relation to income tax assessed to them, in the alternative, for the 2015 income year which already has been assessed to and paid by SEPL.

9 Apart from the claim for the grant of the writ of prohibition and the injunctions as framed, Mr Hyder and the Trustee, by para E of the FAOA, seek review under the provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the "ADJR Act") of the Commissioner's decision of 26 February 2021 refusing a request made on 8 October 2020 under s 255-10 of Schedule 1 to the Administration Act by them, of the Commissioner, to defer the due date for payment of a "tax-related liability" (without conceding the validity of the assessments in question). I will return to that aspect of the application later in these reasons.

10 To inject some content into the claims, it is convenient to now note the chronology of events in some detail. Much of what follows is cross-referenced to the documents. To the extent that the applicants attribute a particular characterisation or treatment to payments or receipts or both, or the contended capacity in which distributions, payments or receipts were made or received, I note the basis upon which the applicants assert that treatment. The Commissioner contests the characterisation adopted by the applicants in relation to the relevant events and I will note the contentions of the Commissioner. In Part IVC proceedings, the applicants seek to demonstrate that the assessments in issue are excessive for the purposes of s 14ZZO of the Administration Act. These proceedings, however, address an anterior question of whether the contended conduct of the Commissioner is "unlawful" giving rise to remedial relief under s 39B of the Judiciary Act having regard to the jurisprudence that determines that question.

11 The events (and contended characterisation) are these.

12 On 29 June 2015, the Trustee of the Trust distributed the net income of the Trust to six beneficiaries in particular amounts in a particular sequence with the remaining balance of the net income of the Trust distributed to a contended presently entitled seventh beneficiary described as the "Screaming Eagle Partnership" (the "Partnership"). The amount of the distribution was $18,028,722.00 made up of net income of $15,669,518.00 (other than net capital gains) and net capital gains of $2,359,204.00 (according to the Trust's tax return for 2015).

13 The Partnership was established by an agreement executed on 29 January 2015 between Mr Hyder and SEPL in which Mr Hyder is described as the "Principal" and SEPL as the "Ordinary Partner". The Ordinary Partner and the Principal agreed to contribute capital and share in the profits and losses of the Partnership in the ratio 99%:1%, respectively. A Partnership bank account was established into which the Trustee made payments.

14 On 16 October 2015, the Trustee of the Trust lodged its Trust Tax Return with the Commissioner for the 2015 income year. It discloses total net income of the Trust (said to engage the definition of "net income" in s 95, ITAA 36) of $18,534,970.00 (Item 26) comprising net income other than capital gains of $15,970,766.00 (Item 20) and capital gains of $2,564,204.00 (Item 21 A). The Statement of Distribution (Item 54) discloses the Partnership as receiving a share of the income of the Trust estate in an amount of $18,028,722.00 (Item 54 W) made up of a share of income of $15,669,518.00 and capital gains of $2,359,204.00 (Item 54 F).

15 The amount of $18,028,722.00 is described by the Commissioner as the appointment of Trust income by the Trustee by way of the resolution in the 2015 income year to the Partnership (on 29 June 2015).

16 On 19 May 2016, the Partnership tax return for the 2015 income year was lodged (said to engage Div 5, ITAA 36) disclosing net income of $15,678,015.00 (Item 20 S) including the distribution of the net income of the Trust (less capital gains) of $15,669,518.00 (Item 8 R, said to engage s 97, ITAA 36) to the Partnership. The return discloses Mr Hyder's share of the Partnership income as 1%, that is, $156,780.00. It discloses SEPL's share as 99%, that is, $15,521,235.00.

17 On 19 May 2016, SEPL lodged its company tax return for the 2015 income year. It discloses a gross distribution from partnerships (Item 6 D, said to engage s 92, ITAA 36) of $15,521,235.00 (being SEPL's 99% share of the Partnership income of $15,678,015.00 which included 99% of the distribution of the net income of the Trust, but not including capital gains). The return also disclosed SEPL's 99% interest in the net capital gains of the Trust estate (said to engage Part 3-2, Div 105, s 102-5, ITAA 97), that is, 99% of $2,359,204.00 amounting to $2,335,612.00 (Item 7 A). The taxable income of the company after deductions of $8,337.00 (Item 6 Q) was $17,848,510.00. The tax payable (at the rate of 30c in the dollar) was $5,354,553.00 (Calculation Statement T 5) less an eligible credit of $128.79 resulting in tax payable by SEPL of $5,354,424.21. The applicants emphasise that by operation of s 166A, ITAA 36, the Commissioner is taken for the purposes of s 166, ITAA 36, to have made an assessment of the taxable income of SEPL and the tax payable on that assessed income in terms of the respective amounts shown in SEPL's return.

18 The due date for payment of SEPL's tax for the 2015 income year was 16 May 2016. SEPL failed to pay the tax due on that date. On 28 October 2016, SEPL was placed in voluntary liquidation by its sole director, Mr Dreves. On 1 November 2016, the Commissioner lodged a proof of debt with the liquidator for the full amount of the tax due. The proof remained unsatisfied and SEPL was deregistered. On 17 May 2019 (the Commissioner having commenced an income tax audit of the affairs of the taxpayers associated with SEPL), Mr Hyder commenced proceedings to cause SEPL to be reinstated on the basis that the liquidator had failed to identify a significant asset of SEPL consisting of its entitlements under the Partnership agreement. Orders were made in the Supreme Court of Queensland on 3 October 2019 for the reinstatement of SEPL. The orders included an order that SEPL pay the Commissioner $5,577,228.08 in full settlement of SEPL's liability to the Commissioner made up of the amount of tax due on 16 May 2016 of $5,354,424.21 and an amount representing the general interest charge to that date of $222,803.87.

19 On 7 November 2019, SEPL paid the Commissioner $5,577,228.08.

20 One of the complaints of the applicants is that the Commissioner in issuing amended alternative assessments to Mr Hyder on the one hand, and the Trustee on the other, failed to bring to account as a credit in either alternative assessment, SEPL's assessment to tax and the tax paid as assessed (which is neither challenged nor refunded) by SEPL of $5,354,424.21 on 99% of the Trust distribution received by SEPL as the 99% participant in the presently entitled beneficiary of the Trust, that is, the Partnership.

21 I will turn to the amended alternative assessments shortly.

22 As to Mr Hyder's individual tax return for the 2015 income year dated 19 May 2016, it discloses a taxable income of $114,104.00. It discloses assessable income (Item 13 O, distribution from partnerships) of $156,780.00 (said to engage s 92, ITAA 36) being Mr Hyder's 1% interest in the Trust distribution to the Partnership (not including capital gains). As to capital gains, it discloses as assessable income, capital gains of $23,592.00 (said to engage Part 3-1, Div 115, s 115-215(3), ITAA 97) representing Mr Hyder's 1% interest in the net capital gains of the Trust of $2,359,204.00 distributed to the Partnership.

23 On 15 June 2016, the Commissioner issued an assessment to Mr Hyder showing taxable income of $114,104.00 and tax payable of $30,165.48 less a refundable offset of $98.00. Mr Hyder's income tax liability arising out of the assessment was discharged by reason of his PAYG credits.

24 The applicants contend that, by reason of s 350-10(1) of Schedule 1 to the Administration Act, SEPL's assessment (for the purposes of ss 166 and 166A, ITAA 36) is conclusive evidence that the assessment was "properly made" and except in proceedings under Part IVC on review or appeal relating to the assessment, the amount and particulars of the assessment are correct. They say that since there is no challenge by SEPL to the assessment (and the tax has been paid) and SEPL has no intention to challenge the assessment (and nor could it since the time within which to do so expired on 15 May 2020 by reason of s 14ZW, Administration Act), the 2015 return and the 2015 assessment to tax (on the basis of that return) of $5,354,424.21 are correct and remain correct. The applicants do not accept that any power under ITAA 36 or ITAA 97 or the Administration Act is engaged which confers power on the Commissioner to call the proper making of SEPL's assessment into question. The Commissioner contends otherwise, a matter to which I will return.

25 On 24 April 2018, the Commissioner commenced an income tax audit of the affairs of the Partnership. On 6 May 2020, the Commissioner provided Mr Hyder with a "Position Paper" explaining the Australian Taxation Office's ("ATO") position on "Trust Distributions and [Mr Hyder] and [SEPL] for the period 1 July 2014 to 30 June 2016".

26 In a letter dated 19 May 2020 to Mr Hyder (care of his solicitors), Deputy Commissioner Day observed that the period of review concerning Mr Hyder would expire on 15 June 2020 and would expire for the Trustee of the Trust on 7 June 2020. Deputy Commissioner Day advised that based on the Position Paper issued to Mr Hyder, "the amended assessments will be raised and issued shortly, with the primary tax payable and the SIC for yourself and the alternative assessment for the Trustee of the [Trust]" [emphasis added]. Deputy Commissioner Day advised that penalty assessments on the tax shortfall amounts had not been raised at that point and that a "Penalty position paper" would be raised shortly for Mr Hyder's consideration.

27 The following amended assessments were issued to Mr Hyder in May 2020:

28 As to the two amended income tax assessments (the 2015 and 2016 income years), the Notice for the 2015 income year recites Mr Hyder's previous taxable income of $114,104.00 and amends it to $13,364,104.00 by assessing as taxable income an additional $13,250,000.00 representing withdrawals made by Mr Hyder from the Partnership bank account in three amounts during the 2015 income year for, in the Commissioner's view, his personal use: see the determinations made by Deputy Commissioner Geale on 8 February 2021 (engaging s 97, ITAA 36) described at [78] of these reasons. The Commissioner also contends that these receipts are assessable income under s 6-5, ITAA 97. The amended assessment records amended assessed tax payable of $5,987,295.80 which, having regard to other liabilities recorded in the Notice resulted in an amended assessment of tax payable of $6,486,122.46 for the 2015 income year.

29 As to the 2016 income year, the amended assessment records amended taxable income of $4,677,654.00 (and previous taxable income of $689.00) resulting in amended tax payable of $2,078,474.30 which, having regard to other liabilities recorded in the Notice of amended assessment, resulted in an amended assessment of tax payable of $2,262,660.45 for the 2016 income year.

30 The Commissioner does not accept that the Partnership is a bona fide commercial partnership and treats the amounts drawn from the Partnership bank account by Mr Hyder (drawn from deposits made by the Trustee of the Trust into the Partnership bank account throughout the 2015 income year) as receipts by him for his personal use. The particular characterisation adopted by the Commissioner concerning those receipts having regard to ITAA 36 and ITAA 97 will be discussed later in these reasons.

31 The applicants say that the withdrawals by Mr Hyder from the Partnership bank account were withdrawals by the Principal partner for which he must account to the Partnership (his partner, SEPL) according to the orthodox understanding of obligations between partners inter se taking into account the Partnership agreement, and that the amount of $13.250m paid into the Partnership bank account forms part of the distribution of the net income of the Trust made to the presently entitled beneficiary in the form of the Partnership (of $18,028,722.00) by force of the resolution on 29 June 2016. Thus, the applicants say that the amount of $13.250m is part of the same source of income in the same income year on which SEPL has already paid tax of $5,354,424.21 and the amended assessment to Mr Hyder for the 2015 year ought properly recognise the earlier SEPL payment on that source of income. The applicants say that if Mr Hyder's amended assessed tax payable had taken account of the earlier tax paid by SEPL on the distribution (said to be the same source of income in the same income year), his amended assessed tax (before other elements recited in the Notice) would not have been $5,987,295.80 but rather $632,871.59. Other criticisms of the amended assessments are identified later in these reasons.

32 As to the 2015 income year, the accounts of the Trust record payments to the Partnership of $13,304,054.61 and a revenue adjustment of $14,167.00. They show a balance owing to the Partnership at 30 June 2015 of $4,710,500.66. The payments, adjustment and balance owing, amount to $18,028,724.00 (virtually the amount of the distribution the subject of the resolution on 29 June 2015, but for $2.00). The unpaid amount at 30 June 2015 of $4,710,500.66 was treated by the Trustee (and Mr Hyder) as an "unpaid present entitlement" (a "UPE").

33 As to the 2016 income year, Mr Hyder withdrew $1,357,000.00 from the Partnership bank account on 1 September 2015. The Commissioner contends that the payment into the Partnership bank account on the same day had the effect of reducing the 30 June 2015 balance owing of $4,710,500.66 (rounded in the ATO Position Paper) to $3,353,501.00. The applicants contend that the payment by the Trustee into the Partnership bank account was not treated as a payment in partial discharge of the UPE. The entries for 30 June 2016 record a journal entry "Move Screaming Eagle loan [apparently the unpaid UPE treated as a loan] to MH [Mr Hyder's] Capital introduced" and show an amount of "4 710 500.66", which seems to suggest that the full amount owing at 30 June 2015 remained owing at 30 June 2016 subject to the journal entry, and was converted into a capital contribution made by Mr Hyder.

34 Nevertheless, a question to be ultimately resolved is whether the 2016 payment by the Trustee into the Partnership bank account and the withdrawal by Mr Hyder is a part reduction of the UPE with the balance of $3,353,501.00 treated as a capital contribution by Mr Hyder to the Trust, or whether a capital contribution of $4,710,501.00 was made by Mr Hyder.

35 As mentioned, I will return to the various contentions of the Commissioner as to the way in which the various payments and receipts are to be characterised, in his view, for the purposes of ITAA 36 and ITAA 97 later in these reasons, but for present purposes it is important to keep in mind that these proceedings are addressing an anterior question of whether the contended conduct of the Commissioner (and his officers) gives rise to invalidity or unlawfulness according to the jurisprudence applied to the relevant facts so as to give rise to the remedial orders of prohibition and the injunctions as sought by the applicants under s 39B.

36 As to the Trustee of the Trust, described by Deputy Commissioner Day on 19 May 2020 as being issued with an "alternative" assessment to that of the "primary" amended assessment issued to Mr Hyder (arising out of the Position Paper), the Commissioner issued an assessment to the Trustee for the 2015 income year on the basis that the Partnership was not presently entitled to the net income of the Trust represented by the distribution of $18,028,722.00 made to the Partnership and that no beneficiary of the Trustee was presently entitled to the distribution with the result that the Trustee was liable to be assessed (under s 99A(4), ITAA 36) and pay tax on the distribution.

37 Accordingly, on 20 May 2020, the Commissioner issued a Notice of assessment to the Trustee reciting the Trustee's taxable income as $18,028,722.00 resulting in assessed tax payable of $8,473,499.34 which, together with the Medicare Levy, resulted in tax payable by the Trustee of $8,833,943.65.

38 As to the assessment to the Trustee, the applicants contend that it cannot stand (that is, is invalid) together with the 2015 assessment of the Trust distribution to the Partnership and thus 99% to SEPL (and 1% to Mr Hyder) as assessed. As to that matter, the applicants contend that the correctness of SEPL's assessment (taken, by operation of s 166A, ITAA 36, to have been made by the Commissioner) is not challenged in these proceedings (or otherwise) and, accordingly, the power under s 173, ITAA 36, to refund the tax collected from SEPL is not engaged. The applicants also contend that the Commissioner is in no doubt that SEPL is (and was) liable to pay tax on 99% of the Trust distribution (and Mr Hyder 1%) as the 2015 alternative assessments were issued "expressly on this basis". It is true that the position adopted in the Position Paper is that the Trust distribution to SEPL of $17,848,510.00 is assessable to tax in the hands of SEPL as income and the distribution to Mr Hyder of the 1% is assessable to tax in his hands as income. There is no suggestion by the Commissioner, however, that the amended assessment to Mr Hyder in respect of the payments received by him in the 2015 income year (that is, the drawings from the Partnership bank account of $13.250m paid into that account by the Trustee and said by the applicants to be a part of what is otherwise characterised as the Trust distribution to the presently entitled beneficiary) is an alternative assessment to the SEPL assessment (and payment).

39 The nub of the complaint of the applicants (said to give rise to invalidity) is that the Commissioner metaphorically wants to keep in his left pocket all of the tax paid so far by SEPL on $17,848,510.00 (being 99% of the distribution of $18,028,722.00) and assess and collect into his right pocket, tax on $13.250m of the receipts otherwise representing part of the distribution, as payments made to Mr Hyder for the 2015 income year (tax of $6,486,122.46) together with tax from Mr Hyder in the 2016 income year on the balance of $4,710,500.66 (of the receipts otherwise representing the distribution; tax of $2,262,660.45) or, in the alternative to the primary amended assessments to Mr Hyder, assess and collect into his right pocket (while retaining in his left pocket SEPL's payment of tax of $5,354,424.21) tax from the Trustee on $18,028,722.00 (the full amount of what is otherwise characterised by the applicants as the distribution to the presently entitled beneficiary) of $8,833,943.65, or alternatively, as the applicants apprehend, recover tax from all three entities, SEPL, Mr Hyder and the Trustee, and in the meantime pending the Part IVC proceedings, require Mr Hyder and the Trustee (both within, put simply, the Hyder "camp" or "group") to pay the full amount of both alternative assessments including the general interest charge or pay 50% of the total debt and provide "security" for the balance from entities and persons within the Hyder camp or group.

40 Clearly enough, the amended assessments to Mr Hyder and the assessment to the Trustee are described by Deputy Commissioner Day as alternative assessments (described as primary (Mr Hyder) and alternative (the Trustee)). However, neither assessment (primary or alternative) is said to be an alternative to the earlier SEPL assessment and SEPL's payment of $5,354,424.21.

41 The applicants contend that the Commissioner's position that the tax (described by the Commissioner as "properly paid" by SEPL as assessed for the purposes of ITAA 36), is "separate and distinct" from the amended assessments to and disputed by each of Mr Hyder and the Trustee, means that the income tax treatment and liability to tax for the 2015 income year of the distribution by the Trustee to SEPL and Mr Hyder has been "genuinely and finally determined and collected by the Commissioner" (tax on 99% of the distribution to SEPL and 1% to Mr Hyder).

