COMMONWEALTH FUNDS MANAGEMENT LTD & ANOR v COMMISSIONER OF STAMP DUTIES (NSW)

Judges:
Levine J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 15 October 1993.

Levine J

In the principal proceedings the plaintiffs, by Amended Summons seek the following relief:

In the proceedings before me the defendant moves the Court, by Amended Notice of Motion, that the Summons be dismissed pursuant to Pt 13 r 5 (alternatively that the second plaintiff [Kern] gives security for the defendant's costs).

Bearing in mind the nature of the application with which I have to deal (a strike out application) a principal component of the argument is this: the applicant contends that the plaintiffs cannot apply to the Court for the relief sought in the Amended Summons in circumstances where Pt V of the Stamp Duties Act 1920 specifically provides a code for the determination of disputes (by way of appeal or review) of assessments issued under that legislation. For the respondents/plaintiffs it is contended that the Court has jurisdiction to determine as a matter of law what in effect is the threshold question, that is the status at law, in the light of the legislation, of the assessment, the preconditions for the triggering of the assessment issuing process and the consequential (if it be called for) operation of Pt V.

Pursuant to a call on a notice to produce the applicant tendered a letter dated 28 September 1983, Exhibit A, from the Stamp Duties Office to Messrs Dawson Waldron, Solicitors, referring to a deed of agreement for lease dated 27 June 1983 between Sydney Cove Redevelopment Authority (SCRA), the lessor, and Kern Corporation Limited (Kern) and Superannuation Fund Investment Trust (SFIT), lessees. The letter goes on to say:

``Stamp Duty on the Agreement for lease has been assessed at $343,700.00 in accordance with section 78D of the Act. As Kern Corporation Limited hold a 20% interest in the lease as at June 27 1983, their portion of the stamp duty is $68,740.00 and providing this amount of duty is paid within 28 days from the date hereof, no fine for late payment will be imposed.''

Exhibit B is a letter from the Office of State Revenue dated 29 July 1991 to Kern requiring the satisfaction of requisitions within 14 days in respect to a lease (SCRA and Kern).

ATC 4873

Exhibit C is a photocopy lease between SCRA as lessor and Kern and SFIT as lessees for the period 28 October 1987 to 27 October 2086 which document was executed on 25 August 1988.

Exhibit 1 is annexure ACM1 to the Affidavit of Andrew Charles Murton filed by the respondents on 28 September 1992 and is the agreement referred to in Exhibit A.

Exhibit 2 is annexure ACM3 to the same Affidavit being a copy of Exhibit A.

The Affidavit of Andrew Charles Murton sworn 28 September 1992 deposes to Mr Murton being the finance manager of Grosvenor Place Pty Ltd; the entering into, on 21 September 1988, of a management agreement pursuant to which Grosvenor agreed to carry out and perform all management activity relating to the Grosvenor Place project. Pursuant to that agreement Grosvenor was responsible for all financial transactions in relation to the property and in particular the deponent, as finance manager, was responsible for dealing with all financial transactions relating to the property including any stamp duty liability. ACM1 as annexed to the Affidavit is a true copy of the Deed of Agreement dated 27 June 1983 between SCRA and the plaintiffs in relation to the property and ACM2 is a Variation Deed dated 16 April 1987. The letter (Exhibit A) is annexed as ACM3 and the deponent purports to establish the basis for what is said to be the assessment of stamp duty in that letter. At the date of the execution of the agreement the first plaintiff held an 80 per cent share and the second plaintiff a 20 per cent share in the benefit of the agreement. The Minister for Finance granted an ex gratia payment charged against treasury funds for the first plaintiff's proportion of the stamp duty assessed and the second plaintiff paid to the defendant an amount of $68,744.00 being its proportion of the duty assessed in the belief that it was a claim properly made by the defendant.

The Affidavit of Graham Conrad Read sworn 17 March 1993 and filed by the respondent is that of the solicitor for the plaintiffs. Annexed to the Affidavit is a series of correspondence including a letter dated 10 March 1993 (Annexure B) from the Crown solicitor to the plaintiffs' solicitors providing the following particulars of points of claim as to why the applicant contends that the order sought in the Amended Summons are ``an abuse of process'':

``1. The First Plaintiff has no interest in the proceedings for the reason that the liability to stamp duty was discharged ex gratia by the Defendant.