42 The decision to issue the primary amended assessments to Mr Hyder and an alternative assessment to the Trustee could only be made by the Commissioner (leaving aside for the moment the invalidity claim described at [38] of these reasons) on the footing that he was unsure about the ultimate position concerning which of those two taxpayers properly bears the burden of tax as between each of them on the relevant receipts and payments and thus, in order to protect the revenue, the Commissioner formed the view that it was necessary to issue alternative assessments. In Practice Statement PS LA 2006/7 (Alternative Assessments), the Commissioner recognises that alternative assessments are made on the basis of the information available at the time and that there must be "genuine doubt" about which assessment is "appropriate" with the Commissioner holding the view that each assessment is "capable of being correct". The Commissioner recognises that alternative assessments are made where the "uncertainty" on the facts or operation of the law cannot be practicably resolved to ensure a single correct assessment is made (within the relevant time limit): see the Statement of Principle at para 445 of the Commissioner's Position Paper of 6 May 2020 and the discussion later in these reasons at [205] to [209].

43 Thus, the Commissioner must have held "genuine doubt" about whether the amended assessments to Mr Hyder were "appropriate" assessments or whether the assessment to the Trustee was the "appropriate" assessment.

44 If the ultimate resolution of the Commissioner's genuine doubt proves to be that the assessment to the Trustee is correct, it is difficult to see how the Commissioner could take the view that, on the one hand, he could collect tax from the Trustee on $18,028,722.00 of $8,833,943.65 and at the same time, on the other hand, retain tax paid by SEPL of $5,354,424.21, on 99% of the distribution. It may also be difficult to see how the Commissioner could, without acting oppressively, call for payment from the Trustee and Mr Hyder (before the "appropriateness" of the assessment issued to each of them is determined thus resolving the Commissioner's "genuine doubt"), of the full amount of the assessments issued to both taxpayers and, so far as the Trustee is concerned, the assessment issued to the Trustee of tax of $8,833,943.65 without taking into account the alternative nature of that assessment and the payment by SEPL of $5,354,424.21. However, in order to determine the character of the impugned conduct of the Commissioner, it is necessary to look closely at the detail of the circumstances, the contended conduct of the Commissioner reflected in the relevant correspondence and events and the legal character of that conduct.

45 The amended assessments to Mr Hyder ($6,486,122.46 for the 2015 income year; SIC of $1,340,494.60 (2015); $2,262,660.45 for the 2016 income year; and SIC (2016) $331,428.50) fell due for payment on 15 June 2020.

46 The alternative assessment to the Trustee ($8,833,943.65) recites a due date of payment of 7 June 2016.

The events occurring after 21 May 2020

47 On 28 May 2020, the ATO (by Ms Cupay) sent an email to Mr Hyder's solicitors (Mr Wojtasik) under the reference "Elton Matthew Hyder and the Trustee for the EMHIV Family Trust" advising that the "above cases" had been allocated to her for "debt management". Ms Cupay notes that Mr Hyder and the Trustee would be lodging objections against the assessments (and penalties). Those objections were said to be under preparation. Ms Cupay notes that the liabilities raised against Mr Hyder would not be due until 15 June 2020 but that the alternative assessment to the "Family Trust" was due and payable. The email notes that Mr Wojtasik and Mr Hyder would be discussing how to address "the debts" pending determination of the objections to be lodged. Ms Cupay notes Mr Wojtasik's advice that "the taxpayer" did not have sufficient funds to pay the liabilities. Ms Cupay suggested that providing securities for the liabilities pending the determination of the objections was one option. Alternatively, a corporate guarantee might be considered. In relation to the recovery of debts under dispute, Ms Cupay referred Mr Wojtasik to PS LA 2011/4 noting that the Practice Statement provides that the Commissioner may initiate recovery action for collection of unpaid disputed debts at any time, including before determination of an objection, based on an analysis of the risk associated with the case. Ms Cupay called for a "security proposal" to address the liabilities raised by the assessments, by 15 June 2020. Ms Cupay noted the following options available to the taxpayer:

•

payment of the whole debt by instalments

•

payment of 50% of the disputed debt in a lump sum with the balance being paid by instalments

•

payment of 50% of the disputed debt together with the provision of acceptable security for the remaining balance

•

provision of acceptable security for the whole debt

•

provision of financial documents to substantiate that payment of the disputed debt would cause serious financial hardship [citing two authorities]

48 Ms Cupay requested the following information in support of any proposal emerging from the taxpayers:

1.

The source of funds that the taxpayer intends to draw upon to meet the liability to the Commissioner in the event that the assessment is confirmed;

2.

Statement of Assets and Liabilities;

3.

Income and Expenditure; and

4.

Security, if any, that or any associates that may be willing to offer to obtain a deferment of legal action.

49 Ms Cupay advised that acceptable securities would be a first party mortgage over real property; an equitable mortgage of land together with a caveat; a first charge over company assets and property; a mortgage of securities issued in a "blue chip" publicly listed entity; and a bank guarantee. Ms Cupay attached to her email a copy of the assessments issued to Mr Hyder and the Trustee and the respective "penalty notices" (by which Ms Cupay must have meant the SIC notices).

50 The applicants note that the ATO was not seeking to protect the revenue for the difference between the rate of 30c in the dollar and the relevant marginal rate. The applicants also note that no consideration is given to the possibility that the tax already paid by SEPL of $5,354,424.21 might need to be taken into account in resolving the Commissioner's uncertainty as to who ultimately bears the burden on the relevant payments and receipts that led to the election to issue a primary assessment and an alternative assessment, or that should the assessment to the Trustee prove to be the appropriate assessment, the earlier payment by SEPL relevantly related to the receipts and payments would or might well need to be taken into account. The earlier payment by SEPL would be a relevant material matter in undertaking the Commissioner's analysis of the risk to the revenue.

51 On 11 June 2020, by letter to Ms Cupay, Mr Wojtasik referred to the tax assessments issued to Mr Hyder and the Trustee and the SIC Notices (all called assessments). Mr Wojtasik sought, on behalf of both taxpayers, a deferral (under s 255-10(1) of Schedule 1, Administration Act) of the time at which the assessments were to be due and payable (essentially until the expiration of a period of 14 days after a final decision exhausting all rights of appeal). Mr Wojtasik notes the amounts due by Mr Hyder under the amended assessments and SIC Notices on 15 June 2020 ($10,420,706.01 in all) and the amount due by the Trustee on 7 June 2016 of $8,833,943.65. Mr Wojtasik sought to demonstrate that the considerations set out at para 32 of PS LA 2011/14 were satisfied in all the circumstances. The requests to defer the due date for payment of the assessments and a deferral of recovery action were made assuming, for the purposes of the correspondence and the application, that all of the assessments were validly issued.

52 At point 4 of Mr Wojtasik's letter, he draws Ms Cupay's attention to the following consideration:

4) apart from anything else, and as noted in the audit Position Paper dated 6 May 2020, on 7 November 2019, [SEPL] paid the [ATO] an amount of $5,577,228.08 for income tax previously assessed to [SEPL] for the year ended 30 June 2015 plus interest charges [although the amount quoted includes the GIC] with respect to the same income that the Assessments are based on.

53 Mr Wojtasik's letter seeking each deferral was supported by written submissions. The written submissions develop the contentions about the distribution by the Trustee to the Partnership in 2015, the lodging of SEPL's return, the assessment and the payment by SEPL of $5.354m in tax based on that assessment (representing 99% of the Trustee's distribution) and asserts that the amended assessments to Mr Hyder (amounting to $8,748,782.91, leaving aside the amount of the SIC Notices) ought to be seen or characterised as alternative assessments to the SEPL assessment (and payment). Mr Wojtasik asserts that if the matter of SEPL's earlier payment is taken into consideration, the primary assessment to Mr Hyder is, in effect, satisfied to the extent of 61.2% (on the numbers). Mr Wojtasik also set out at paras 27 to 31 of the submissions, the features of the relationship between Mr Hyder, the Family Trust, the critical property development projects undertaken by "Legacy Property" (Mr Hyder's property development company) and the relationship between that Unit Trust, the Trustee of the Trust and Mr Hyder.

54 Ms Cupay responded on 16 June 2020 advising that the "request to defer payment of the outstanding debts" had been refused. Ms Cupay notes that the debt "as it currently stands is substantial and poses a risk to the revenue". Ms Cupay notes Mr Wojtasik's advice that the client does not have the capacity to pay the amount of the debt outstanding. Ms Cupay requests Mr Hyder and the Trustee to consider providing security for the outstanding debts pending objections and appeals being determined consistent with the "50-50 payment option" set out in Ms Cupay's letter. Under that proposal, Ms Cupay again emphasises that lodgement or an intention to lodge an objection does not require the Commissioner to withhold action for recovery of the taxation liability assessed under the relevant assessments and, to that end, the Commissioner applies PS LA 2011/4. Ms Cupay emphasises paras 2, 11, 15 and 52 of PS LA 2011/4 (and quotes those paragraphs). Paragraph 11 of PS LA 2011/4 emphasises that the Commissioner may initiate recovery action for collection of unpaid disputed debts at any time based on an analysis of the risk associated with the case (cross-referencing to PS LA 2011/6). Paragraph 52 of PS LA 2011/4 sets out options the Commissioner considers to be an alternative to instigating recovery action. Those options involve payment of the whole debt within 14 days, payment of the whole debt by instalments, payment of 50% of the debt in a lump sum with the balance either paid by instalments or made subject to the provision of acceptable security.

55 Ms Cupay emphasised that if there was little or no risk associated with the case (the risk of obtaining payment), the Commissioner would generally grant a deferral of legal action pending the determination of the objection. Ms Cupay called upon Mr Hyder and the Trustee to provide information about the source of funds to pay the debt, an assets and liabilities statement and an income and expenditure statement by 7 July 2020 with a view to a "50-50 payment option" being put to the Commissioner by Mr Hyder and the Trustee. That option would involve payment of 50% of the "disputed debt" in a lump sum with the balance paid by instalments or protected by security.

56 The liabilities to be brought within such an arrangement were these (as set out in Ms Cupay's letter): Mr Hyder's tax liability (2015 and 2016) of $8,748,782.91 with 50% to be paid by lump sum being $4,374,391.46 (and the balance by instalments or security); the Trustee's liability of $8,833,943.65 with 50% to be paid by lump sum being $4,416,971.82 (and the balance being paid by instalments or security). Thus, Ms Cupay was seeking payment of 50% of both alternative assessments (an amount of $8,791,363.28) with a proposal for the payment of the balance 50% by instalments or the provision of acceptable security in relation to it. No reference is made in Ms Cupay's letter to any of the submissions concerning the tax paid by SEPL of $5,354,424.21 on the distribution to it in 2015 of 99% of the distribution to the Partnership or whether the prior payment is relevant at all to the question of the Commissioner's risk assessment. No recognition is given to the circumstance that the assessments to Mr Hyder are the "primary" assessments and the assessment to the Trustee is an "alternative" assessment to those assessments (with the question of where the true burden lies as between the two (one burden), remaining a matter to be decided in the relevant forum). Ms Cupay's letter does not engage with the possibility that the earlier payment by SEPL, in the context of the alternative assessments, might bear on the Commissioner's risk assessment or debt exposure. Ms Cupay reminded Mr Wojtasik that the general interest charge would apply on any and all unpaid amounts at the rate of 7.89%.

57 On 7 July 2020, Mr Wojtasik responded to Ms Cupay's letter, advising that objections on behalf of Mr Hyder and the Trustee would be lodged within time (due 19 July and 21 July 2020) noting that the content of the objections would be a matter relevant to Ms Cupay's debt management considerations. Mr Wojtasik said that a statement of assets, income and expenditure and liabilities would be prepared to 30 June 2020. He enclosed the affidavit that had been relied upon in support of the reinstatement order concerning SEPL and, referring to the earlier correspondence, emphasised that the tax of $5.354m paid by SEPL "represents the tax on the same income assessed in May 2020 to [the Trustee of the Trust] and also to Mr Hyder personally". The proposition put to the ATO was this:

These are alternative assessments. One of the alternative assessments, that is, the assessment to [SEPL], has been paid in full. Your 16 June 2020 correspondence does not provide a basis upon which the Commissioner can collect tax on two alternative assessments.

We note that the [$5.354m] already paid represents more than 50% of the disputed tax arising from the assessment [of the Trustee of the Trust] ($8,833,943.65), or the tax arising from the individual assessments [$8,748,782.91]. Your 16 June 2020 correspondence does not provide a basis upon which the Commissioner's own criteria for a 50/50 arrangement have not already been satisfied.

We refer also to your refusal to defer payment of the disputed debts and note that no reasons have been provided. We ask for a statement of reasons [under the ADJR Act]. The decision should be reconsidered with reference to the merits of the request ...

58 On 17 July 2020, Mr Wojtasik lodged objections to the two amended assessments and SIC Notices issued to Mr Hyder and the assessment issued to the Trustee of the Trust.

59 On 18 July 2020, Mr Wojtasik provided Ms Cupay with the objections to the disputed tax liabilities on the footing that the content of the objections would be "relevant to your debt management considerations".

60 On 21 July 2020, Deputy Commissioner Ravanello sent a letter to Mr Wojtasik responding to Mr Wojtasik's email of 7 July 2020, noting the contents of that email. Deputy Commissioner Ravanello notes that reasons had not been provided explaining the decision to refuse to "defer the due date for payment resulting from the issue of the amended assessments". He advised that that question had not been addressed due to an oversight. The Deputy Commissioner notes that the ATO's letter of 16 June 2020 addressed a request for "deferral of recovery action" and not the request to defer "payment of the disputed debt" (by which he means the request to defer the "due date" under s 255-10(1) of Schedule 1). Deputy Commissioner Ravanello advised that his letter of 21 July 2020 would "now seek to address" that matter.

61 The Deputy Commissioner advised that the deferral request had been refused based upon four considerations. The first reason identified by Deputy Commissioner Ravanello was that the "quantum of [the] tax debt for both Mr Elton Hyder and the Trustee for [the Trust] [totalled] $17,582,726.56 (excluding GIC)" [emphasis added] and that the "debt as it currently stands is substantial and poses a risk that the outstanding amount will not be paid". The combined debt of $17,582,726.56 is made up of the amounts set out in Ms Cupay's letter of 16 June 2020: Mr Hyder's amended assessments for 2015 and 2016 (totalling $8,748,782.91) and the Trustee's assessment of $8,833,943.65. Deputy Commissioner Day had made it plain previously that Mr Hyder's assessments were the primary assessments and the assessment to the Trustee was an alternative assessment.

62 Deputy Commissioner Ravanello also says that Mr Hyder had not provided sufficient evidence that payment of the total debt ($17.582m) could not be made because of circumstances beyond Mr Hyder's control; that Mr Hyder had said that he had no capacity to pay the debt and had not been able to provide security for the debt to support deferral; and that Mr Hyder had been given "ample time" to pay or provide security. Having dealt with the matter of the due date, Deputy Commissioner Ravanello then addresses the topic of "debt recovery actions" and says that, as previously advised, "the request to defer recovery action is refused" and "[a]ccordingly, debt recovery action will continue if payment is not made or security is not provided as outlined in our letter" (the letter of 16 June 2020).

63 In this letter, Deputy Commissioner Ravanello responds to the various contentions concerning the payment of tax by SEPL, put to the ATO by Mr Wojtasik. Deputy Commissioner Ravanello said this:

Payments made against [SEPL] ("the company")

Until the dispute in relation to the characteristics of the income received and the attribution of that income are determined, the issue of notices of assessment or amended assessment is conclusive evidence of the due making of an assessment and, except in proceedings in relation to a review or appeal, that the assessment is valid and the amount and particulars of the assessment are correct hence collectable.

[emphasis added]

64 Deputy Commissioner Ravanello acknowledged that SEPL had "made payments" (that is, put accurately, SEPL had paid the full amount of the tax as assessed on 99% of the distribution by the Trustee and had paid the general interest charge, amounting in all, to $5,577,228.08), but noted that, "[h]owever the notices of assessments issued to the taxpayers are payable, are separate and distinct from the income tax returns lodged by the company and the payment it has made" [emphasis added]. Mr Hyder is, of course, a "separate and distinct" entity from the Trustee of the Trust just as SEPL is a separate and distinct entity from each of them. However, assessments had issued to Mr Hyder and the Trustee concerning what appears to be the same set of payments and receipts (with differences of treatment arising out of the characterisation of the payments and receipts and the capacity in which receipts occurred) on an expressly alternative basis. So too, another separate and distinct taxpayer, SEPL, had been assessed to tax in relation to the same body of payments and receipts in the same 2015 income year and had paid the tax, as assessed (by operation of the deeming provision in ITAA 36). Deputy Commissioner Ravanello seems to be saying that no account will be taken of, or consideration given to, the circumstance of SEPL's payment of tax on the relevant receipts in the 2015 income year either in relation to the deferral of the due date or, it seems, in relation to any aspect of the "debt recovery actions".

65 The position, at this point, seems to be that in relation to an original series of payments and receipts in question amounting to $18,028,722.00 in the 2015 income year (and some in the 2016 income year), the Deputy Commissioner seeks to retain tax paid of $5,354,424.21 and requires the taxpayers to pay or secure the full amount of the alternative assessments to Mr Hyder and the Trustee of $17,582,726.56.

66 On 7 August 2020, Mr Wojtasik responded to the letter of 21 July 2020 by letter to Ms Cupay. Mr Wojtasik requested the ATO to provide a Statement of Reasons concerning the decision "to refuse to defer the due date for payment" suggesting that the letter of 21 July 2020 was addressing reasons for not deferring recovery action. The letter however seems clearly enough to be addressing the due date point (and the consequences of refusing deferral of recovery actions).

67 Mr Wojtasik also responds to the reasoning of Deputy Commissioner Ravanello set out in the letter of 21 July 2020 and, as to SEPL, says this:

The first [reason set out in Deputy Commissioner Ravanello's letter] is that the quantum of the tax debt is $17,582,726.56, the debt is substantial, and there is a risk that the amount will not be paid.

The reasoning incorrectly proceeds on the basis that the amount of $17,582,726.56 is collectable by the Deputy Commissioner. As explained in both our 11 June 2020 deferral application, and the 7 July 2020 email, the amounts assessed to [the Trustee of the Family Trust] and to Mr Hyder are alternative assessments. The Deputy Commissioner cannot collect both of these two amounts.

There is a further alternative assessment, being the assessment issued to [SEPL], which has been paid. Consequently, the Deputy Commissioner has already collected the tax payable on one of the alternative assessments.