2. The Second Plaintiff by its liquidation has no further interest in the lease consequent upon it being ordered to be wound up - see clause 13.1(c) of the lease agreement.

3. The Second Plaintiff is out of time to seek a refund of stamp duty paid pursuant to an assessment made by the Defendant on 28 September 1983.

4. The provisions of Part V of the Stamp Duties Act, 1920 (the Act) are an exclusive code for the determination of stamp duty disputes.''

The second bundle of correspondence annexed to the Affidavit comprises a letter to SFIT of 30 August 1988 regarding the Agreement for Lease indicating that the Lease had been stamped on an interim basis and that pursuant to s 78D(2) a requirement was raised to inform the Commissioner of any increase in rental etc. A letter dated 15 December 1988 addressed to Kern was in similar terms as was a further letter dated 28 June 1991 to the company. Further correspondence in this regard is dated 29 July 1991 to the company and 21 August 1991. In the last-mentioned letter it was suggested by the defendant that the corporation was the person primarily liable to pay duty and attention was drawn to ss 129A and 129B and the penalty for failure to supply information. On 1 October 1991 a letter was addressed to one Jeff Rubython in similar terms and on 20 November 1991 the Commissioner indicated to Mr Rubython that he had contacted the persons ``primarily liable to the duty''.

Exhibit L to Mr Read's Affidavit is a lengthy letter from Freehill, Hollingdale and Page dated 16 January 1992 which raised the essential submission that s 78D (and the Second Schedule to the Act) as in force prior to 1 July 1990 (the relevant documents having been executed in 1983 and 1988) has no application and that the documents were initially stamped with excess duty and the refund of that excess is sought. The solicitors for the plaintiffs articulate their analysis of the payment provisions of the Lease, their arguments in support of the construction of s 78D, and the Second Schedule of the Act.

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The Commissioner replied by letter dated 24 February 1992 (Annexure M) disputing the construction placed on s 78D and asserting the validity of the requisition.

On 20 March 1992 the solicitors for the plaintiffs pursuant to an invitation which I gather was extended by the Commissioner, made further submissions in relation to s 78D(1) and (2), the distinction between ``rate'' and ``amount'' to which a reply was made dated 21 April 1992 maintaining the position of the Commissioner.

I have made reference to the correspondence annexed as the request for information made by the Commissioner in the letters of 28 June 199l, 29 July 1991, 21 August 1991, 1 October 1991, 30 October 1991, 20 November 1991, 24 February 1992 and 21 April 1992 are the subject of the declaration sought in Order 2A of the Amended Summons.

I have referred to the correspondence in outline annexed to Mr Read's Affidavit as indicating the areas of dispute between the parties in the substantive action subject to the outcome of the Motion presently being considered.

It is contended for the applicant/defendant that it is not open to the plaintiffs to seek declarations of the kind sought in circumstances where Pt V of the Stamp Duties Act 1920 specifically provides for the mechanism by which disputes are to be determined.

The relevant provisions of Pt V of the Act as applied are as follows:

``Appeal .

124(1) Any person liable to the payment of duty (other than death duty), and any administrator or other person liable to the payment of death duty, who is dissatisfied with the assessment of the Chief Commissioner may, within sixty days after the date of the assessment in the case of duty (other than death duty) and within sixty days after notice of the assessment has been given to the administrator or other person in the case of death duty, and on payment of duty in conformity with the assessment, and of the sum of forty dollars as security for costs, deliver to the Chief Commissioner a notice in writing requiring him to state a case for the opinion of the Supreme Court.

(2) The Chief Commissioner shall thereupon state and sign a case accordingly, setting forth the facts before him on making the assessment, the assessment made by him, and the question to be decided, and shall deliver the case so signed to the person by whom the same is required (hereinafter referred to as the appellant).

(3) The appellant shall within 28 days after receiving the case commence in the court proceedings on the case.

(4) On the hearing of the case the court shall determine the question submitted, and shall assess the duty chargeable and also decide the question of costs.

(5) If it is decided by the court that the assessment of the Chief Commissioner is erroneous, any excess of duty paid in conformity with such erroneous assessment, together with any fine paid in consequence thereof, and the sum paid as security for costs shall be ordered by the court to be repaid to the appellant.

(6) On the hearing of the case the appellant may dispute any fact or document stated in the case.

...

Assessment to be evidence .

124A(1) Production of any assessment or of any document under the hand of the Chief Commissioner purporting to be a copy of an assessment shall-

  • (a) be conclusive evidence of the due making of the assessment; and
  • (b) be conclusive evidence that the amount and all particulars of the assessment are correct, except in proceedings on appeal against the assessment or in proceedings in a court under section 140 of this Act when it shall be prima facie evidence only.

(2) This section shall apply in respect of-

  • (a) the estates of persons who died before as well as of persons who die after the passing of the Stamp Duties (Further Amendment) Act, 1967;
  • (b)(i) every instrument executed; and
    • (ii) every assessment made,

    whether before or after the passing of the Stamp Duties (Further Amendment) Act, 1967.''

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The authorities and statements of general principles on which the applicant/defendant relies in support of the above proposition are as follows:


Cuming Campbell Investments Pty Ltd v. The Collector of Imposts (Vict) (1938) 60 CLR 741 the judgment of Latham CJ, at 749-751:

``It is a well-established principle that mandamus will go to compel the performance of a public or quasi-public legal duty which the person who is subject to the duty has refused to perform and the performance of which cannot be enforced by any other adequate legal remedy. When it is the duty of a public officer to exercise a discretion, the court may order the officer to perform his duty by exercising his discretion, but it will not control the exercise of the discretion by directing that it be exercised in a particular manner not expressly required by law. `A mandamus goes to set a party in motion to do a thing, but not to prescribe the way in which it shall be done'...

The appellant in this case asks that mandamus should issue directing the Collector of Imposts not to give his opinion under sec. 32 of the Act, but to decide the matter by giving a particular opinion, namely, that the transfer is taxable as a conveyance on sale as upon a consideration of £50,000. What is asked is that the collector be ordered to arrive at a particular decision in the appellant's favour. In my opinion the court can do no more than direct the collector to perform his statutory duty. He will perform the whole of his statutory duty if he considers the instrument submitted to him and expresses an opinion whether it is chargeable with any duty and with what amount of duty it is chargeable.

If any person is dissatisfied with the assessment made by the collector he is entitled under sec. 33 to appeal against the assessment to the Supreme Court. If he does so appeal, the collector is bound to state and sign a case setting forth the question upon which his opinion was required and the assessment made by him (sec. 33(1)). Upon the hearing of the case the court determines the question submitted, and, if the instrument in question is in the opinion of the court chargeable with any duty, the court assesses the duty with which it is so chargeable. Section 34 entitles the collector to require evidence to be furnished `in order to show to his satisfaction whether all the facts and circumstances affecting the liability of the instrument to duty or the amount of duty chargeable thereon are fully and truly set forth therein'; and the collector may refuse to proceed upon any application for his opinion until the evidence which he requires is provided. Thus the statute expressly provides a specific method of putting the collector right if he goes wrong. The court is not authorized by the statute to make an original assessment of duty. The court is authorized to make an assessment only after the collector has assessed and when the court has the benefit of the opinion of the collector... The statute shows the intention of the legislature that the court should engage in the assessment of duty only upon an appeal from the collector. It would, in my opinion, be wrong for the court, when this specific remedy by way of appeal is given, to utilise mandamus proceedings so as to exclude the collector from the exercise of the function entrusted to him by the statute, and at the same time, to enable the court to make an original assessment of duty which is not contemplated by the Act.''


O'Sullivan & Ors v. Commr of Stamp Duties (Qld) 83 ATC 4684 is also relied upon being a case in which the statements of Latham CJ are referred to in the judgment of Mathews J at 4686. (See also
Commr of State Taxation (WA) v. Bayswater Hire Cars Pty Ltd ((1989) ATC 5298).)

The application of the principle is to be seen within the general structure of the legislation which provides that the Commissioner has the principal executive function of assessing the stamp duty (s 8) in accordance with the appropriate Schedules (s 4) as a debt to the Crown (s 38) pursuant to assessment under s 35 (see Exhibit A in these proceedings). Default assessments can issue pursuant to s 127B, and s 124 provides the review and appeal regimes.