68 Mr Wojtasik then set out further remarks reflected in the earlier submissions of 11 June 2020 to the effect that payment of the recently issued assessments could not be made by the taxpayers without abandoning current property development activities. Mr Wojtasik explained that the Trustee of the Trust is the unitholder and ultimate beneficiary in the Legacy Property Holdings Unit Trust ("LPHUT") and that as the statement of assets and liabilities set out, LPHUT had substantial cash investments in various property developments amounting to substantial assets under control well in excess of the disputed amounts. Mr Wojtasik contended that accessing those assets at that moment in time would cause significant property development activities to halt giving rise to substantial costs being incurred and contended loss of jobs.

69 Mr Wojtasik contended that it was incorrect to assert that the recently issued assessments were separate and distinct from the SEPL assessment and payment of tax. He asserted that "all of these assessments are alternatives" and that "all of these assessments assess the same income, albeit on different bases". Mr Wojtasik requested the ATO to reconsider the decision of 21 July 2020 and in any event to provide a Statement of Reasons under the ADJR Act as requested in his email of 7 July 2020 concerning the request to defer the due date.

70 On 7 September 2020, the following Notices of "assessment for a shortfall penalty" were issued by Deputy Commissioner Smith:

71 As at 29 September 2020, Mr Hyder's tax-related liabilities to the Commissioner under all of the "primary" amended assessments and Notices amounted to $15,021,359.41 and the tax-related liability of the Trustee under the "alternative" assessment and Notices amounted to $13,250,915.45 (leaving aside the GIC in each case), amounting in all to $28,272,274.86.

72 On 15 September 2020, Deputy Commissioner Ravanello sent a letter to Mr Wojtasik. The letter enclosed a Statement of Reasons under the ADJR Act outlining the basis of the ATO's decision to refuse the request under s 255-10(1) of Schedule 1 to defer the due date for payment of tax-related liabilities. The Statement of Reasons dated 15 September 2020 recites that Ms Maria Llorca is the decision-maker in relation to the decision made on 21 July 2020. Deputy Commissioner Ravanello says in the letter that apart from the Statement of Reasons, the points raised in Mr Wojtasik's letter of 7 August 2020 had already been addressed in the letter of 21 July 2020. Deputy Commissioner Ravanello took up the response of 21 July 2020 and said this in his letter of 15 September 2020:

As per our response, the payment made by [SEPL] after it was re-instated is not a payment that can be attributed as 50% payment against the taxpayers' liabilities as it is a separate entity. Any payments made by the company towards its tax do not have any bearing to the taxpayers' current outstanding liabilities unless a determination has been made under objection, review of appeal to state otherwise.

Until the dispute in relation to the characteristics of the income and attribution is determined, the issue of notices of assessment and amended assessment are conclusive evidence of the due making of an assessment. The assessments are valid, and the amount and particulars of the assessments are correct hence collectable until the disputes are determined.

[emphasis added]

73 Deputy Commissioner Ravanello then takes up the options by which the taxpayers might provide security for the debt and expresses observations in relation to a corporate guarantee over the assets of Legacy Property Holdings Unit Trust and the contended restrictions in doing so due to the property development projects underway.

74 As to the Statement of Reasons, Ms Llorca observes as a background matter that at 15 September 2020, Mr Hyder and the Trustee of the Trust were indebted to the Commissioner in an amount of $23,368,417.38 (including general interest charges). That seems an odd matter to mention in identifying the reasons which informed her decision made on 21 July 2020 (see para 1 of the Statement of Reasons). If Mr Hyder and the Trustee were indebted in that amount including the GIC as at 15 September 2020, the additional Notices described at [70] of these reasons issued on 7 September 2020 would have resulted in a combined debt at 29 September 2020 of $32,386,046.58 (including GIC to 15 September 2020).

75 In the Statement of Reasons, Ms Llorca says that she has taken into account paras 32 and 33 of PS LA 2011/14. Ms Llorca also notes the shortfall penalty issued to the Trustee of the Trust on 29 September 2020 (which was also not a matter before the decision-maker on 21 July 2020). Ms Llorca notes Mr Wojtasik's email of 7 July 2020 and the proposition put to the ATO that the amended assessments issued to Mr Hyder and the alternative assessment to the Trustee of the Trust are properly considered as alternative assessments to SEPL's assessment (and tax as paid), and the proposition that there is no basis on which the Commissioner can collect tax on two alternative assessments. In Ms Llorca's Statement of Reasons, she does not identify how any aspect of PS LA 2006/7 was taken into account in reaching the decision. In making the decision, Ms Llorca observed that the debt as it stood at 15 September 2020 (presumably looking forward from the date of the decision on 21 July 2020) was substantial and posed a risk that it would not be paid and noted, presumably as at 15 September 2020, that "the debt continues to escalate with GIC accruing in the amount of approximately $1.9M per month" [emphasis added].

76 On 1 October 2020, Mr Hyder and the Trustee lodged objections in relation to the penalty assessments. On 8 October 2020, Mr Wojtasik sent a letter to Ms Cupay referring to Ms Llorca's observation in the Statement of Reasons that no suitable security had been obtained by the Commissioner in respect of the debt and that the debt continued to escalate (including GIC) in an amount of $1.9m per month. Mr Wojtasik observed that the deferral of the due date for payment of a tax-related liability would have the effect of deferring the accrual of GIC. He observed that associated entities of the taxpayers anticipated a substantial return of capital from various property development activities and referred to the three examples he had earlier given noting that it would not be until a return had been realised that payment could be made of the disputed tax-related liabilities. He observed that the decision not to defer the due date would substantially prejudice the ability of the taxpayers to attend to the payment tax-related liabilities.

77 Mr Wojtasik observed that the refusal to defer the due date for payment would mean that the quantum to be secured would be substantially larger than the disputed tax-related liabilities. Mr Wojtasik made the following request:

Further, we ask that you reconsider your decision to not defer recovery action knowing that the tax-related liabilities are disputed, the objections are meritorious, and that the prospects of recovery substantially improve should the Commissioner accommodate the taxpayers financial circumstances discussed above and in previous correspondence.

78 On 8 February 2021, Deputy Commissioner Geale made an objection decision not allowing each of the objections made by Mr Hyder to the amended assessments, the assessment of shortfall penalties and the Notice of Liability to pay SIC. Deputy Commissioner Geale made an objection decision on the same day not allowing the objections made by the Trustee to the assessment and the shortfall penalty notice. Deputy Commissioner Geale also made a determination on 8 February 2021 under s 177F(1)(a), ITAA 36 that the amount of $13.250m, being the whole or part of a "tax benefit" referrable to an amount that has not been included in the assessable income of Mr Hyder for the 2015 year of income, be included in the assessable income of the taxpayer for that year. Deputy Commissioner Geale further determined under s 177F(2), ITAA 36 that the amount be deemed to be included in the assessable income of the taxpayer by virtue of s 97, ITAA 36. The determination took effect at the date of issue of the amended assessments to Mr Hyder on 22 May 2020.

79 It is convenient to note at this point the contention of the applicants said to be the "critical aspect" of the objection decision made by Deputy Commissioner Geale concerning Mr Hyder. The critical matter is said to be that Deputy Commissioner Geale confirmed that SEPL and Mr Hyder were each presently entitled, respectively, to a "fixed" share (99% and 1%) of the Trust distribution and each was assessable to tax on that fixed share under s 97, ITAA 36, in the 2015 income year. The applicants emphasise paras 34.3.2 and 35.1 of the objection decision and it is convenient to set those paragraphs out here:

34.3.2 There is no tax law partnership between Mr Hyder and [SEPL] for the receipt of trust distributions from the [Trust] in the 2015 income year. The Trustee resolution for the 2015 year is effective to identify as beneficiaries for the purposes of the trustee exercising its discretion, as being those persons who at the relevant time when the Trustee's discretion is exercised, were the members of the Partnership. The effect of the Trustee exercising its discretion in this way is to make the members of the purported Partnership (as then existing) who were eligible beneficiaries of the [Trust] presently entitled to a "fixed" share of the net income of the Trust under subsection 97(1) of the ITAA 1936. It is the exercising of the Trustee's discretion that includes the statutory income in the individual members of the purported Partnership's assessable income.

35 We refer to paragraphs 229-302 of the Position Paper, which outlines in detail the Commissioner's reasons for his position that the withdrawals totalling $13,250,000 in the 2015 income year (the 2015 withdrawals) are assessable income to Mr Hyder either under Division 7A of the ITAA 1936 or under section 6-5 of the ITAA 1997. No additional documents have ever been provided, no new contentions articulated, and the Commissioner has not changed his position on the substantive issues. In summary:

35.1 There is no general law partnership or even if there is a general law partnership, the trust distributions do not form part of the Partnership net income. As outlined above at paragraph 34, the Taxpayer and [SEPL] were both presently entitled to a "fixed" share of the net income of the [Trust], under subsection 97(1) of the ITAA 1936. The funds the subject of the 2015 withdrawals were paid from the Trust to satisfy the present entitlement of [SEPL] to trust income. Relevantly it is the Commissioner's position that [four propositions are then set out which it is not presently necessary to reproduce here].

80 The second "critical aspect" of the objection decision is said to be the Commissioner's "confirmation" that the "inconsistent assessments" to the Trustee under s 99A, ITAA 36, on 100% of the Trust distribution, and to Mr Hyder on an additional $13.250m "of the Trust distribution" are alternative assessments within PS LA 2006/7. The applicants contend that it is common ground that if the 2015 alternative assessment to the Trustee under s 99A, ITAA 36, on 100% of the distribution is correct, then no other assessment on the Trust distribution can stand with that assessment as correct.

81 On 18 February 2021, Mr Hyder filed a notice of appeal against the appellable objection decision. The Trustee also filed a notice of appeal on 18 February 2021.

82 On 26 February 2021, Deputy Commissioner Smith by letter addressed to Mr Wojtasik responded to the letter of 8 October 2020. It seems, however, that the letter was sent by Ms Llorca to Mr Wojtasik by email on 17 March 2021. Deputy Commissioner Smith advised Mr Wojtasik that the requests for deferral of the due date for payment of the taxpayers' tax-related liabilities had been refused based on an attached Statement of Reasons (the "Statement"). Deputy Commissioner Smith advised that as the objections of the taxpayers had been disallowed in full, the tax debt remained immediately due and payable. The letter encouraged the taxpayers to propose a reasonable arrangement to pay the outstanding amounts for the consideration of the ATO. Mr Wojtasik was reminded that the general interest charge was accruing at the rate of 7.02% per annum on the outstanding balance until the entire amount had been paid.

The Statement of Reasons of Ms Llorca dated 26 February 2021

83 The Statement of Reasons dated 26 February 2021 attached to Deputy Commissioner Smith's letter of 26 February 2021 recites that Ms Llorca is the decision-maker (para 4), acting as the duly authorised officer of the Commissioner.

84 The applicants seek review under the ADJR Act of Ms Llorca's decision made on the basis set out in her Statement. At para 7, Ms Llorca sets out the Notices of amended assessments and Notices of SIC issued to Mr Hyder (including amounts due under Div 293 Notices issued on 19 June 2020 amounting to $9,000.00), amounting in all to $15,030,363.41.

85 The Statement recites the assessment and Notice of shortfall penalty issued to the Trustee amounting to $13,250,915.45.

86 The combined amount is $28,281,278.86.

87 At paras 26 and 27, however, Ms Llorca records that the combined amount due as at 11 January 2021, including the general interest charge amounted to $32,376,959.21.

88 At Part C of the Statement, Ms Llorca sets out the history of the exchanges between Mr Wojtasik on behalf of Mr Hyder and the Trustee, and the Commissioner, commencing on 11 June 2020 until 8 October 2020. These exchanges have been extensively set out in these reasons. At para 21 of the Statement, Ms Llorca says that in making her decision, she has considered all of the correspondence sent to the ATO on behalf of the taxpayers since 28 May 2020 in relation to the taxation liabilities in respect of which the taxpayers were seeking a deferral of the due date for payment or, alternatively, deferral of recovery action by the Commissioner. Ms Llorca says that she has considered PS LA 2011/4, 2011/14, 2011/18 and 2006/7 on the topic of Alternative Assessments.

89 At para 25, Ms Llorca sets out the documents she considered, including the Notices of objection lodged on behalf of Mr Hyder and the Trustee, the objection decision in relation to those objections and the applications constituting the appeal to the Court from the objection decisions.

90 At Part E of the Statement, Ms Llorca sets out findings on material questions of fact. Ms Llorca notes that the amount of $32,376,959.21, due as at 11 January 2021, is due and payable.

91 At para 29, Ms Llorca sets out her understanding of the findings arising out of the audit conducted by the Commissioner. Ms Llorca notes that a determination was made that Mr Hyder had entered into a contrived arrangement through a purported partnership with a private company [SEPL] as a partner and then utilised the private company's profits for private purposes or retained profits for working capital purposes. Ms Llorca notes that six particular groups of facts were "established" in the course of the audit. They included: that Mr Hyder set up the Partnership as a controlling partner; that Mr Hyder resolved, as the controller/director of the Trustee, to make the Partnership presently entitled to income of approximately $18m; that Mr Hyder withdrew $13.250m from the Partnership bank account in the 2015 income year for his own use and a further amount of $1.357m in the 2016 year; that a remaining amount of $4.710m was retained in the Trust and reclassified as a capital contribution; that the Partnership was then dismantled; and that the Commissioner takes the view that the Partnership arrangement is contrived, lacks commercial substance and is part of an attempt by the taxpayers to avoid tax.

92 At para 29(f), Ms Llorca says that she also concludes "that this was a contrived arrangement to avoid tax".

93 At paras 30 and 31, Ms Llorca notes matters asserted by Mr Hyder relating to steps taken by him to fund the property development activities of the LPH Unit Trust and Mr Hyder's statement that his estimated net assets have a value of $56m of which $18m are immediately available although Mr Wojtasik's correspondence says that "there are no assets available to secure such an amount" (quoted at para 31).

94 At Part F of the Statement, Ms Llorca identifies the reasons for deciding that she is not satisfied that the circumstances of the taxpayers warrant the exercise of the Commissioner's discretion under s 255-10, Schedule 1, Administration Act.

95 At para 33, Ms Llorca observes that the Commissioner "expects that all debts owed by taxpayers, including those subject to dispute, will be paid on time". Ms Llorca observes that the legislative framework underpinning the Commissioner's policy is designed to ensure that taxation debts are due and payable notwithstanding that they may be disputed. Ms Llorca observes that there is a "wide discretion" under s 255-10 to defer the due date for payment of a tax-related liability and the discretion is to be exercised "having regard to the circumstances of the taxpayer's particular case".

96 Ms Llorca observes at para 34 that one "critical effect" of granting a deferral of the due date for payment would be that GIC would not be payable even if the Commissioner were to be ultimately successful in any proceeding under Part IVC of the Administration Act.

97 Ms Llorca observes at para 35 that decisions of the Federal Court "make clear that the taxpayers' prospects of success (and by extension, the contents of any notices of objection) is not a factor that the Commissioner can reliably take into account, unless the outcome is obvious in that the taxpayer's objection is bound to succeed" [emphasis added].

98 In the case of assessments issued to two taxpayers on an alternative basis where, as in this case, the primary assessment is directed to Mr Hyder and an alternative assessment is directed to a trustee of which Mr Hyder is the controlling director concerning a Family Trust, it would be apparent in the very nature of an alternative assessment that one of the objections is bound to succeed, as it would be extremely difficult to identify any circumstances in which both assessments, expressed in the alternative, would succeed.

99 At para 36, Ms Llorca observes that although she notes that the tax liability is disputed before the Court by way of appeal, the objections were nevertheless disallowed in full on 8 February 2021. Ms Llorca observes that, regardless of the appeal, she is of the view that "the outcome of the taxpayers' appeal is not such that it will obviously result in an outcome that is in the taxpayer's favour or that the appeal is bound to succeed" [emphasis added]. Thus, Ms Llorca seems to take the view that the Commissioner is likely to succeed on both appeals and establish the appropriateness of both assessments and a total debt due to the Commissioner of $32,376,959.21 as at 11 January 2021 with the general interest charge accumulating from that date at the prevailing rate.

100 At para 38, Ms Llorca observes that "[a]lthough alternative assessments have been issued to [the Trustee of the Trust], I do not consider that of itself to be a ground to defer the time by which the tax liability becomes payable" [emphasis added]. Ms Llorca observes that in any event, the amended assessments issued to Mr Hyder and the Trustee are not alternative assessments to the assessment issued to SEPL as contended for by the taxpayers. Ms Llorca then observes that "[a]s per Division 7A of the ITAA 1936, income assessed is not frankable even though it is paid out of [SEPL's] profits". Ms Llorca notes that the objections were disallowed in full and that the taxpayers did not take up the "50/50 payment offer" previously described in these reasons.

101 At para 41, Ms Llorca observes that the debt, as it currently stands, is substantial and poses a risk that the outstanding amount will not be paid.

102 At paras 41 to 45, Ms Llorca discusses matters in relation to the exchanges concerning the property development projects, the role of LPHUT and related matters material to the request to defer the due date for payment.

103 After considering those matters, Ms Llorca said this at para 46:

Whilst it is acknowledged that the tax payable is being disputed as evidenced by the objections that have been disallowed in full and the subsequent Federal Court lodgement of the appeal against the objection decision, generally, the Commissioner expects that all debts, including disputed debts will be paid on time. As we have informed the taxpayers previously, the legislative framework which underpins the Commissioner's policy in the collection and recovery of disputed debt is designed to ensure that taxation debts are due and payable even though the underlying liability is being disputed by the taxpayers.

104 At para 47, Ms Llorca notes that the Commissioner has a discretion to defer the due date for payment and then observes:

In Mr Hyder's and [the Trustee's] case, the deferral of the due date was requested because the taxpayers currently do not have the capacity to pay the tax liabilities. However, they may be in the position to pay these after 18 months when LPH realises the property developments being undertaken and it makes distributions [to the unitholder in the LPHUT, the Trustee] and subsequently to Mr Hyder.

105 The observations at para 47 take up some of the matters the subject of the earlier correspondence all of which Ms Llorca says that she has taken into account in reaching her decision. However, Mr Hyder and the Trustee had observed in the correspondence that the request to defer the due date for payment was a function of a number of considerations (not just the capacity to pay immediately due to the state of the property projects), including, importantly, that the assessments issued to Mr Hyder and the Trustee are alternative assessments, described by Deputy Commissioner Day as a primary assessment issued to Mr Hyder and an alternative assessment issued to the Trustee.