The decision of the High Court in
; (1981-1982) 149 CLR 431DKLR Holding Co (No 2) Pty Ltd v. Commr of Stamp Duties (NSW)82 ATC 4125; (1981-1982) 149 CLR 431 does not aid the plaintiff's position in that no argument there or below (see DKLR Holding Co (No 2) Limited v. Commr of Stamp

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Duties (NSW) 80 ATC 4279; [1980] 1 NSWLR 510) as to the availability of declaratory relief, it being necessary to bear in mind that that was a stated case.

Section 78D as it existed before the amendments in 1990 deals with the situation where the rent reserved is subject to a re- appraisement in any way during the term of the lease so that the total rent payable during such time is not ascertainable (sub-s (1)) and provides for the person liable (the lessee, transferee or assignee for the time being) to provide information to the Commissioner in relation to re-appraisement and shall pay any additional duty thereby assessed. That is, it provides for or gives an indication of an intended making of an assessment given the application of the factual circumstances to which s 78D points. It is argued that the statute does not intend to give any right to thwart the Commissioner in seeking the further information which he has purported to seek under s 129A in relation to the matters the subject of s 78D.

The requisitions for the purposes of s 78D(2) are annexures D, E and F to the Affidavit of Mr Read sworn 17 March 1993.

There is (see also Exhibits G and H) a fact finding exercise on the part of the Commissioner in accordance with his statutory power with a view to making an assessment: that is presently in train and these proceedings, so it is submitted by the applicant/defendant, have a predominant purpose of seeking to stop the assessment process. The plaintiff is in effect saying, so it is submitted on behalf of the applicant/defendant, that because the plaintiff is not liable the plaintiff is not going to supply the information. The Commissioner's response is no: provide the information, I will assess, objections will be dealt with and then the appeal and review process to the Supreme Court can then properly be put in train.

For the plaintiff/respondent it was stressed, of course, that the applicant's motion was founded upon Pt 13 r 5, the power under which should only be exercised if it can be shown by the applicant that there is no real factual or legal question to be tried:
General Steel Industries Inc. v. Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125 at 129-130.

It is contended that by reference to annexure B to Mr Read's Affidavit of 17 March, being the letter setting out the four points founding the motion, that it is clear that the power and discretion under the Rule should not be exercised there being triable issues and that motion's resolution in the light of the applicant's submissions revolves around point 4.

As to the underlining substantive issue, there is no need for the Court on the motion to decide it. To the extent, however, that there is a discretion in respect of the relief sought in the motion the nature of that issue warrants an outline. The position of the plaintiffs and the defendant in relation to the substantive matters is set out in the correspondence between the parties, particularly Exhibits L, M, N and O to the Affidavit of Mr Read.

The Summons for substantive relief seeks what is described as, for the plaintiffs/ respondents, a declaration of right as to the dutiability of an instrument and an order for repayment of the paid duty (an order seeking relief by way of restitution). It is contended that the purpose of the declaratory relief is not simply to establish the precondition of the legal rights for the recovery of the duty paid. It is described as a ``valuable'' declaration of the legal position of the parties for the future which will govern not only any present or future questions of liability for duty in addition to the amount already paid but also important questions as to the obligation of the plaintiffs to answer requisitions for information made under s 129A (it being an offence not to provide information). The request for information under s 129A, it is submitted, must of course be lawful in the first instance.

It is submitted that s 124 is concerned with a statutory method of review of an assessment in order to claim repayment of overpaid duty pursuant to that assessment; it is not in terms a code for the resolution of all disputes as to dutiability under the legislation. The section applies, it is submitted, if there has been an ``assessment''. Simply put, if there has been no ``assessment'' s 124 does not operate at all.

Liability to duty arises independently of ``assessment'' on the first execution of the relevant instrument and is payable by reason of the ascertainment of the real and true meaning of the instrument and the transaction and the legal consequences of the place of that instrument and transaction in the regime of the Act which does not in terms provide any definition of ``assessment''.