106 In addition, Mr Hyder and the Trustee had consistently emphasised in the correspondence that a material consideration which ought to bear on the reasoning of the Commissioner is the notion that the prior payment by SEPL of tax of $5,354,424.21 on the distribution by the Trustee (the subject of the alternative assessment to the Trustee) was a material consideration in the analysis of the risk to which the Commissioner was exposed.

107 At paras 48-58, Ms Llorca examines various submissions on serious financial hardship and said this at para 58:

Mr Hyder by his own admission, participated in [a] managed partnership arrangement which is an investment scheme where profits are said to be directed through a purported partnership between an individual(s) and an associated private company. Most of the profits are taxed to the private company at the corporate tax rate but are accessed by one or more individuals or associated entities without them paying additional tax at their higher marginal rate. He has participated in a contrived arrangement to minimise his tax exposure. By this, there are inherent risks to the revenue and there is no surety that the tax will be paid even if the due and payable date is deferred for 18 months. By his conduct, he has planned to protect his assets by purchasing the family home and registering this under his wife's name. He has also planned to minimise payment of tax by creating a purported partnership with [SEPL], accessing its profits and using these to further his business projects through another entity - LPH and streaming profits from these business ventures again through a trust structure - EMH IV [the Trustee of the Trust]. By his conduct and behaviour, I am of the view that there is a significant risk to the recovery of the outstanding tax.

[emphasis added]

108 It seems to follow that Ms Llorca's concern is that Mr Hyder's conduct, in conjunction with SEPL, and his role as the controlling director of the Trustee of the Trust, has resulted in arrangements which have meant that tax has been paid by SEPL at the rate of 30c in the dollar on payments and receipts characterised as the distribution, when tax ought to have been paid by Mr Hyder at the "higher marginal rate". It seems to follow that the payment of tax by SEPL is inherently bound up in what is thought to be, by the Commissioner, the "appropriate" rate of tax, that is, the higher marginal rate on the payments and receipts representing what is characterised by the applicants as the distribution to the presently entitled Partnership of the net income of the Trust and thus the distribution to SEPL as to 99% and Mr Hyder as to 1% of that distribution.

109 At para 59, Ms Llorca says this:

The distribution that Mr Hyder received from the Partnership has been assessed to him as his income under Division 7A of the ITAA 1936 [thus attracting the higher marginal rate referred by Ms Llorca at para 58 of the Statement]. It was determined that the amounts or other benefit he received from [SEPL] are a dividend for income tax purposes. This is even if he has treated these amounts as debt/loan that have been forgiven, as he stated in his sworn statement of 11 May 2018. Mr Hyder sought to avoid paying tax on these payments from the Partnership by putting [SEPL] in liquidation owing $5,577,228.08 in tax. When he was notified that he would be assessed under Division 7A, he reinstated [SEPL] and caused the outstanding tax to be paid. By structuring his affairs in this manner, the taxpayer was entitled to claim franking credits to which he would not otherwise be entitled to claim. However, because Mr Hyder had not disclosed receipt of this payment before the financial year end under Division 7A, the payments he received are unfranked. Alternatively, [SEPL] was not able to provide documentation supporting claims that the amounts were loans or issued a distribution statement showing the amount of franking credit attached to the distribution.

[emphasis added]

110 Ms Llorca reaches the ultimate conclusion at para 62 in these terms:

On the basis of these matters, the information that I have considered in making this decision, including the fact that the taxpayers have recently lodged an application for review of the decisions disallowing their objections in full, is outweighed in my mind by the statutory objective of Part 4-15 to ensure tax liabilities are recovered in a timely manner and the desirability of GIC accruing from the date upon which the relevant tax-related liabilities are already due and payable.

[emphasis added]

111 Thus, the full amount of the tax debt remained due and payable amounting to $32,376,959.21 as at 11 January 2021 with the general interest charge accruing at the relevant daily rate from that date.

112 The reasoning reflected in the Statement is challenged on the grounds of failing to take into account relevant considerations, taking into account irrelevant considerations, and legal unreasonableness. The applicants contend that the decision ought to be set aside as infected by error of law. Those matters are addressed later in these reasons.

113 On 9 October 2020, Mr Hyder and the Trustee had commenced these proceedings. At that time, the applicants were seeking review of Ms Llorca's decision of 21 July 2020 communicated to them by Deputy Commissioner Ravanello's letter of 21 July 2020. Ms Llorca's decision was subsequently the subject of her Statement of Reasons dated 15 September 2020: see [72], [74] and [75] of these reasons.

114 On 13 April 2021, Mr Wojtasik sent a letter to the Commissioner's solicitors (Mr Tolhurst of HWL Ebsworth) advising that leave would be sought to amend the application (in the form of a draft amended application) to include claims for relief under s 39B and an order of review of Ms Llorca's decision of 26 February 2021. The applicants also foreshadowed that they would be seeking an injunction to restrain the Commissioner from taking recovery action pending determination of the proceedings on the footing that the circumstances giving rise to the two alternative assessments were already the subject of an assessment to SEPL which had been paid and that the Commissioner is "not authorised, and it would be oppressive, to collect tax on the same income more than once" citing Richardson and Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 ("Moorebank"). The applicants sought an undertaking in the terms of a document attached to the letter.

115 On 4 May 2021, Mr Tolhurst responded consenting to leave to amend the proceeding. As to the undertaking concerning recovery action for the debt ($32,376,959.21 as at 11 January 2020 with GIC accruing daily thereafter) pending the determination of the proceedings, Mr Tolhurst noted that the Commissioner "has not been provided with material that might indicate why" such an order be made; and that the applicants "would ordinarily" need to put on material to satisfy the Court on the question of the balance of convenience and an undertaking as to damages to be given by the applicants. At point 8 of the letter, Mr Tolhurst said this:

The taxation liabilities are due and payable [the total debt identified by Ms Llorca]. As you are aware, the Commissioner has a statutory obligation to recover outstanding taxation liabilities from taxpayers, notwithstanding that they may have objections to the amount of tax that ought to be payable.

116 Mr Tolhurst said that he was taking instructions on the request for an undertaking.

117 On 13 May 2021, Mr Tolhurst sent a letter to Mr Wojtasik seeking, by 26 May 2021: current full financial information concerning Mr Hyder, Amy Hyder, the Trustee, the Family Trust, Legacy Property Holdings Pty Ltd, the LPH Unit Trust and other financial information; information concerning the source of funds that would be called upon to satisfy the debt in the event that the assessments were confirmed; confirmation that the taxpayers were willing to provide security for the disputed debt to ensure that the tax liability would be paid; confirmation that the taxpayers (or another party) would be willing to provide an undertaking to the Commissioner and to the Court that, in the event of a decision in these proceedings (QUD 314/2020, the s 39B and ADJR proceedings) favourable to the Commissioner, "the disputed debt and the GIC that accrued on the debt will be paid in full within 14 days of the decision" [emphasis added] and, in the event that the taxpayers failed to pay the disputed debt "in line with the above, the taxpayers consent to judgment being entered against them" [emphasis added]; provision of a group or organisational chart/structure demonstrating the inter-relationships between Mr Hyder, Amy Hyder and the other entities earlier mentioned together with a list of properties currently owned by any of the group entities (or people); and details of liabilities to any financial institutions provided by any of the entities within the group.

118 On 26 May 2021, Mr Wojtasik responded and observed that the Commissioner was aware of the composition of the group entities and the relationship of individuals within the Hyder family to those entities and trusts. The letter refers to financial statements attached to existing affidavits. It sets out a range of other information about property projects. As to the requirement for an undertaking that the taxpayers (or another party) pay the disputed debt and the GIC accruing on the debt in full within 14 days of a decision in these proceedings should a decision be unfavourable to the taxpayers, Mr Wojtasik said this:

... [W]e advise that the Applicants do not propose to undertake to the Commissioner or the Court, to pay the disputed tax liabilities in full within 14 days should a decision in these proceedings be unfavourable to them.

The reason why an undertaking in those terms will not be given is explained in our amended Originating Application dated 14 May 2021. The Commissioner has already collected the amount of $5,577,228.08 in tax and GIC on the same income as assessed, in the alternative, to the Applicants. In those circumstances, the Applicants will not agree to paying in full one or both of the alternative assessments because the Applicant does not accept that double collection of tax on the same income from the same source is permissible.

Mr Hyder is open to an undertaking to pay the difference between the disputed amount assessed and the amount already paid if the Commissioner will undertake not to commence recovery proceedings against either or both of the Applicants until 21 days after the final determination of the tax appeals currently before the Federal Court, matter nos. QUD 40 and 41 of 2021.

Mrs Hyder may be prepared to provide the Commissioner with security with respect to her husband's disputed tax liability via a second mortgage over the home now that the market value, and her equity, has increased. ...

[emphasis added]

119 In the context of a request made of the Commissioner by Mr Hyder and the Trustee of the Trust for an undertaking not to take debt recovery action(s), one of the conditions the Commissioner requested of the taxpayers (or sought to extract from them) was that if they were unsuccessful in these proceedings (that is, unsuccessful in obtaining the relief sought under s 39B and an order of review of Ms Llorca's decision of 26 February 2021), the taxpayers would pay the full amount of the disputed debt and accruing GIC within 14 days (and, if not paid within 14 days, consent to judgment). At this point, the Commissioner held a "genuine doubt" about which of the two alternative assessments would prove to be correct (the genuine doubt that had led to two alternative assessments being issued in accordance with PS LA 2006/7), a matter that would be resolved in the Part IVC proceedings. In the Commissioner's view, either assessment A or assessment B would ultimately be shown to be correct, but not both.

120 On 9 July 2021, Mr Tolhurst responded advising that the Commissioner was "not prepared to provide an undertaking to defer recovery action/s on the basis proposed, but has an open mind to providing such an undertaking if security is offered to the Commissioner on appropriate terms [which must be taken to be security for the total debt and GIC as accruing as previously sought]". In the "background" factors informing that decision, Mr Tolhurst explains that the Commissioner expects that all tax debts (disputed or not) are paid on time and in full, with compensation in the form of interest paid by the Commissioner to the taxpayer on overpayments. The circumstances in which deferral of recovery action might occur are then set out by Mr Tolhurst reflecting the features of the Commissioner's position previously put to the taxpayers by Ms Cupay. As to the earlier SEPL payments, Mr Tolhurst says this on behalf of the Commissioner:

Nature of Claim

7. The Commissioner does not accept that the amount already collected is tax "on the same income" such that there is any double taxation. Rather, it is the Commissioner's position that the taxation laws impose two points of taxation on the transactions made by the Applicants [Mr Hyder and the Trustee of the Trust], consisting of:

(a)

the income received by [SEPL] on which tax has been paid; and

(b)

separately to the income received by [SEPL], the income received by Mr Hyder, which is either:

(i)

an unfranked deemed dividend in accordance with Division 7A of the ITAA 1936; or

(ii)

ordinary income of Mr Hyder.

8. In the Commissioner's view, this is not a case of double taxation. Rather, the taxation laws are operating as designed by Parliament.

9. It follows that the Commissioner does not accept that any undertaking made by the Applicants to pay the disputed tax, or any security in the sum of the disputed tax, ought be calculated by first deducting the amount paid by [SEPL]. In the Commissioner's view, the amount properly paid by [SEPL] is separate from the amended assessments disputed by [Mr Hyder and the Trustee of the Trust].

121 The two points of immediate taxation, however, were the amended assessments to Mr Hyder for the 2015 and 2016 income years (the "primary" assessment) on a number of contended grounds and an "alternative" assessment to the Trustee of the Trust on the footing that no beneficiary was presently entitled to the net income of the Trust in the 2015 income year. Of the distribution made in that year, SEPL had paid tax of $5,354,424.21 on 99% of a distribution of $18,028,722.00.

122 On 23 July 2021, Mr Wojtasik responded observing that he understood the Commissioner's position (at points 7, 8 and 9 of the earlier letter) to be that neither the amended assessments to Mr Hyder nor the assessment to the Trustee were regarded by the Commissioner as alternative assessments to SEPL's assessment and that having regard to the observation at points 7, 8 and 9, it was common ground between the taxpayers and the Commissioner that SEPL was properly assessed on its income and SEPL's tax position is finalised.

123 Mr Wojtasik observed that the Commissioner seemed to be saying (at points 7, 8 and 9) that each of the three assessments is correct; each assessment stands independently of the other; and none are alternatives to any of the others.

124 Mr Wojtasik "hoped" that no recovery action would now occur as the hearing of these proceedings was to commence on 23 September 2021.

125 On 27 July 2021, Mr Duhig of HWL Ebsworth, responded by email to Mr Wojtasik's letter of 23 July 2021. In that email, the Commissioner confirms that a "Notice of Assessment" had issued to SEPL for the 2015 income year and the tax (as assessed) had been paid. That statement of objective fact did not address the contention that the disclosure in SEPL's return (upon which the assessment is based) discloses, as income, SEPL's 99% share of the Trust distribution on the footing that SEPL was presently entitled to its share of the net income of the Trust as a participating beneficiary. As to the amended assessments to Mr Hyder for the 2015 and 2016 income years and the assessment to the Trustee in the 2015 income year, the Commissioner adopted the following position:

Consistent with PSLA 2006/7 and Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192; (1932) 2 ATD the Commissioner will not and cannot recover against both Mr Hyder and the Trustee for the EMH IV Family Trust in the 2015 income year. Subject to the outcome of the Federal Court proceedings, the Commissioner is only seeking to recover against Mr Hyder in the 2015 and 2016 income years.

[emphasis added]

126 The reference to "subject to the Federal Court proceedings" must be a reference to the outcome of the present proceedings as that is the only reference at the top of the email, but it seems clear enough from the quoted passage that in the two appeal proceedings the Commissioner "is only seeking to recover against Mr Hyder in the 2015 and 2016 years" [emphasis added] and not against the Trustee in the 2015 year, as well.

127 There is no suggestion in the email of any account being taken in relation to any matter (whether the assessments to Mr Hyder or the Trustee or deferral of recovery actions or otherwise) of SEPL's payment of $5.354m pursuant to its assessment. It may well be that the email of 27 July 2021 is silent about any of the circumstances giving rise to the assessment to SEPL and its payment of $5.354m of tax pursuant to it because the Commissioner had also made it plain that he was not seeking (or his preferred position was not to seek) recovery of tax from the Trustee of the Trust pursuant to the alternative assessment, and perhaps the assessment to SEPL and SEPL's payment of the tax was only thought to be relevant to the alternative assessment to the Trustee.

128 In any event, no statement of position in the terms of the position adopted by the Commissioner as quoted at [125] of these reasons is contained in any of the letters of Deputy Commissioner Ravanello, Deputy Commissioner Smith, Ms Cupay or in Ms Llorca's Statements of Reasons articulating the Commissioner's conception of the assessments, the tax position and the risk the Commissioner was seeking to protect against.

129 On 28 July 2021, Mr Wojtasik sent two letters to Mr Tolhurst noting that the Commissioner had accepted that he could not recover tax against both Mr Hyder and the Trustee (on the alternative assessments) and that the Commissioner's position was that the tax paid by SEPL would not be brought to account either as a refund or a credit against tax assessed to Mr Hyder or in the alternative to the Trustee.

130 It seems to follow that once the Commissioner accepted that he could not recover tax from both Mr Hyder on the amended assessments for the 2015 and 2016 income years and also from the Trustee for the 2015 income year, the Commissioner was never at any time facing a risk to the revenue of not recovering the total tax under both assessments (described by Ms Llorca as a debt due at 11 January 2021 including GIC of $32,376,959.21) with GIC accruing each day thereafter. This was particularly so as all of the relevant entities (persons, trustees, trusts and other companies) within the Hyder "group" addressed by the Commissioner in the earlier correspondence were within the control, for all practical purposes of Mr Hyder, that is, the Hyder camp. The real risk to the Commissioner, even assuming that SEPL's payment of tax of $5.354m under its assessment was thought to be an entirely irrelevant and separate matter, could only have been a risk that the Commissioner might not recover the higher quantum of the two alternative assessments, not a risk of a failure to be paid the quantum of both assessments plus GIC accumulating on both from whatever the relevant date might be.

131 On 15 September 2021, Deputy Commissioner Smith issued a series of certificates under ss 350-10(3) and 350-12(2) of Schedule 1 to the Administration Act, signed by her.

132 Section 350-10(3) provides, relevantly, that a certificate signed by a Deputy Commissioner stating that from the time specified in the certificate an amount is payable under a taxation law, is prima facie evidence that the amount is payable from that time, and the particulars stated in the certificate, are correct. Section 350-12(2) provides that the certificate may state the things set out in that subsection.

133 By those certificates, Deputy Commissioner Smith certified that at 15 September 2021, an amount of $16,306,288.39 (inclusive of GIC) is payable by Mr Hyder consisting of: $9,550,526.30 as income tax for the 2015 and 2016 years (inclusive of GIC); $4,922,777.18 as an administrative penalty for a shortfall amount (inclusive of GST); $1,826,778.88 as a shortfall interest charge to 21 May 2020; and $6,206.03 as additional tax on concessional contributions (Div 293 tax), inclusive of GIC. Deputy Commissioner Smith also certified on 15 September 2021 that an amount of $18,403,117.55 was payable by the Trustee as a tax-related liability (inclusive of GIC) consisting of: $13,676.886.83 in respect of income tax (inclusive of GIC); and $4,726,230.72 in respect of an administrative penalty for a shortfall amount (inclusive of GIC).

The Commissioner's position in the Part IVC proceedings

134 The Commissioner's position is that irrespective of SEPL's assessment and payment of tax on the basis of that assessment (on the footing of the Trust distribution based on the resolution of 29 June 2015), Div 7A of Part III, ITAA 36 applies to the withdrawals by Mr Hyder of $13.250m from the bank account (otherwise described as the Partnership bank account) in the 2015 income year and to the withdrawal in the 2016 income year of $1.357m and also to the contended capital contribution of $4,710,500.66 in the 2016 income year, with the result that these amounts constitute unfranked dividends paid to Mr Hyder. In the alternative, the Commissioner contends that the amounts of $13.250m and $1.357m constitute ordinary income of Mr Hyder under s 6-5, ITAA 97 for the 2015 and 2016 income years. The Commissioner also contends that Part IVA may apply.