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The Commissioner's obligation under the statute is to come to a view that the relevant instrument is under no liability for duty or to assess the duty and to have the instrument ``duly stamped'' (s 35). The phrase ``duly stamped'' is defined in s 3 as meaning stamped in accordance with the Act and the Regulations. It is contended that the Act contemplated ``duly stamped'' to mean only final and not ``interim stamping'' and this contention arises from the operation of ss 29 (inadmissibility), 41(5) (interim stamp/conveyances), 42(7) (return of duty) and 78D. For the applicant/defendant it is argued that s 78D provides for a number of assessments.

There is the prohibition against the admissibility of instruments under s 29 which speaks of instruments that are ``duly stamped'' and it is contended that that prohibition does not include ``interim stamping'' by reason of special provisions relating thereto: ss 41(5), 42(7), 78D(5) and (6). ``Duly stamped'' is a state reached at the finality of the determination of liability for duty. It is therefore argued that ``assessment'' in s 35 is a process prior to either the formulation of an opinion that an instrument is not liable to duty or the formulation of an opinion that the instrument is liable to duty in a sum which upon stamping in accordance with that sum will cause the instrument to be ``duly stamped''. ``Assessment'' is related to the final determination of duty which leads to an instrument being ``duly stamped''.

The structure of the legislation gives specific meaning to ``assess an amount'' narrower than what one might expect the English language otherwise to provide by excluding from it interim assessment.

In
Wilcox Mofflin Limited v. Commr of Stamp Duties (NSW) 78 ATC 4191; [1978] 1 NSWLR 341 (a case stated by the Commissioner at the request of the plaintiff) at 344FMeares J was of the view that an assessment was primarily a document rather than a process of calculation. The letter from the Commissioner of September 1983 is not an ``assessment'': if that be correct any submission relating to the privative effect of Pt V and s 124 fails in limine. It is argued that the proposition just stated is correct as being reinforced by the terms of the letters of requisition which, it is said, on their face have an element of self-assessment (the Stamp Duties legislation having no equivalent to self- assessment provisions of the Income Tax legislation, s 166A) and a declaration will lie in the absence of any question as to the privative effect of s 124:
Pyx Granite Co. Limited v. Ministry of Housing and Local Government [1960] AC 260;
Sankey v. Whitlam & Ors (1978) 142 CLR 1;
Forster v. Jododex Australia Pty Ltd & Anor (1972) 127 CLR 421.

If the correspondence of September 1983 constitutes an ``assessment'' for the purposes of the operation of s 124 the terms of the section and other provisions must be the subject of examination to determine whether on the true construction of the legislation there is to be found an intention to oust the jurisdiction of the Court or alternatively to provide a regime which demands that the exercise of jurisdiction by the Court be in such a way as not to hear matters otherwise than in accordance with the regime laid down by the section. The position of the applicant/defendant as I understand it on this motion would incorporate both propositions.

The appeal provisions of the kind in s 124 have been found to be a code in relation to the review of assessments and whether assessments are accurate as to the amount of duty demanded by the Commissioner. The cases, however, it is submitted, do not establish any proposition that sections such as s 124 once exhausted by the effluxion of time without the interposition of judicial determination lead to any final determination of legal rights for ``other purposes''. The fact that the review procedure in such a section has not been availed by party may mean that there is no jurisdiction in a court to review that assessment, however, if the legal rights of the parties underpinning the correctness of the assessment are relevant for other purposes including the seeking of information, the court clearly has jurisdiction to determine those underlying legal rights for those other purposes.

The structure of the claim for substantive relief in the Summons is not put forward simply as an element in the cause of action for restitution: it is an independent claim in which the plaintiffs seek without consequential relief otherwise than for the order for repayment a declaration of their rights, a claim ie without consequential relief being specifically envisaged by s 75 of the Supreme Court Act (Sankey v. Whitlam (supra) at 20, per Gibbs J).

It is contended that if the plaintiffs are correct in the assertion that the subject instrument is

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stampable as the plaintiffs assert, then the Commissioner has been acting without power in making requisitions under s 129A in that a request for information under that section has to be ``concerning any matter relevant for the purposes of the Act'' or ``relating to any such matter'', the power to request information not being couched in terms of the Commissioner forming any view or opinion with a reason or otherwise. Essentially it is submitted that it is irrelevant for the purposes of the legislation to seek information or purport to do so under s 129A with respect to an instrument upon which duty has been fully paid (in the instant case it is alleged overpaid) on a mistaken view that further duty is payable, an irrelevant consideration vitiating the decision to exercise the power to require information under s 129A. Thus declaration will make plain that the plaintiffs are not committing an offence under s 129B if they refuse to answer the requisitions for information purportedly pursuant to s 129A. That declarations are available in relation to possible criminal offences has been the subject of authority: Sankey v. Whitlam & Ors, supra, at 20, 21, 79, 81;
Imperial Tobacco Limited v. A-G [1981] AC 718 at 750;
Dyson v. A-G [1911] 1 KB 410.

The applicant/defendant vigorously asserts that the plaintiffs' contention is of necessity fallacious: if the Commissioner in good faith issues requisitions for information, it is entirely a matter for him in his, at that time, exclusive administrative function: it will thus be relevant (cp.
Lucas v. O'Reilly 79 ATC 4081;
U.S. v. Arthur Young & Co 84-1 USTC 9305 p 83,670); thus, a matter for substantive argument inappropriate to be resolved on a strike out motion in my view.

If it be the case that there is an assessment for the purposes of s 124 and s 24 has a privative effect as essentially contended for by the applicant and that the documents are conclusive evidence under s 124G, nonetheless it is contended there is a sufficiently arguable case in that those matters may not raise defences to an action for restitution or unjust enrichment on the basis of a mistake of law:
David Securities Pty Ltd & Ors v. Commonwealth Bank of Australia (1992) 92 ATC 4658; 66 ALJR 768.

It is further submitted that the establishment of the dutiability of the instrument is relevant to further potential liability which may occur in the next 89 years apart from the review of any assessment on an interim basis made in 1983.

Cases dealing with the privative nature of sections such as s 124 do not establish any proposition concerning the court hearing a declaration concerning the rights of the parties other than in circumstances which can properly be seen as the review of an assessment: Cuming Campbell Investments (supra); O'Sullivan v. Commr of Stamp Duties (supra);
Commr of Stamp Duties v. Edmunds & Anor 88 ATC 4343; (1988) 19 ATR 1195;
Corfu Clothing Co Pty Ltd v. CSD 88 ATC 4081; (1988) 48 SASR 105; CST v. Bayswater Hire Cars (supra);
McCaughey v. CSD (1945) 46 SR (NSW) 192;
Ex parte Xenon 84 ATC 4073; [1984] 1 Qd R 232.

It is a fundamental submission on behalf of the respondents/plaintiffs that in the area to which these cases refer the proper conclusion is not as to jurisdiction but as to discretion. It is not as if there have been no cases where the court has heard argument upon the dutiability of an instrument; the fact that the parties have apparently commenced proceedings cannot lead to a conclusion that there was jurisdiction: the court cannot be vested with jurisdiction by the parties if the legislature has intended there be none that this proposition pointing to it being a matter of discretion: DKLR v. CSD (supra);
WF Securities Pty Ltd v. Chief Commr of Stamp Duties (NSW) 92 ATC 4429; (1992) 22 ATR 774;
Mutual Pools & Staff Pty Ltd & Anor v. FC of T 92 ATC 4016; (1992) 66 ALJR 222;
Genex Corporation Pty Ltd & Ors v. The Commonwealth of Australia & Anor 91 ATC 4564; (1992) 22 ATR 178;
Magna Stic Magnetic Signs Pty Ltd & Anor v. FC of T 91 ATC 4216; (1991) 21 ATR 1367.

What is being sought is the exercise of the Court's discretion to declare the rights of the parties as to the dutiability of an instrument as an element in deciding or as relevant to deciding the power of the Commissioner to requisition information under s 129A: thus any apparent privative effect of the section becomes irrelevant; the determination of the legal rights of the parties once made stands for all purposes and the causes of action in restitution can proceed.