135 The Commissioner's "primary contention" in the Part IVC proceedings is that Mr Hyder's amended assessments are "correct" because Div 7A applies such that each payment is an unfranked dividend paid by a private company, SEPL, to Mr Hyder, the sole director. The sole issued share in SEPL was held by Screaming Eagle Co Pty Ltd ("SECPL") as trustee for the Screaming Eagle Family Trust. The Commissioner contends that the Trust distribution of $18,028,722.00 does not form part of the income of the Partnership (as a presently entitled beneficiary of the Trust or otherwise) as the Partnership is neither a partnership at general law nor a tax law partnership, with the result that it is SEPL and Mr Hyder "who were appointed as beneficiaries of the Trust" not the Partnership and thus the Trust distribution constitutes "statutory income of the persons identified in the Deed of Partnership", which is income "assessable to those persons under the income tax provisions". On that footing, 99% of the Trust distribution was received by SEPL as income actually received, disclosed, assessed to tax with tax of $5.354m paid.

136 Irrespective of that matter, the Commissioner contends that Mr Hyder actually received payments of $13.250m and $1.357m in the 2015 and 2016 income years respectively, by making withdrawals from the bank account (otherwise described as the Partnership bank account) and those amounts are to be properly understood as payments of unfranked dividends by SEPL to Mr Hyder as the Partnership could not, it is said, receive Trust distributions as Partnership income (because it is neither a partnership at law nor a tax law partnership for the receipt of the Trust distribution). These contentions are said to engage ss 109C, 109D, 109T, ITAA 36. Otherwise, s 6-5, ITAA 97 is said to apply to the payments obtained by Mr Hyder.

137 The Commissioner contends that if his view as to Mr Hyder's amended assessments is correct, he can properly recover the tax from Mr Hyder (on the unfranked dividends) and also retain SEPL's payment of tax on what is regarded by SEPL, based on its return and the assessment, as a Trust distribution to a 99% participant in a Partnership as a beneficiary presently entitled to the net income of the Trust, but which the Commissioner now characterises as statutory income of SEPL of 99% of $18,028,722.00.

138 Apart from these matters, the Commissioner contends, as mentioned earlier, that Part IVA applies.

139 In the alternative to the primary position concerning the correctness of the amended assessments to Mr Hyder, the Commissioner contends that if he is wrong about that matter, the facts relating to the relevant events reveal the existence of a "reimbursement agreement" for the purposes of s 100A, ITAA 36. Section 100A(1) has the effect that where a beneficiary of a trust estate is presently entitled to a share of the income of the trust estate and the present entitlement arose out of a reimbursement agreement or arose by reason of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement, the beneficiary is deemed not to be, and never to have been, presently entitled to the relevant trust income. The Commissioner's position on the facts is that he does not accept that the Partnership ever properly existed as a matter of law or as a tax law partnership. Nor does the Commissioner accept that the Partnership was ever presently entitled to a share of the net income of the Trust estate.

140 Nevertheless, in the alternative, on the hypothesis that it was so entitled, the Commissioner contends that if it was presently entitled, s 100A(1) is engaged which brings about the deemed consequence described above. A "reimbursement agreement" is an agreement that provides for the payment of money, or the transfer of property to, or the provision of securities or other benefits for, a person other than the beneficiary (or the beneficiary and another person). Section 100A(7) is subject to the operation of s 100A(8). Section 100A(8) provides that an agreement for the purposes of s 100A(7) does not include an agreement that was not entered into for the purpose recited in the subsection.

141 The Commissioner contends that because the Partnership is deemed never to have been presently entitled to a share of the net income of the Trust, it follows that SEPL should not be assessed on any share of the Trust distribution in the 2015 income year through its individual 99% interest in the income of the Partnership with the result that s 99A, ITAA 36, operates such that the Trustee is liable to be taxed on the net income of the Trust (as assessed in the alternative). The Commissioner also contends that if s 100A(1) is found in the Part IVC proceedings to apply with the consequence just described, these things would also follow.

142 First, SEPL's 2015 assessment would be amended so as to give effect to s 100A on the footing that s 100A prevents SEPL from ever having been presently entitled to any part of the net income of the Trust: s 170(10), Item 17 (which provides that nothing in s 170 prevents the amendment, at any time, of an assessment for the purpose of giving effect to any of the provisions of ITAA 36 set out in the table at s 170(10), one of which is s 100A).

143 Second the Commissioner contends that if effect is given to s 100A, as contended, SEPL's assessment would be amended to reduce its assessable income by the proportion of the distribution it disclosed in its return thus reducing the assessment of tax payable with the result that tax already paid by SEPL on 99% of the distribution would be "addressed according to s 172, ITAA 36" (that is to say, a refund in accordance with s 172, ITAA 36).

144 Thus, it can be seen that if the Commissioner's contention concerning s 100A is correct, ultimately leading to the alternative assessment to the Trustee under s 99A, ITAA 36, as just described (as he contends) in the alternative, the Commissioner accepts that SEPL's assessment cannot stand and would need to be amended to reduce its assessable income (which on the face of the events would seem to suggest a reduction of assessable income by 99% of the distribution, that is, a reduction in assessable income of $17,848,501.00 and thus, a reduction in the assessed (and paid) tax of $5,354,424.21), and so it can be seen that on this contended footing, the tax paid by SEPL as assessed is not an irrelevant matter unrelated to the primary amended assessments to Mr Hyder and the alternative assessment to the Trustee.

The End Point on recovery adopted by the Commissioner

145 The applicants contend that but for these proceedings commenced in reliance on s 39B and amended to also seek ADJR relief in respect of Ms Llorca's decision on 26 February 2021, the Commissioner would not have adopted the position reflected in Mr Duhig's email of 27 July 2021 (see [125] of these reasons) leading up to the hearing in September 2021, but would have persevered in demands for payment or security of the total debt in the manner reflected in the correspondence described in these reasons.

146 Counsel for the Commissioner, Mr Looney QC, contends that no relief of prohibition or the injunctions is warranted under s 39B "given the position that the Commissioner has landed in at this time" (T, p 70, lns 2-7) for the purposes of the hearing, with the result that the Commissioner is only seeking to recover tax as assessed to Mr Hyder (T, p 70, lns 6-7; T, p 71, lns 4-5) and no recovery action is being taken "until the end of the Part IVC proceedings" : T, p 71, lns 20-21.

147 As to the claims made under s 39B and the relief sought under the ADJR Act, I have set out the conduct relied upon by the applicants to support the contention that until the email of 27 July 2021 (in the period from 28 May 2020), the Commissioner was acting "oppressively" in seeking to recover the total tax debt issued to the two taxpayers in the Hyder camp or group as reflected in the correspondence in the narrative described in these reasons.

The issues

148 I propose to now address the basis upon which the conduct of the Commissioner in issuing the amended assessments is said to amount to unlawfulness or invalidity giving rise to double recovery; whether the contended conduct gives rise to jurisdictional error having regard to the statutory scheme under the Administration Act having regard particularly to ITAA 36 and the approach to statutory construction adopted in the authorities; whether the conduct of the Commissioner in the period from 28 May 2020 to 27 July 2021 can properly be characterised as "oppressive" and if so, whether that conduct engages jurisdictional error; and whether the decision of Ms Llorca of 28 February 2021 is infected by error of law.

The contended basis for invalidity in the amended assessments issued to Mr Hyder and the assessment issued to the Trustee

149 The starting point is the contention of the applicants as to the consequences of the Commissioner's assessment in May 2016. The applicants say that in May 2016 the Commissioner assessed the distribution of the net income of the Trust as assessable income under s 97, ITAA 36, in working out the notional net income of a partnership between SEPL as to 99% and Mr Hyder as to 1% and assessable to each of them in their respective shares, under s 92, ITAA 36. They say that assessments issued, the tax was paid on SEPL's 99% share of the distribution (and so too Mr Hyder as to tax on 1% of the distribution).

150 They then say that the assessment issued to SEPL is not challenged and is "undisputed" in any proceedings.

151 They say that by reason of s 175, ITAA 36, the assessment issued to SEPL "is valid" and, by reason of s 350-10, Schedule 1, Administration Act, the Notice of assessment is "conclusive evidence" that the assessment was "properly made" and, "except in proceedings under Part IVC of the [Administration Act] relating to the assessment", the "amount" and the "particulars' of the assessment are "correct". The applicants say that proceedings "relating to the assessment" means Part IVC proceedings "against" the assessment or in which the subject matter of the challenge is the assessment in issue (that is, SEPL's assessment). They say that SEPL's assessment is not the subject matter of the Part IVC proceedings which concerns appeals from objection decisions concerning the amended assessments issued to Mr Hyder and the assessment issued to the Trustee.

152 The applicants then say that what follows is that the Commissioner is bound by the law and bound by the statutory consequences for the SEPL assessment determined by operation of s 175, ITAA 36, and s 350-10(1) in the absence of Part IV proceedings challenging that assessment.

153 The next step in the contention involves a factual analysis of the sequence of payments. In substance, the applicants say that a distribution of the net income of the Trust was made (consistent with the assessment) to a presently entitled beneficiary resulting in 99% of the distribution of $18,028,722.00 being paid to SEPL resulting in the assessable income the subject of the unchallenged assessment described above, and 1% paid to Mr Hyder resulting in assessable income the subject of an assessment issued to him and in respect of which tax was paid.

154 They say that the payments on which Mr Hyder's amended assessment rests for the 2015 income year, bringing $13.250m into his assessable income for the 2015 income year and $1.357m into his assessable income for the 2016 income year (and the capital distribution in that year), are simply, as a matter of fact, elements or components of the very same distribution of $18,028,722.00 made by the Trustee of the Trust the subject of the earlier assessment to SEPL to 99%, resulting in tax paid on that part of the distribution of $5,354,424.21 on that source of income (and 1% to Mr Hyder).

155 They say that the Commissioner has already received the tax the subject of the SEPL assessment which, in turn, is an assessment of the assessable income on the same source of funds or income which is the subject of the amended assessments to Mr Hyder.

156 The same position is said to be true of the alternative assessment to the Trustee of tax on the distribution of $18,028,722.00 as assessable income of the Trustee on the footing that no beneficiary was presently entitled to the net income of the Trust resulting in tax on that source of funds in the 2015 income year of $8,833,943.65.

157 They contend that unless and until there is a Part IVC challenge to the SEPL assessment (by SEPL, and none is or will be made), there is no basis on which any power to disturb the statutory "correctness" and "validity" of the SEPL assessment for the purposes of s 175, ITAA 36, and s 350-10(1) is engaged.

158 They say that the question of the "tax payable" on the "source of funds" represented by the payment/distribution of the amount of $18,028,722.00 (in the manner reflected in the factual analysis of the payment and distribution of the source of funds) in the 2015 and 2016 income years is a "decided question" on the basis of the assessment issued to SEPL which enjoys the statutory validity and correctness concerning the "assessment", the "amount" and the relevant "particulars" recited in the Notice.

159 They then say that, that being so, the amended assessments to Mr Hyder and in the alternative the assessment to the Trustee are said to be a matter of taxing again different taxpayers (Mr Hyder and the Trustee) on the same source of funds for the same income years when tax has already been "validly" and "correctly" assessed and paid on that source of funds.

160 The next step is the contention that issuing the amended assessments to Mr Hyder and the alternative assessment to the Trustee is said to be invalid on the principle that the Commissioner's conduct in issuing those two alternative assessments fails to conform with the principles identified in Richardson.

161 At para 75 of the submissions of the applicants, consistent with their oral submissions, the applicants say this:

The Applicants presently accept that the Commissioner held, and continues to hold, a bona fide, albeit plainly wrong, belief that the Trust Distribution assessed to [SEPL] as to 99% and Mr Hyder as to 1% is not, by the 2015 Alternative Assessments being assessed again by him. (But if he deliberately intended to issue the 2015 Alternative Assessments for the extraneous purpose of collecting tax twice on the Trust Distribution or in the knowledge that he had correctly assessed the same income to [SEPL] and Mr Hyder, then not only writs of prohibition should issue and the Part IV proceedings stayed forever, but the 2015 Alternative Assessments do not obtain the protection of s 175 ITAA 36 and should also be quashed.)

[bold emphasis added]

162 At this point, it will be obvious that the applicants contend for "error" on the part of the Commissioner which is said to be characterised as error which is "plainly wrong" but nevertheless they "presently accept" that the view held by him is held "bona fide".

163 Two things follow from the observations to this point.

164 The first is that a question arises about whether such an error is an error within jurisdiction or an error which takes the repository of the power outside the limits of the conferred jurisdiction. The determination of the nature of the error contended for and the consequences of that error would, according to the orthodoxy of Futuris, be a matter to be determined within the Part IVC proceedings.

165 The second is that in order to address the content of the contentions just described at [149] to [160] on the question of the validity of the assessments, it is necessary to make findings of fact concerning the sequence of payments across the relevant chronology, the character of the Partnership, the movement of cash in and out of the Partnership bank account and by whom and in what capacity, and related matters the subject matter of the various assessments.

166 The mechanism under the Administration Act for determining such questions is proceedings under Part IVC. However, I will return to the relationship between a challenge to the validity of the assessments in the context just described under s 39B and proceedings under Part IVC of the Administration Act after addressing the Richardson principles.

167 As to the contended invalidity of the amended assessments issued to Mr Hyder and the assessment issued to the Trustee, on the footing that the Commissioner is taking (but is not authorised to do so according to Richardson) income tax from each of them (in the alternative) "in respect of the same source for the same period of time" (being the same income source upon which SEPL was assessed and pay tax of $5.354m for the same income years, the following aspects of Richardson ought to be noted.

168 In Richardson, the "large amounts" of assessable income the taxpayer failed to include in his returns arose from operations conducted by a person as a nominee of the taxpayer who returned, as his own income, income derived from the operations of a hotel conducted on behalf of the taxpayer. That income was included in the assessments issued to the nominee and tax was levied and paid at a much lower rate than the tax that would have been payable had the income been included in the returns lodged by the taxpayer, Richardson. The Commissioner issued an amended assessment to the taxpayer amending the assessable income to include the income otherwise disclosed in the nominee's returns for the relevant years. In his amended assessments issued to the taxpayer, the Commissioner refused to take any part of the tax paid by the nominee, under the nominee's assessments, into account as a part-payment of the tax levied upon the amended taxable income of the taxpayer or as otherwise reducing the total amount payable by the taxpayer.

169 In issuing the amended assessments to the taxpayer, the Commissioner had not cancelled or amended the assessments issued to the nominee, and had retained the full amount of the tax paid under the assessments to the nominee.

170 Thus, a liability was imposed upon the taxpayer (in each year in issue) of a total sum consisting of the increase in the amount of tax arising from the inclusion in the taxpayer's assessment of the omitted income, and neither he nor his nominee received any credit or repayment of the tax already paid by the nominee.

171 Starke J (at first instance) reduced the total amount of each assessment by a sum equal to the increased tax already paid by the nominee. His Honour did so on the basis that the Commissioner having treated the nominee as a "dummy for the taxpayer", the Commissioner was bound to treat the tax paid by the nominee as tax paid by the taxpayer. His Honour observed that the "Income Tax Acts do not authorise the Commissioner to take income tax twice over in respect of the same source for the same period of time".

172 On appeal, Dixon J observed that Starke J had done no more than appropriate a portion of the payments already received by the Commissioner in satisfaction of tax levied upon another person (the nominee) in respect of the same income. Counsel for the Commissioner did not ultimately contest "the correctness of this appropriation": 48 CLR at 205.

173 The taxpayer contended that the Commissioner ought not be allowed to assert a liability in the taxpayer to be taxed upon income derived from the operations of his nominee while the Commissioner maintained the assessment of the nominee in respect of the same income and retained the tax paid under the assessments to the nominee. The assessments issued by the Commissioner to the nominee were not issued to him in a "representative capacity" and Dixon J observed that "two persons cannot be severally liable each in his own right to include in his individual assessment for the same year the same income" [emphasis added]: 48 CLR at 205. The taxpayer contended that "so long as assessments upon the nominee which include the income as his [the nominee's income] are maintained in force to warrant the retention of the tax already paid, the Commissioner cannot assess the taxpayer in respect of that income" [emphasis added]: 48 CLR at 206.

174 However, Dixon J observed that the question of the validity of the assessment issued to the taxpayer, "therefore reduced to the effect upon the Commissioner's authority to assess the taxpayer produced by the existence of the unaltered assessments upon the nominee" [emphasis added] and thus the question, put another way, was framed this way by Dixon J: "Is the alteration of these assessments so as to exclude the income [from the assessments issued to the nominee] an essential condition of the Commissioner's power to include the income in the assessments of the taxpayer?" [emphasis added]: 48 CLR at 206.

175 In answering that question, Dixon J observed that what "affects the taxpayer is the withholding of his money [in this case his money being the assessable income attributed to the nominee and tax paid on that income by the nominee], if it be his [money], under colour of assessments". Dixon J then made this observation at 48 CLR at 207:

No doubt, when and if the Commissioner arrived at the clear conclusion that to ensure the completeness and accuracy of the nominee's assessments the exclusion of the income he returned was requisite, it became his duty to exercise his power under sec.37. But it was not unnatural that he should delay relieving one of two persons whom he considered culpable until the liability of the other was established. The questions which may arise out of such situations are no doubt attended with difficulty. For this reason it is not desirable to enter upon them more at large than is necessary for the decision of this appeal. It is enough to say that there is nothing in the character of the power given in sec.37 or in the nature of the power of assessment which requires the formal alteration of the nominee's assessments before the alteration of the assessment to the taxpayer.

[emphasis added]

176 Clearly enough, two persons cannot be severally liable each in his or her (or its) own right to include in individual assessments for the same income year, the same income. However, it follows from Richardson that if the conclusion on the facts is that the Commissioner is seeking to make two persons severally liable each in his or her (or its) own right by assessment to the same income in the same year (in this case, recognising that the contention is that SEPL and Mr Hyder on the one hand, or SEPL and the Trustee in the alternative on the other hand, are in that position, these propositions follow).