If the demand for duty in the letter of September 1983 was without legal foundation in that it was wrongful by reason of a misconstruction of the legislation, it is

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submitted, it cannot be said that there has been an assessment for the purposes of the Act - there was no lawful basis to demand the duty and no lawful basis to assess it, no lawful basis for s 129A inquiries and s 124 should not be construed as to include assessments founded on unlawful demands. In this context reliance was placed upon the decision of the House of Lords in
Woolwich Equitable Building Society v. Inland Revenue Commissioners [1992] 3 WLR 366 and what was said in his speech by Lord Goff at 388 in the context of the statutory provisions his Lordship was considering, as follows:

``However there is, in my opinion, a more fundamental reason why the section has no application in the present case. This is because the present case is not one in which an excessive assessment was made on a taxpayer, through some error of fact or law, as is contemplated by section 33(1). This is a case where there is no lawful basis whatever for any demand of tax to be made by the revenue. In such circumstances, the demand itself is ultra vires and is therefore a nullity. It follows that in a case such as the present there can be no valid assessment. No assessment was in fact raised on Woolwich in the present case, because the money alleged to be due by way of tax was paid, though under protest. It was pointed out in argument that, pursuant to regulation 7 of the Income Tax (Building Societies) Regulations 1986, tax which was due but not paid on or before the due date could have been the subject of an assessment on Woolwich under paragraph 4(2) or (3) of Schedule 20 of the Finance Act 1972; but for the reasons I have already given any such assessment would, in my opinion, have been a nullity in the circumstances of the present case. In particular, I do not see how there could have been an appeal against such an assessment pursuant to paragraph 10(3) of Schedule 20; because such an appeal presupposes an assessment which, apart from the impugned error, would otherwise have been valid. If the assessment is alleged to have been made (as here) under ultra vires regulations, the proper course is to take proceedings by way of judicial review to quash the aberrant regulations and the assessment made thereunder, not by way of an appeal under procedure which presupposes that the assessment, although it may be erroneous, is basically lawful.''

Returning to the Amended Summons, it can be seen that the defendant would have been particularly provoked by the terms of order 1 to moving the Court for the relief it presently seeks as, on their face, the orders by virtue of the introduction to the paragraph seeking order 1 cut across the fundamental proposition which, in my view, is correct, that the Court cannot simply put itself in the position of the Commissioner in the determination of liability to duty in a context otherwise than provided for by the review and appeal provisions. That there may have been such a reaction from the Commissioner probably accounts for the response by the plaintiffs/respondent when one considers the terms of order 2A, the substantive amendment to the Amended Summons.

There clearly is an attraction in having an action disposed of, namely by a ``strike out'' motion, by the application of fundamentally basic propositions of the nature and quality put to me by Mr Pape in his submissions for the Commissioner. One can see the attraction on the other hand in seeking to avoid so drastic a determination of proceedings by the raising of apparently complex matters of law and fact as were outlined to by Mr Allsop in his submissions. I do not regard either side's position however as a forensic device only.

For the purposes of determining the outcome of this Notice of Motion I am not persuaded that the substantive action as articulated in the Amended Summons has that want of arguability about it as to warrant the Summons being struck out. As I have just indicated, true it is that if the relief sought was limited essentially to what is claimed in paragraph 1 of the Amended Summons, then on the face of the Summons the defendant's position would be more attractive. But I do not perceive the plaintiffs' position to be as ``simple'' as in the end would be necessary for the defendant to achieve success. I am satisfied that the substantive action as formulated in the Amended Summons and the material that I have considered points to there being arguable cases as to the issues of ``assessment'' and ``interim assessment'' generally but in particular in relation to the agreement for lease and lease the subject of the dispute between the parties. These questions are anchored in matters of law involving the construction of the legislation as to particularly

ATC 4880

the Commissioner's authority under s 129 to seek information and especially as to the ``context'' in which he purports to do so: i.e, as I see it, the status of Pt V of the Act when considered from the perspective of the legality of conduct by the Commissioner under one of its components. It is apparent that the resolution of such matters will go to the entitlement of the plaintiffs to seek the relief in the nature of restitution as to the duty already paid and as to any future liability. However the last component of what I have just said as to any future liability does not appear to involve the Court in performing what I will describe as the formation of an opinion as to liability as to duty simpliciter in this dispute between the parties but rather the resolution of the question of the nature and extent of the powers under s 129 to requisition information in the context, factual and legal, constituted by questions of the lawful conduct of the Commissioner under the legislation and in relation to the documents.

Thus I am not persuaded that the defendant is entitled to relief on the Notice of Motion and relief is refused and the Motion is dismissed.

The defendant is to pay the plaintiffs' costs and the exhibits are to be returned.

 

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