177 First, there is nothing in the nature of the power of assessment which requires the Commissioner to amend or alter the assessment to SEPL before issuing an amended assessment to Mr Hyder or an amended assessment to the Trustee. In other words, to use the language of Dixon J in Richardson, exclusion of the income from the assessment to SEPL (assuming the power to do so) is not an "essential condition" of the "power to include" the income in the subsequent amended assessments to Mr Hyder or the assessment to the Trustee.

178 Second, the Commissioner has the power to assess more than one taxpayer in respect of the same income by issuing alternative assessments.

179 Third, once it becomes "clear" that the Commissioner is seeking to render two persons severally liable each in their own right by inclusion of the same income in their individual assessments for the same income year, the Commissioner has a duty to relieve one of them of the liability to the relevant tax or account to the relevant taxpayer for the tax already paid (or, to use the language of Dixon J in describing the step taken by Starke J, to appropriate to the relevant taxpayer the tax already paid) subject to the proper construction of the contemporary statutory provisions which govern the matter of giving expression to that principle.

180 See also, generally, Richard Walter ([4] of these reasons; (1995) 183 CLR 168 and particularly Dawson J at 217).

181 Ultimately, the Commissioner simply cannot take income tax twice over in respect of the same income source for the same income year(s): see [171] and [173] of these reasons. However, there are questions to be determined on the facts in issue and findings of fact need to be made about all of the relevant matters going to those questions.

182 Let it be assumed, however, for present purposes, that the bona fide view the Commissioner holds that the income represented by the Trust distribution to SEPL as to 99% and Mr Hyder as to 1% is not being "assessed" again by him, is nevertheless "manifestly wrong": see [161] of these reasons. Let it also be assumed that, although the Commissioner may exercise the power to issue assessments by issuing alternative assessments to different taxpayers in relation to the same source of income in the same income years (where the Commissioner holds "genuine doubt" as to which assessment is correct), the exercise of the power to issue an amended assessment to Mr Hyder and an assessment to the Trustee without appropriating (as Starke J did in Richardson in the case of the nominee) the earlier tax paid in reduction of each assessment to the relevant taxpayer, renders the assessments as issued without taking account of that reduction, invalid.

183 Does the Commissioner's conduct on the basis of those assumptions give rise to remedial jurisdictional error within s 39B?

Section 39B and Part IVC proceedings

184 The applicants seek orders "under section 39B" of the Judiciary Act 1903 (Cth) for the grant of the writ of prohibition and permanent injunctions as described earlier. The relief claimed makes plain that the applicants are relying upon the Court's original jurisdiction under s 39B(1) which for the purposes of s 77(i) of the Constitution defines the jurisdiction of this Court with respect to matters mentioned in s 75(v) of the Constitution (which are also necessarily matters in which a person is being sued on behalf of the Commonwealth for the purposes of s 75(iii) of the Constitution.

185 Section 39B(1) "relevantly replicates" (Futuris (2008) 237 CLR 146, Gummow, Hayne, Heydon and Crennan JJ at [4]) the terms in which jurisdiction is conferred on the High Court by s 75(v) in any matter in which the remedy of a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth (which includes the conferral of jurisdiction to grant certiorari as incidental to the exercise of the jurisdiction to grant prohibition and mandamus: Re Refugee Tribunal; Ex parte Aala (2000) 204 CLR 82 at [14], Gaudron and Gummow JJ).

186 The significance of invoking s 39B(1) for an order for the grant of prohibition is that the applicants must show that the contended error amounts to jurisdictional error. The statutory mechanism by which a tax sought to be imposed by the Commissioner is made contestable for citizens, without the need to demonstrate jurisdictional error on the part of the decision-maker, is Part IVC of the Administration Act.

187 In Futuris, the plurality determined that the proper construction to be attributed to the operation of the "Pt IV(C) system", "triggered" by s 175A, ITAA 36, having regard to s 175, ITAA 36, and s 177(1), ITAA 36 (as it was, but which is now s 350-10, Schedule 1, Administration Act) is that the validity of an assessment is not affected by failure to comply with any provision of the ITAA 36, but rather, a dissatisfied taxpayer may invoke the Part IVC system and ultimately, if thought appropriate, engage with the Commissioner in review proceedings before the Administrative Appeals Tribunal (the "Tribunal") or appeal proceedings before this Court: Futuris, the plurality at [22]-[24]. See also Glennan v Commissioner of Taxation [2003] HCA 31; 198 ALR 250, Gummow, Hayne and Callinan JJ at [15] to [18].

188 The reference to s 175, ITAA 36, and to what is now s 350-10 of Schedule 1, Administration Act, giving rise to the "legislative purpose" embodied in the text (Futuris, [23]) that the validity of an assessment is "not affected" by a "failure to comply with any provision of the Act" but rather a dissatisfied taxpayer may object and challenge the assessment within the Part IVC system, has the following consequences.

189 First, a contention that the Commissioner has a duty or obligation to relieve a taxpayer of a liability to tax or account to the relevant taxpayer for the tax already paid if it be the case that the Commissioner is seeking to make two persons severally liable each in his or her (or its) own right, by assessment, to the same income in the same income year, is itself a matter or question the taxpayer is entitled to agitate within the Part IV system as an aspect of a contended failure on the part of the Commissioner to comply with the provisions of the taxation laws of the Commonwealth and, in particular, ITAA 36 and ITAA 97.

190 Second, the presence and operation of the Part IVC system means that where s 175 applies, "errors" in the process of assessment do not go to jurisdiction and thus do not attract the remedy of the grant of the constitutional writs (in this case, prohibition) under s 75(v) of the Constitution or under s 39B(1) of the Judiciary Act: plurality [24].

191 Third, the construction attributed to the text of the above sections construed in the context of the Part IVC system that "errors" in the process of "assessment" do not go to jurisdiction, is largely informed by the reach of s 175, ITAA 36, and the protection it affords to something that answers the "statutory description" of an "assessment": plurality [25].

192 Fourth, a so-called "tentative" or "provisional" assessment does not answer the statutory description of an "assessment" and nor can the "conscious maladministration of the assessment process" produce an assessment answering the statutory description: plurality [25]. As to that matter, the plurality said this at [55] and [56]:

55 The issue here is whether, upon its proper construction, s 175 of the Act brings within the jurisdiction of the Commissioner when making assessments, a deliberate failure to comply with the provisions of the Act. A public officer who knowingly acts in excess of that officer's power may commit the tort of misfeasance in public office in accordance with the principles outlined earlier in these reasons. Members of the Australian Public Service are enjoined by the Public Service Act (s 13) to act with care and diligence and to behave with honesty and integrity. This is indicative of what throughout the whole period of the public administration of the laws of the Commonwealth has been the ethos of an apolitical public service which is skilled and efficient in serving the national interest. These considerations point decisively against a construction of s 175 which would encompass deliberate failures to administer the law according to its terms.

56 Such failures manifest jurisdictional error and attract the jurisdiction to issue the constitutional writs. ...

193 At [47], the plurality observe that although the principles of jurisdictional error control the grant of the constitutional writs, those principles do not "attend the remedy of injunction" provided for in s 75(v) and thus s 39B(1) of the Judiciary Act. Their Honours said this at [47] having regard to the view adopted in relation to construction of the relevant statutory provisions in the context of the Part IVC system:

Nevertheless, the equitable remedies, which are available at the suit of a party with a sufficient interest, operate to declare invalidity and to restrain the implementation of invalid exercises of power. Where s 175 of the Act operates there will be no affectation of the validity of any assessment.

194 The plurality also observed that, in any event, in view of the usual discretionary considerations that apply to the grant of any equitable remedies, the pendency of the proceedings under Part IVC strongly suggested that an injunction ought otherwise not be granted. The same considerations apply in these proceedings.

195 For all these reasons, the relief sought by the applicants for the grant of the writ of prohibition is refused.

196 As earlier mentioned, the applicants seek relief "under section 39B" and the nature of the relief framed by the FAOA suggests reliance upon s 39B(1). However, original jurisdiction is conferred on this Court under s 39B not only by s 39B(1) but also by s 39B(1A)(c) which provides that the original jurisdiction of the Court includes jurisdiction in any matter arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter. The issues raised by the applicants engage a matter arising under laws made by the Parliament: ITAA 36, ITAA 97 and the Administration Act.

197 Because the original jurisdiction conferred under s 39B by s 39B(1A)(c) includes jurisdiction in any matter arising under any laws made by the Parliament and is not concerned with the jurisdiction conferred on this Court which "relevantly replicates" (Futuris at [4]) the terms of the jurisdiction conferred on the High Court by s 75(v)), a remedy in the exercise of the jurisdiction under s 39B(1A)(c) is not governed by the principles of jurisdictional error which control the grant of the constitutional writs. To the extent that the applicants seek to rely upon s 39B(1A)(c) to support the claims for an injunction (as clearly the claim for the grant of the writ of prohibition can only be referrable to s 39B(1)), it is not necessary for the applicants to show jurisdictional error on the part of the repository of the power. It is sufficient to show error within jurisdiction. However, the question of statutory construction addressed and adopted by the plurality in Futuris also engages the question of whether the legislative purpose to be derived from the text of s 175, ITAA 36, and s 350-10, Schedule 1, Administration Act, suggests that any error leading to invalidity in the exercise of the power to issue assessments by reason of any failure to comply with any statutory provisions of the Act is to be determined within the Part IVC system.

198 To the extent that the applicants seek permanent injunctions restraining the Commissioner from recovering tax from Mr Hyder under the amended assessments for the 2015 and 2016 income years or from the Trustee in the 2015 income year, without taking into account (in the sense described earlier) the tax previously paid by SEPL, on the footing that to do so involves seeking to make two persons severally liable each in his or her (or its) own right by assessment to the same income in the same year, the injunctions ought not to be granted because those questions need to be determined within the Part IVC proceedings, and to grant the injunctions in anticipation of the Part IVC proceedings would offend the discretionary considerations informing the grant of the equitable remedy.

199 To the extent that the applicant's seek injunctions framed in terms of whether the Commissioner has engaged in conduct in seeking to recover the tax debt oppressively (rather than a question of invalidity of the assessments, a Part IVC question), that matter requires separate consideration in the light of all of the exchanges described at [47] to [129] of these reasons against the background of the matters described at [12] to [46] of these reasons.

Has the Commissioner sought to enforce payment of tax-related liabilities by conduct amounting to oppressive conduct?

200 In Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55, the High Court determined that State Limitation Acts did not have the effect of intruding into and limiting the capacity of the Commissioner to seek recovery of tax-related liabilities within the coherent scheme established for that purpose in the ITAA 36 (as the provisions stood in 1988). The Court said this at 67:

The intrusion of State Limitation Acts provisions would undermine other aspects of the coherent scheme which the Assessment Act embodies. The intrusion of such provisions would, e.g., lie ill indeed with the Assessment Act provisions pursuant to which income tax and additional tax become and remain due and payable notwithstanding that an objection to payment of the tax has been lodged and the appellate procedures for challenging an assessment have been invoked [citing s 201, ITTA 36, as it then was].

[emphasis added]

201 The Court then made the following observations which are invoked by the applicants in these proceedings. The statement of principle is significant because it represents the collective view of the entire bench comprised of five of their Honours, speaking with one voice: Mason CJ, Brennan, Deane, Dawson and Gaudron JJ. Their Honours said this at 67:

There will inevitably be cases in which it would be oppressive for the Commissioner to seek to enforce payment of the full amount due under a notice of assessment or by way of additional tax before the final resolution of a genuine dispute about the correctness of the assessment: cf. Deputy Federal Commissioner of Taxation v Australian Machinery and Investment Co. Pty. Ltd.; Marina Estates Pty. Ltd. v Deputy Commissioner of Taxation. A case in which the Commissioner issues a number of assessments on an alternative basis to different taxpayers in respect of the same income provides an obvious example.

[emphasis added; citations omitted]

202 In Richard Walter, 183 CLR 168, Brennan J at 202 cited Moorebank as having recognised, consistent with Richardson, that the Commissioner has the power to issue alternative assessments to tax against two taxpayers in respect of the same item of income in the same income year and then observed: "And the courts, if not the Commissioner, can diminish the difficulty of concurrent assessments by ensuring that there is no double recovery of tax" [emphasis added]. Deane and Gaudron JJ in Richard Walter at 214 observed that the Courts would not "be powerless to prevent their processes being abused to obtain double recovery by enforcement of an alternative assessment" [emphasis added]. At 217, Dawson J, in Richard Walter, in the course of observing that there is nothing which would prevent the Commissioner from issuing assessments to more than one taxpayer in respect of the same income in the same income year, also referred to the passage from Moorebank quoted above without suggesting any disagreement with the notion that conduct would be oppressive in the circumstances described by their Honours in Moorebank at 67, Toohey J in Richard Walter at 228, observed that "it would be oppressive to proceed to recover against more than one before the final resolution of a genuine dispute about the correctness of the assessment".

203 Clearly enough, their Honours, in Moorebank, took the view that in circumstances where the Commissioner issues assessments on an alternative basis to different taxpayers (Mr Hyder and the Trustee) in respect of the same income, the conduct of seeking to enforce payment of the full amount due under the Notices of assessment issued on an alternative basis, before the final resolution of a genuine dispute about the correctness of the alternative assessments, would provide an "obvious example" of "oppressive" conduct.

204 It will be recalled that on 27 July 2021 the solicitors for the Commissioner sent an email to the solicitors for the applicants which reflected a change in position: see [125]-[128] of these reasons. Rather than pressing for payment of the combined debt represented by the two alternative assessments together with accumulating GIC (which as at 11 January 2020 was being pressed in an amount of $32,376,959.21 with GIC accumulating daily thereafter), the Commissioner made clear in the email that he was not seeking to recover and could not recover against both Mr Hyder and the Trustee and was only seeking to recover against Mr Hyder in the 2015 and 2016 income years under the amended assessments issued to Mr Hyder. For the sake of convenience, that statement of position is again set out here:

Consistent with PSLA 2006/7 and Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192; (1932) 2 ATD the Commissioner will not and cannot recover against both Mr Hyder and the Trustee for the EMH IV Family Trust in the 2015 income year. Subject to the outcome of the Federal Court proceedings, the Commissioner is only seeking to recover against Mr Hyder in the 2015 and 2016 income years.

[emphasis added]

205 It should be noted that the Commissioner's statement of position was now said to be one "consistent with PS LA 2006/07" and Richardson's case. No reference in that statement of position is made to Moorebank.

206 Before turning to the content of the term "oppressive" conduct, it is necessary to note some further elements of PS LA 2006/7. The document contains the following statements:

1. What this practice statement is about

We may issue multiple assessments in which the same underlying amount is assessed if there is genuine doubt about where the "final" liability to tax rests. These assessments are referred to as alternative assessments. They are usually issued to different taxpayers but can be issued to the same taxpayer in some situations.

...

3. When should an alternative assessment be made?

Alternative assessments are made only when good administration requires them. They are made on the basis of the information available to us at the time. There must be genuine doubt about which assessment is appropriate because we hold the view each assessment is capable of being correct.

Usually alternative assessments will be made where the uncertainty on the facts or operation of the law cannot be practicably resolved to ensure a single correct assessment is made within a time limit.

...

5. Circumstances where the issue of alternative assessments is appropriate

Alternative assessments issued pursuant to separate tax Acts

You may issue alternative assessments to the same taxpayer (or to different taxpayers) pursuant to more than one tax Act in respect of the same income, benefit or transaction.

...

Alternative assessments issued to multiple taxpayers under the same tax Act

You may issue alternative assessments to different taxpayers in respect of the same income and the same income year.

For example, you may issue an assessment to the trustee of a trust and also issue assessments to the trust beneficiaries where there is uncertainty as to whether the beneficiaries are presently entitled to income of the trust.

...

7. Recovering the tax payable to the ATO

The production of a notice of assessment is conclusive evidence of the due making of an assessment and, except in proceedings in relation to a review or appeal, that the assessment is valid and the amount and particulars of the assessment are correct.

When tax becomes due and payable under a notice of assessment, it becomes a legally binding debt of that taxpayer.

Despite the standing of alternative assessments once issued and the binding debt created, we are not permitted nor intend to undertake double recovery of the tax [citing Richardson]. Our intention is to ultimately collect the relevant amount of tax payable on the alternative assessments to the extent they prove correct to the exclusion of others.

You should commence the usual debt collection procedures for amounts owing under alternative assessments. We have discretion as to which assessment is collected on and as to the amounts collected under each assessment, but there is an obligation to ensure these actions are not oppressive [citing Winter v Deputy Commissioner of Taxation 87 ATC 4655 but not citing the observations in Moorebank at 67 quoted at [201] of these reasons].

We do not normally commence proceedings to recover the aggregate amount of tax owing under all alternative assessments. However, we may seek to recover the amount of tax payable or take action to secure the assets of a taxpayer where the tax payable under any of the assessments is at risk because the taxpayer is dissipating assets or taking other action to stop us being able to collect.

When undertaking debt collection activity where alternative assessments have issued, you should also note our policy on remission of general interest charge where all undisputed tax is paid and at least 50% of the disputed liability is paid - see PS LA 2011/4 Collection and recovery of disputed debts

8. Advising the taxpayer when an alternative assessment is issued

You should ordinarily issue a letter to the relevant taxpayer or taxpayers prior to the issue of alternative assessments. However there may be circumstances which mean the letter issues at the same time as, or shortly after the issue of the alternative assessments.

The letter should advise each taxpayer that:

•

Alternative assessments are being issued as on the available information there is uncertainty on the facts or operation of the law which indicates any of these assessments is capable of ultimately being correct.

•

How much of the tax payable is the subject of an alternative assessments ("the relevant amount of tax").

•

We only intend to collect "the relevant amount of tax" and do not intend to recover the aggregate amount of all assessments.

•

What payments of tax we require be made in respect of their assessments.

•

The taxpayer may object against the assessment having regard to the time limits allowed for lodging objections.

•

Once the "final" liability has been determined, either by way of agreement with the taxpayer or resolved through an appeal process, the relevant assessments will be amended. We will not ultimately collect more than the final liability.

...

[emphasis added]

207 The document recites that each of these paragraphs "explains the use of alternative assessments in respect of the same income, benefit or transaction for one or more taxpayers". All of the quoted paragraphs are material.

208 As to recovery of tax debts the subject of alternative assessments, it is important to emphasise that the Commissioner accepts that despite the statutory standing of alternative assessments once issued, and the statutory conclusion that each gives rise to a binding debt, the Commissioner nevertheless recognises that he is not permitted and nor does he intend to undertake double recovery of tax, and his intention is to ultimately collect only the relevant amount of tax payable on the alternative assessments to the extent that one of them proves to be correct to the exclusion of any others. Moreover, the Commissioner recognises that he has a discretion as to which assessment is to be collected and as to the amount to be collected under each assessment consistent with an obligation to ensure that any action taken is not oppressive.

209 The Commissioner can be taken to know and understand that at the date of issue of PS LA 2006/7 Alternative assessments (relevantly for these proceedings the version issued on 27 July 2006), a joint judgment of the High Court in Moorebank had observed that seeking to enforce payment of the full amount due in a case in which the Commissioner has issued assessments on an alternative basis to different taxpayers in respect of the same income, provides an "obvious" example of conduct which would be "oppressive".

210 The present statutory framework is this. Each pecuniary liability arising under each of the alternative assessments is a tax-related liability which became due and payable on the date for payment recited in each notice. An amount of a tax-related liability that is due and payable is a debt due to the Commonwealth and is payable to the Commissioner: s 255-5(1), Schedule 1, Administration Act. The Commissioner (or the relevant officer nominated in the section) may sue in his or her official name to recover the amount of a tax-related liability that remains unpaid after it has become due and payable: s 255-5(2). Thus, the Commissioner has a choice: is recovery action to be taken or not? If a request is made by the taxpayer of the Commissioner to defer recovery action on the due debt in the circumstances of the case, another choice arises: is the request to be accepted; accepted in part on conditions; or rejected?

211 The Commissioner has power to defer the time for payment of a tax-related liability having regard to the circumstances of the taxpayer's particular case: s 255-10(1). The Commissioner may, having regard to the circumstances of the taxpayer's particular case, permit a tax-related liability to be paid by instalments. The Commissioner may require the taxpayer to give security for the due payment of an existing or future tax-related liability having regard to the circumstances of the taxpayer set out in s 255-100(1)(a). If the Commissioner "reasonably believes" that a requirement for security is otherwise appropriate having regard to all the relevant circumstances, the Commissioner may require the taxpayer to give security: s 255-100(1)(b). The Commissioner may require security to be given by way of a bond or deposit, payment of instalments or by any other means that the Commissioner reasonably believes is appropriate: s 255-100(2)(a) and (b). The Commissioner may require the taxpayer to give security under s 255-100 at any time the Commissioner reasonably believes is appropriate and as often as the Commissioner reasonably believes is appropriate.

212 If the Commissioner requires the taxpayer to give security under s 255-100, the Commissioner must give the taxpayer notice which satisfies the requirements of s 255-105. By s 260-5, the Commissioner may collect amounts the subject of a tax-related liability from a third party by giving notice which meets the requirements of s 260-5.

213 Division 260 contains special rules about collection and recovery of tax-related liabilities and particular sections deal with the obligations of liquidators, receivers, the administrators of estates and other matters. Those provisions are not relevant for present purposes.

214 As already noted, the production of a Notice of assessment under a taxation law is conclusive evidence that the assessment was properly made and, except in proceedings under Part IVC of the Administration Act on a review or appeal relating to the assessment, the amounts and particulars of the assessment are correct: s 350-10(1). The production of a certificate signed by the Commissioner or a relevantly nominated officer is prima facie evidence that the amount is payable and the particulars stated in the certificate are correct. See ss 350-10(3), 350-10(3A), 350-10(4), 350-12, 350-15, 350-20 and 350-25 as to those statutory consequences and other evidential consequences supporting the scheme for recovery of tax-related liabilities.

215 The provisions described at [210] to [214] of these reasons provide the contemporary statutory arrangements which constitute the "coherent scheme" (as the Court described it in Moorebank at 67 in the statutory setting prevailing in 1988) for determining the status of a tax-related liability as a debt due to the Commonwealth and payable to the Commissioner and the powers conferred for the recovery of such debts by enforcement of payment or the provision of security. In the context of alternative assessments, the Commissioner has set out in PS LA 2006/7 the comments quoted at [206] of these reasons under the heading Recovering the tax payable to the ATO.

216 As to the content of what "would be oppressive" (Moorebank at 67; [201] of these reasons) conduct on the part of the Commissioner in the exercise of these powers in the context of alternative assessments, I simply make these comments:

(1)

In Moorebank, the Court recognised that in exercising the public law powers conferred on the Commissioner by the "coherent [statutory] scheme" earlier described, it would be "inevitable" that cases will occur in which it would be "oppressive" for the Commissioner to "seek to enforce payment" of the "full amount due" under a Notice of assessment "before" the final resolution of a "genuine dispute" about the "correctness" of the assessment. Moreover, their Honours went further and said that a case in which the Commissioner issues a number of assessments "on an alternative basis to different taxpayers in respect of the same income" provides an "obvious example" of that inevitability of oppressive conduct.

(2)

The notion that it would be an obvious example of oppressive conduct on the part of the Commissioner to "seek to enforce payment" of the full amount of the various alternative assessments before the final resolution of the genuine dispute about the correctness of them is a notion about the exercise of public power. Although it is always dangerous to detach such a statement of the Court in Moorebank from its moorings lest it drift out to sea in an uncontrolled way, an oppressive exercise of public power is, in truth, an abuse of public power and a fraud on the power in the benign sense of being an improper exercise of the power, outside the limits of the power conferred on the repository.

(3)

There is nothing in the "coherent scheme" conferred by the legislation as described at [210] to [214] of these reasons that suggests that the power in the Commissioner to "seek to enforce payment" to recover a debt due to the Commonwealth, payable to the Commissioner, may be exercised oppressively.

(4)

In R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 ("Northern Land Council"), Aickin J explained the notion of an improper purpose in the exercise of public power, in the sense in which I understand their Honours in Moorebank to be using the term "oppressive". At 233, his Honour said this:

I use the term "improper purpose" to mean one for which the relevant power or authority was not conferred. It makes no difference whether or not that purpose was known to, or believed or suspected to be necessary by, the person exercising the power. Generally speaking executive or administrative powers are conferred for a purpose ascertainable, with greater or lesser difficulty, from the terms of the instrument conferring the power. In the case of the legislative powers it is not always possible to discern a purpose, as distinct from subject matter or content. A belief that the act done is being done for an authorized purpose will be irrelevant if the purpose for which the power is in fact exercised is not such a purpose, whether the belief is as to a matter of fact or law.

[emphasis added]

(5)

As to the relationship between an exercise of public power conferred on a repository and the evolution of principles governing the notion of an "abuse of power", the Court, Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ said this in SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189 at [12] and [13]:

12 The attachment by courts of equity of the term "fraud", with related notions of "bad faith" and "abuse of power", when stigmatising exercises of powers of appointment and fiduciary powers as falling short of the standards equity required of the repositories of those powers, has proved influential in the development of public law. What came to be known as the principle of "Wednesbury unreasonableness" was developed in the case law by analogy to the principles controlling the exercise of powers of discretions vested in trustees and others.

13 However, several points should be made here. First, given the equitable nature of their origins described above, principles of public law concerning impropriety in the exercise of statutory powers have not had the focus upon what might be called the "red blooded" species of fraud which engages the common law. Secondly, with respect to references in the public law decisions to good and bad faith and the like, the following observation in a leading English text is in point:

"These add very little to the true sense and are hardly ever used to mean more than that some action is found to have a lawful or unlawful purpose. It is extremely rare for public authorities to be found guilty of intentional dishonesty: normally they are found to have erred, if at all, by ignorance or misunderstanding. Yet the courts constantly accuse them of bad faith merely because they have acted unreasonably or on improper grounds. Again and again it is laid down that powers must be exercised reasonably and in good faith. But in this context "in good faith" means merely "for legitimate reasons". Contrary to the natural sense of the words, they impute no moral obliquity."

[bold italics emphasis added]

(6)

In this case, the question is whether the Commissioner's officers acted oppressively and thus whether the Commissioner's officers acted for a lawful or an unlawful purpose (that is, acted reasonably and for legitimate reasons) in seeking to enforce payment of the full amount due under the alternative assessments before the final resolution of the "genuine dispute" concerning which of those alternative assessments is the "correct assessment".

(7)

This case is itself a tax case in which during the period from 28 May 2020 until 27 July 2021 the Commissioner sought to enforce recovery of the full amount owing under alternative assessments issued to different taxpayers, Mr Hyder on the one hand and the Trustee on the other hand, before the final resolution of the genuine dispute about the correctness of the alternative assessments. Many steps were taken and much correspondence entered into as part of the Commissioner's steps in seeking to enforce recovery of the due debt and the taxpayers seeking to invoke an exercise of powers to defer recovery action and to defer the due date for payment of assessments. Thus, it can be seen that, so far as this case is concerned, the principle in Moorebank at 67 remains firmly anchored at its true mooring. It should be noted that the Commissioner has invoked PS LA 2006/7 in issuing the alternative assessments on the footing that the "same underlying amount is assessed" ([206], Point 1 of the reasons) and the assessments are issued to different taxpayers "in respect of the same income in the same year": [206], Point 5 of these reasons.

(8)

In seeking to enforce recovery of the debt due under the alternative assessments, the Commissioner, acting reasonably, would address the elements of PS LA 2006/7 in some detail; the principle adopted by the High Court in the important joint judgment in Moorebank; the fact of a genuine dispute concerning the correctness of the alternative assessments and some consideration of the scope of what is said to be a genuine dispute concerning the correctness of the alternative assessments; the extent to which a serious or compelling question arose as to whether SEPL's payment of $5,354,424.21 ought to be taken into account when calling for payment of the debt due either by Mr Hyder, or alternatively by the Trustee (and especially in circumstances where the Commissioner is making a demand for payment of both alternative assessments) (or alternatively a demand for payment of 50% of the debt and the provision of securities for the balance of the debt due); whether, in the case of the Trustee, should the debt be enforced against the Trustee, the Commissioner ought to take into account that tax had already been paid by SEPL and Mr Hyder on the precise amount of the distribution which amount formed the basis of the amount included in the assessable income of the Trustee for the purposes of the Trustee's assessment.

(9)

The Commissioner would no doubt have recognised in considering steps directed towards seeking to enforce the debts due under each of the alternative assessments that any attempt to enforce recovery from both would have required the Commissioner to consider the circumstance that the assessments were indeed alternative assessments and ultimately the Commissioner could not recover on both of them.

(10)

At all relevant times, as reflected in the correspondence, the Commissioner knew that Mr Hyder and the Trustee were in the Hyder camp. The Commissioner could have looked to the total debt payable on the one hand by Mr Hyder and looked to the total debt payable on the other hand by the Trustee and sought to have taken steps to protect the revenue in relation to which of those two assessments represented the greatest degree of exposure recognising that the Commissioner by securing protection in respect of that amount would be able to secure his exposure under either of the assessments in the alternative by relevant commitments and securities directed to one or other of the two alternative assessments, thus enabling recovery of the correct assessment once determined in the Part IVC proceeding, even assuming that no account was to be taken of the payment by SEPL of $5.354m already made.

(11)

From 28 May 2020 until 27 July 2021, the Commissioner pressed for enforcement of the total debt.

(12)

On 26 February 2021, Ms Llorca had determined that the total debt due as at 11 January 2021 including GIC was $32,376,959.21. The taxpayers were being called upon to pay that sum together with GIC accruing each day thereafter.

(13)

On 13 May 2021, the Commissioner, by his solicitors, sought an undertaking from the taxpayers (as a condition of deferring recovery action), for payment of the full amount of the disputed debt together with accrued GIC within 14 days in the event that these proceedings prove to be unsuccessful, coupled with a commitment to consent to entry of judgment for the full amount of the total debt (together with accrued GIC) in the event of failure to pay the full amount of the due debt within the 14 day period.

(14)

Nowhere in the exchanges between 28 May 2020 and 26 July 2021 is there any true recognition that the assessments to Mr Hyder and the Trustee are alternative assessments or that the correct position was one as framed by the email of 27 July 2021.

(15)

On 27 July 2021, the Commissioner recognised that pursuing recovery against only Mr Hyder was a step consistent with the status of the assessments as alternative assessments and consistent with the Commissioner's stated position recited in PS LA 2006/7.

(16)

The Commissioner could only ever have been successful against one of the taxpayers in respect of the alternative assessments.

(17)

I am satisfied that, but for these proceedings and the approaching hearing, the Commissioner would not have adopted the position ultimately adopted on 27 July 2021.

(18)

In the course of the proceedings, the Commissioner confirmed that he would only be seeking to recover against Mr Hyder in the Part IVC proceedings consistent with the email of 27 July 2021. The Commissioner confirmed in the hearing on 23 September 2021 that no recovery action would be taken until the end of the Part IVC proceedings.

217 Having regard to all of these circumstances, I am satisfied that the Commissioner acted oppressively in seeking to enforce payment of the total debt from the taxpayers in the period from 28 May 2020 until 27 July 2021. At 28 May 2020, the tax debt arising under the amended assessments issued to Mr Hyder have not fallen due (that would not occur until 15 June 2020), but it is clear that Ms Cupay was looking to 15 June 2020 as well as the date when Mr Hyder's amended assessments would fall due. As mentioned, I am satisfied that the commitment reflected in the email of 27 July 2021 would not have occurred but for the present proceedings and the imminent hearing, and as a result of the present proceedings, the Commissioner gave an undertaking in the course of the hearing not to take recovery action. The circumstance that the Commissioner has not taken recovery action is, of course, a relevant and material matter, but that circumstance diminishes and obfuscates the circumstance that from 28 May 2020 until 27 July 2021, the Commissioner was constantly pressing the taxpayers to either pay the total debt when due under the alternative assessments or to pay 50% of the total debt under those assessments and secure the remaining balance under both assessments and accruing GIC.

218 That conduct was oppressive conduct, and as the Court observed in Moorebank, obviously so.

219 Because the Commissioner no longer presses that position and has given an undertaking to the Court not to commence recovery proceedings, there is no basis for the grant of an injunction. It is, however, appropriate to make declarations as to the oppressive character of the conduct until 27 July 2021 as that conduct is inextricably bound up in the proceedings and the applicants sought to enjoin that conduct by these proceedings.

220 It is also important to recognise that the jurisdiction being exercised in making declarations as to the conduct is the Court's original jurisdiction arising on two bases.

221 The first is that an oppressive exercise of public power conferred on the Commissioner as the repository of the power, is not reasonable and not within power. The error amounts to jurisdictional error, not as to the validity of the assessments (a truly Part IVC question), but rather a question going to the exercise of public power falling within the Moorebank principle. Because the error is an error going to an exercise of a recovery power and not one going to the validity of the assessment itself, the particular construction reflected in the discussion at [184] to [195] of these reasons does not bring about the result that the question of whether the Commissioner's conduct is oppressive in seeking to enforce recovery of the total debt must necessarily be determined within the Part IVC proceedings.

222 It is an entirely separate and discrete matter.

223 The second is that the question of whether the Commissioner acted oppressively in seeking to enforce recovery of the total debt in the way described in these reasons and in the correspondence, is a matter arising under laws made by the Parliament for the purposes of s 39B(1A)(c) of the Judiciary Act.

224 Because I am satisfied that the Commissioner has acted oppressively in the Moorebank sense in seeking to recover the total tax debt under the alternative assessments in a way which is both beyond the scope of the power conferred on the repository of the power (and, in any event, error in the exercise of the power) for the purposes of s 39B(1A)(c), I am satisfied that it is a proper exercise of the discretion to make declarations to that effect under both s 21 and s 23 of the Federal Court of Australia Act 1976 (Cth).

The ADJR proceedings

225 As mentioned earlier, the applicants challenge the decision of Ms Llorca of 26 February 2021 on the ground that the decision-maker failed to take into account relevant considerations, took into account irrelevant considerations and the decision is otherwise legally unreasonable.

226 Ms Llorca recites at para 32 that she is not satisfied that the circumstances of the taxpayers warrant the "use of the Commissioner's discretion under section 255-10, Schedule 1" of the Administration Act. The application to defer the time at which a relevant amount is due and payable was made by Mr Hyder and the Trustee under the following provision of the Administration Act:

255-10(1) The Commissioner may, having regard to the circumstances of your particular case, defer the time at which an amount of a tax-related liability is, or would become, due and payable by you (whether or not the liability has already arisen). If the Commissioner does so, that time is varied accordingly.

Note: General interest charge or any other relevant penalty, if applicable for any unpaid amount of the liability, will begin to accrue from the time as varied. See, for example, paragraph 5-15(a) of the [ITAA 97].

227 That section does not set out all the factors which the decision-maker is bound to take into account. The principles identified by Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39 to 41 ("Peko-Wallsend") are well-known. It is sufficient to note that the parties agree that the relevant principles are these: relief is only available where the decision-maker fails to take into account a consideration which he or she is bound to take into account when making the decision; the factors which a decision-maker is bound to consider in making a decision are determined by construing the statute conferring the discretion; if the statute expressly provides that particular considerations are to be taken into account, it is necessary for the Court to decide whether those considerations are exhaustive or merely inclusive; if the relevant factors are not expressly recited in the text of the statute, the factors must be determined by implication from the subject matter, scope and purpose of the Act; in some circumstances, a Court may set aside a decision which has failed to give adequate weight to a relevant factor of great importance or has given excessive weight to a relevant factor of no great importance although the preferred ground of setting aside a decision in those circumstances is that it is "manifestly unreasonable": Peko-Wallsend at 41; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at [72] ("Li"), Hayne, Kiefel and Bell JJ.

228 It will be apparent from the text of the section that the phrase "having regard to the circumstances of your particular case" confers a "wide discretion" on the decision-maker: Elias v Commissioner of Taxation (2002) 123 FCR 499 at [33] ("Elias"), Hely J. Even so, the wide discretion does not mean that the decision-maker can pick and choose the relevant material circumstances by failing to have regard to circumstances material to the taxpayer's "case" as the section conditions the exercise of the discretion on "having regard" to the "circumstances of your particular case" [emphasis added], not just the circumstance that the tax-related liability is due, as it is or would be due for all taxpayers who have received an assessment giving rise to debt due on the date nominated in the assessment or notice. It is also clear that the "amount" of the tax-related liability is expressly relevant and so too the nature of the tax-related liability itself.

229 As to statutory discretions, no discretion is conferred "at large". Every statutory discretion is constrained by the subject matter, scope and purpose of the legislation under which it is conferred (Shrimpton v The Commonwealth (1945) 69 CLR 613 at 629-630, Dixon J; Li, French CJ at [23]) and every discretion must be exercised according to the "rules of reason": R v Anderson: Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177, Kitto J at 189. In Li, every member of the Court recognised that in the case of an exercise of a discretionary power, an implied legislative intention (or presumption) arises (unless excluded as a matter of construction of the text) that the power conferred on the repository of the power will be exercised reasonably: French CJ at [29], Hayne, Kiefel and Bell JJ at [63] and Gageler J at [88].

230 As to irrelevant considerations, where a statute confers a discretion which is unconfined in its terms, the factors the decision-maker may take into account in the exercise of the discretion are similarly unconfined except to the extent that the subject matter, scope and purpose of the statute operate to impliedly confine the factors to which the decision-maker may have regard: Peko-Wallsend, Mason J at 40.

231 In the submissions, the parties have agitated and contested the scope of the proposition that a relevant consideration to be taken into account in exercising the discretion under s 255-10(1) is whether the taxpayer has lodged an objection to the assessment or an appeal from an objection decision, and the extent to which the content of the objection or appeal is to be taken into account. The scope of the phrase "having regard to the circumstances of your particular case" as a central consideration in the exercise of the discretion suggests that the decision-maker ought to have regard to the fact that the assessment giving rise to the "tax-related liability" (the anchor point of the section) is contested, objected to and, if it be the fact, the subject of an appeal from an objection decision as one of the circumstances of the taxpayer's particular case. There is nothing in the section, however, that requires the decision-maker to analyse and hypothesise the outcome of the Part IVC proceedings. Also, it is clear that the "fact" (Thurecht v Deputy Commissioner of Taxation (1984) 84 ATC 4, 480, Sheppard J) sometimes called the "mere fact" (Rawson Finances Pty Ltd v Deputy Commissioner of Taxation (2011) 86 ATR 108, Foster J) that the taxpayer has objected to an assessment or filed an appeal from an objection decision, does not mean that the discretion must be exercised to defer the due date for payment. The applicants accept that this is so, but contend that the "weight of authority" suggests that the "strength of the objection" in determining whether to grant a deferral of the due date for payment, must be considered.

232 In ARM Constructions Pty Ltd v Deputy Commissioner of Taxation (1986) 17 ATR 459 at 467, Burchett J held that the Deputy Commissioner was "bound to consider the merits of [the taxpayer's] objections", "in the light of the purpose which the discretion under [s 255-10(1)] serves". However, that construction arose because it seemed to his Honour that a claim by a taxpayer who "genuinely disputes" the tax and who faced a situation where payment of the tax "would wholly or partially abolish his business" required the Deputy Commissioner to consider the merits of the objections in exercising the discretion.

233 In Brayson Motors Pty Ltd v Federal Commissioner of Taxation (1983) 57 ALJR 288, Brennan J, was concerned with an application for an interlocutory injunction to restrain the Commissioner from taking recovery action. The case was particularly concerned with the strength of the plaintiff taxpayer's case of irreparable harm and where the balance of convenience lay (rather than, specifically, an extension of time case itself).

234 In ARM Constructions Pty Ltd v Deputy Commissioner of Taxation (1987) 17 FCR 19 (Jackson J), the taxpayer challenged the Commissioner's decision to refuse an extension of time for payment of the tax debt, contending that the Commissioner's statement that, "the lodgement of objections was not a sufficient basis for deferring the payment of tax", was insufficient and that the Commissioner was required to consider the "strength of the objections". His Honour held that the Commissioner had considered, on the facts, the strength of the Commissioner's objections.

235 In Nestle Australia Ltd v Commissioner of Taxation (1987) 16 FCR 167, Wilcox J at 178 observed that "ordinarily" in considering an application under what is now s 255-10(1), the Commissioner is not obliged to address the "likely result of any pending objection or appeal" (applying, in so holding, principles derived from his Honour's earlier decision in Barina Corporation Ltd v Deputy Commissioner of Taxation (1985) 6 FCR 368 at 380-382). However, his Honour identified two circumstances in which that is not so. First, his Honour observed that there may be cases where the merits are so obvious, or the determination so imminent, that "fairness" requires them to be taken into account in the exercise of the discretion, which would be "especially" so if it appears that the effect of a refusal to defer will "occasion great hardship". Second, his Honour observed that "it is always a relevant matter that the liability for tax is disputed". Since that second factor was said to be a qualification on the general proposition about what is ordinarily the case, it seems his Honour was saying that the circumstance that the tax is disputed is always a relevant matter that obliges the Commissioner to "address himself to the likely result of any pending objection or appeal". His Honour's framing of the propositions is not, unfortunately, entirely clear.

236 In Harts Fidelity Pty Ltd v Deputy Commissioner of Taxation (1999) 42 ATR 438 ("Harts Fidelity"), Kiefel J observed at [42] and [43] (of the earlier provision which is now s 255-10(1)) that because the section does not specify the matters to be taken into account in exercising the discretion, policy considerations developed by the Commissioner could be taken into account but only if they conformed to the "statutory purposes and powers" to which the exercise of the discretion relates. Her Honour took the view that having regard to the statutory framework concerning assessments, due dates, debts due to the Commonwealth so arising, and the circumstance that proceedings challenging the assessment do not affect the liability of the taxpayer or the Commissioner's right to collect the tax, made the existence of "an appeal" an irrelevant matter or a circumstance illogical to considerations going to the exercise of the discretion.

237 In Elias, Hely J at [61] took the same view as Kiefel J expressed in Harts Fidelity.

238 The ultimate point of all of this is that the applicants contend that the decision-maker failed to take into account, as a relevant consideration, the strength of the objections and the strength of the challenge to the objection decisions of the Commissioner concerning SEPL's payment of $5.354m of tax on 99% of the Trust distribution assessed to it in the 2015 income year, and that the assessment was not disputed or otherwise under challenge in any Part IVC proceeding (the relevant proceeding being concerned with assessments to Mr Hyder and an alternative assessment to the Trustee), or otherwise under challenge.

239 For my part, in the absence of any binding Full Court or High Court authority, it seems to me that the phrase "the circumstances of [the taxpayer's] particular case", upon which the exercise of the discretion is conditioned by the statute, necessarily imports into the considerations of the decision-maker when exercising the discretion, the circumstance that the tax debt is the subject of an objection and, if it be the case, an appeal from an objection decision.

240 The mere fact that an objection or appeal has been lodged or filed, plainly enough, does not mean that the discretion must be exercised in favour of deferring the due date. The circumstance that there is a "coherent system" adopted by the legislation for rendering tax, as assessed, a due debt to the Commonwealth, a debt recoverable by the Commissioner, and assessments as valid as to the amount and particulars, does not mean that when the decision-maker is engaged in an exercise of the discretion as to whether a debt due under an assessment is to be deferred (or not), the circumstance that there is a genuine dispute in Part IVC proceedings (or a dispute by lodging an objection if deferral be a question arising at that stage) as to the "correctness" of the assessment is not a relevant matter.

241 It is a relevant matter because the statute conditions the exercise of the discretion having regard to the particular circumstances of the taxpayer's case and that is one of the circumstances.

242 Moreover, not only is the fact of an objection or an appeal from an objection decision a relevant "circumstance" in the taxpayer's "particular case", the fact by itself is not the only relevant circumstance. The phrase "the circumstances of your particular case" requires the decision-maker to observe the "fact" of the objection or appeal and consider the essential basis of the challenge to the assessment so as to determine whether the merits are "so obvious" that that circumstance should inform the exercise of the discretion. The decision-maker would also take into account whether the determination of the "correctness" of the assessment is "so imminent" that that circumstance should also inform the exercise of the discretion.

243 In taking into account the relevant fact and the extent to which the content of the objection or appeal informs the two considerations just mentioned, the decision-maker would inevitably form a view about the further fact of whether there is or are serious questions to be determined by the matters raised by the objection or the appeal. However, it is not the role of the decision-maker in exercising the discretion under s 255-10(1) to pre-judge those serious questions or hypothesis about an outcome.

244 For these reasons, relevant circumstances to be taken into account by Ms Llorca (among others) on 26 February 2021 were the assessments issued to Mr Hyder, on the one hand, and the alternative assessment to the Trustee, on the other; the circumstance that the assessments were truly alternative assessments; the elements of PS LA 2006/7 and how those elements might inform the exercise of the discretion; the fact of the objections, the objection decisions, the appeal and any responsive documents; the content of the documents to the extent that they raised serious questions; and the earlier payment of tax by SEPL as one element in those circumstances. However, forming a view about the merits of the contention concerning the extent to which the earlier payment of tax by SEPL affected or would affect the correctness of the alternative assessments was not a relevant matter informing the exercise of the discretion.

245 The difficulty with Ms Llorca's decision is that although she recognised that the amended assessments issued to Mr Hyder on the one hand, and the assessment to the Trustee, on the other, were alternative assessments (see para 38), engaging PS LA 2006/7 (see para 22(d)), there is no recognition that the consequence of the relevant "circumstance", in the "particular case" of each taxpayer, was that because the Commissioner had issued alternative assessments (described as a "primary" assessment to Mr Hyder and an "alternative" assessment to the Trustee), the Commissioner necessarily had held "genuine doubt about where the final liability to tax rests" when issuing the alternative assessments (PS LA 2006/7; [2006], Statement 1), which, under PS LA 2006/7 involved acceptance of "multiple assessments being issued in which the same underlying amount is assessed". Nor do the reasons recognise that because the assessments are alternative assessments, the "genuine doubt" about the correctness of one or other of the assessments would fall to be resolved in the Part IVC proceedings with the result that, at best, one or other of the assessments would prove to be valid (validity being a live issue within the Part IVC proceeding) and thus, at best, the debt under one or other but not both assessments would prove to be payable.

246 Rather, the decision-maker engages with the exercise of the discretion under s 255-10(1) to defer, or not to defer, the due date for payment of each of the alternative assessments on the footing that the Commissioner "expects that all debts" will be paid on time, including debts arising under assessments issued in the alternative: see paras 33, 38, 39 and 46. In this case, the frame of reference to the debt was couched at 11 January 2021 in an amount of $32,376,959.21 (including GIC to that date) which was said by Ms Llorca in her earlier reasons of 15 September 2020 to be continuing "to escalate with GIC accruing in the amount of $1.9M per month".

247 The decision-maker simply observed at para 38 that although an alternative assessment had issued to the Trustee, that "circumstance" in the "particular case" of these two taxpayers was not considered "of itself" to be a ground to defer the time by which the liability became payable. Yet, the Commissioner's position, having regard to the circumstances of each taxpayer's particular case is actually put this way at 27 July 2021:

Consistent with PSLA 2006/7 and Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192; (1932) 2 ATD the Commissioner will not and cannot recover against both Mr Hyder and the Trustee for the EMH IV Family Trust in the 2015 income year. Subject to the outcome of the Federal Court proceedings, the Commissioner is only seeking to recover against Mr Hyder in the 2015 and 2016 income years.

[bold emphasis added]

248 Thus, the fact of alternative assessments "by itself" is not to the point of the relevant consideration. The point of the relevant consideration, in the exercise of the discretion, is the consequence of there being alternative assessments and what that might mean in the circumstances of the particular case of each taxpayer. Importantly, para 47 fails to recognise the long period of agitation by the taxpayers that the assessments are alternative assessments and that that fundamental matter needed to be taken into account.

249 Moreover, the decision-maker at para 39 returned to the circumstance that the taxpayers had been requested prior to the objection decision, to pay 50% of the disputed tax debts and provide security for the balance of the debt, a request that had been refused. That reference seems to be a reference to Deputy Commissioner Ravanello's letter of 21 July 2020 referring to a combined tax debt (in relation to the primary tax) of $17,582,726.56, taking up Ms Cupay's letter of 16 June 2020 setting out the primary tax on both assessments at that point in time.

250 Since Ms Llorca was placing emphasis on the Commissioner's expectation that the taxpayers were required to pay the total debt (then amounting to $32,376,959.21 including GIC, calculated to 11 January 2021), as a factor in the exercise of the discretion under s 255-10(1) (see paras 33, 39 and 46), the joint observations of the High Court in Moorebank would also have been a relevant matter to consider in the circumstances of the particular case of each taxpayer because the observation of their Honours, in the context of alternative assessments, was both material and relevant to the circumstances of the taxpayers and the notion of the Commissioner's expectation that all debts, including debts arising under alternative assessments, must be paid in full when due. It will be recalled that in the joint judgment of the Court their Honours said this:

There will inevitably be cases in which it would be oppressive for the Commissioner to seek to enforce payment of the full amount due under a notice of assessment or by way of additional tax before the final resolution of a genuine dispute about the correctness of the assessment: cf. Deputy Federal Commissioner of Taxation v Australian Machinery and Investment Co. Pty. Ltd.; Marina Estates Pty. Ltd. v Deputy Commissioner of Taxation. A case in which the Commissioner issues a number of assessments on an alternative basis to different taxpayers in respect of the same income provides an obvious example.

[bold emphasis added; citations omitted]

251 Accordingly, I am satisfied that the decision-maker fell into error by failing to take into account relevant considerations.

252 There are other criticisms of the decision of the decision-maker. I do not propose to examine those any further in these reasons. For the reasons, indicated, I am satisfied that the decision-maker fell into reviewable error and accordingly the decision must be set aside. The matter is to be referred back to the decision-maker to take into consideration the matters outlined in these reasons with a view to deciding the application according to law.

253 Accordingly, declarations will be made in relation to the matters described earlier in these reasons and orders will be made setting aside the decision of Ms Llorca and remitting the decision to her to be decided according to law.

254 As to the declarations, the Court proposes to make the following declarations but seeks the views of the parties as to the terms of the declarations. The first proposed declaration is this:

THE COURT DECLARES THAT:

1. The conduct of the Commissioner of Taxation (the "Commissioner") either by, or on behalf of, the Commissioner of seeking to enforce payment in the period from 25 May 2020 to 29 September 2020 of the full amount due under "primary" Notices of assessment for the 2015 and 2016 income years and Notices of liability to Shortfall Interest Charge ("SIC") for those years issued to the first applicant, Mr Elton Matthew Hyder ("Mr Hyder") on 22 May 2020 and 21 May 2020 respectively while, at the same time, seeking to enforce payment of the full amount of a Notice of assessment issued to the second applicant, EMHIV Pty Ltd as Trustee for the EMHIV Family Trust (the "Trustee" for the "Trust") on 20 May 2020 issued for the 2015 income year in the "alternative" to the primary assessments issued to Mr Hyder, in circumstances where the assessments to Mr Hyder and the Trustee respectively as primary and alternative assessments are said, by the Commissioner, to have been issued consistently with and thus in conformity with a document issued by the Commissioner described as PS LA 2006/7, engaging an exercise of the power to issue alternative assessments to tax (and giving rise to consequential notices of SIC and other notices of tax-related liabilities), expressly in respect of the "same income and the same income year", before the final resolution of a genuine dispute about the correctness of the alternative assessments, is conduct characterised as oppressive conduct in the sense contemplated by their Honours Mason CJ, Brennan, Deane, Dawson and Gaudron JJ in Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 at 67 as quoted in reasons for judgment published in these proceedings on 22 March 2022 at [201].

255 The second proposed declaration is in these terms:

2. The conduct of the Commissioner of Taxation (the "Commissioner") either by, or on behalf of, the Commissioner of seeking to enforce payment in the period from 29 September 2020 to 27 July 2021 of the full amount due under "primary" Notices of assessment for the 2015 and 2016 income years, Notices of liability to Shortfall Interest Charge ("SIC") for those years and Notices of assessment for Shortfall Penalty issued on 7 September 2020 for the 2015 and 2016 income years (which became payable on 29 September 2020), issued to Mr Hyder, while, at the same time, seeking to enforce payment of the full amount of a Notice of assessment issued to the second applicant as Trustee of the Trust for the 2015 income year in the "alternative" to the primary assessments issued to Mr Hyder and an amount due under a Notice of assessment of Shortfall Penalty issued to the Trustee on 7 September 2020 (and payable on 29 September 2020), in circumstances where the assessments to Mr Hyder and the Trustee respectively as primary and alternative assessments are said, by the Commissioner, to have been issued consistently with and thus in conformity with a document issued by the Commissioner described as PS LA 2006/7, engaging an exercise of the power to issue alternative assessments to tax (and giving rise to consequential notices of SIC and other notices of tax-related liabilities), expressly in respect of the "same income and the same income year", before the final resolution of a genuine dispute about the correctness of the alternative assessments, is conduct characterised as oppressive conduct in the sense contemplated by their Honours Mason CJ, Brennan, Deane, Dawson and Gaudron JJ in Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 at 67 as quoted in reasons for judgment published in these proceedings on 22 March 2022 at [201].

256 The third proposed declaration is in these terms:

3. The conduct of the Commissioner in calling upon Mr Hyder, persons associated with Mr Hyder and entities under the control of Mr Hyder to pay the full amount of both the primary and the alternative assessments (and respective notices), before the final resolution of a genuine dispute about the correctness of the alternative assessments, is conduct characterised as oppressive conduct in the sense contemplated by their Honours Mason CJ, Brennan, Deane, Dawson and Gaudron JJ in Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 at 67 as quoted in reasons for judgment published in these proceedings on 22 March 2022 at [201].

257 The fourth proposed declaration is in these terms:

4. For the purposes of these declarations, the phrase "seeking to enforce payment" in the relevant periods means seeking to require of the taxpayers payment in full of each of the alternative assessments or alternatively payment of 50% of each of the alternative assessments with the balance the subject of securities provided by the taxpayers and others and otherwise seeking to secure arrangements for the payment of the full amount owing under both assessments jointly.

258 The applicants are directed to submit proposed declarations within seven days. The respondent is directed to provide comments in relation to the proposed declarations within a further period of seven days.

259 An order of review will be made in respect of Ms Llorca's decision of 26 February 2021.

260 The parties will be directed to put on submissions as to costs.