Lindsey v Commissioner for Taxation M8/2000 [2000] HCATrans 209 (2 May 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M8 of 2000

B e t w e e n -

DAVID JAMES LINDSEY

Plaintiff

and

THE COMMISSIONER FOR TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Defendant

Application to strike out

HAYNE J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON TUESDAY, 2 MAY 2000, AT 11.10 AM

Copyright in the High Court of Australia

MR D.J. LINDSEY appeared in person.

MR C.M. CALEO: If your Honour pleases, I appear on behalf of the defendant. (instructed by the Australian Government Solicitor)

HIS HONOUR: It is your application, is it not, Mr Caleo?

MR CALEO: Yes, it is, your Honour.

HIS HONOUR: Yes. I have seen an outline of your submissions. Has Mr Lindsey been given a copy of those?

MR CALEO: Yes, he was given a copy of it yesterday, your Honour, as well as a copy this morning of the sole unreported decision referred to in those submissions. That is the case of Young v Commissioner of Taxation. I have a copy of that decision for your Honour as well, if I might hand that up.

HIS HONOUR: Yes. Just before we dive into the substance of the application, Mr Caleo. Paragraphs 6 to 15 of your submissions, or at least part of paragraphs 6 to 15, seem at first blush to depend upon the constitutional concept of "matter" which would seem, at once, to raise questions of 78B and the like. Now, are we going down that path because, if we are, we are going to have to have 78Bs.

MR CALEO: Your Honour, perhaps, in the circumstances, I can seek instructions as to whether my client wishes to go down that path.

HIS HONOUR: And if the Commissioner wants to pursue questions of jurisdiction and the better understanding of Richard Walter and such issues, if I may put it in that form, that seems to be a rather different piece of litigation from an application in Chambers to terminate an action summarily for want of a cause of action. But, at one level I am in your hands, Mr Caleo.

MR CALEO: Yes. Your Honour, in those circumstances, might I seek that the matter be stood down for a few moments so that I can seek instructions?

HIS HONOUR: Yes. How long do you need?

MR CALEO: No more than, I think, perhaps 5 or 10 minutes, your Honour.

HIS HONOUR: Well, I will come back on to the Bench at twenty-five past eleven.

MR CALEO: If your Honour pleases.

AT 11.14 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.25 AM:

HIS HONOUR: Mr Caleo.

MR CALEO: Your Honour, I am grateful for the brief adjournment. I have received instructions not to pursue paragraph 1 of the summons, so that the submissions made in the written outline in paragraphs 6 to 15 are not relied on in so far as they were made to found an argument that this Court does not have jurisdiction to entertain the claim.

May I ascertain that your Honour has a copy of the affidavit which is relied on in support of the application?

HIS HONOUR: Yes, I do.

MR CALEO: That is an affidavit of Jeffrey Boyd Hindson?

HIS HONOUR: I have read it once. I am therefore familiar to some extent with it.

MR CALEO: Yes. And your Honour will be aware there are nine exhibits to that affidavit.

HIS HONOUR: Yes.

MR CALEO: There is also an affidavit which has been filed in opposition to the application and that is an affidavit sworn by Mr Lindsey on 20 April this year.

HIS HONOUR: Yes, I have that.

MR CALEO: If your Honour pleases. Your Honour, the opening paragraphs of the written outline set out in some detail the allegations the plaintiff makes and also the nature of the evidence which is relied upon by the defendant in support of the summons. In particular, so far as the defendant's evidence is concerned, I draw your Honour's attention to the production of extracts of the notices of assessment which appear as exhibits JBH-2, JBH-7, and JBH-9 to Mr Hindson's affidavit.

HIS HONOUR: And those cover which years, those assessments?

MR CALEO: They cover, in the first instance, the year ended 30 June 1991. In the case of JBH-7, it is the year ended 30 June 1998. And in the case of JBH-9, the year ended 30 June 1999.

HIS HONOUR: Those being the three years in which Mr Lindsey returned amounts that he returned as eligible termination payments?

MR CALEO: Yes, your Honour. In the first instance, it is clear from the nature of the return that the amount returned and the identity of the payer is the same as that alleged in Mr Lindsey's statement of claim. As the written outline indicates, that is less clear in the case of the latter years.

HIS HONOUR: But let it be assumed for the moment that it is or arguably is the same. Can I focus for a moment on the first year, the 1991 year?

MR CALEO: Yes, your Honour.

HIS HONOUR: Can I just see if I can understand what has happened and what has, perhaps, equally importantly not happened? Return is made reporting the receipt of a sum; an assessment issues; some years after the assessment issues a request is made - - -

MR CALEO: It is deposed to in paragraph 5, your Honour.

HIS HONOUR: Yes, to review. An answer is given to that, what, too late?

MR CALEO: The first answer that is given is too late. The answer goes on to say "in any event, you're incorrect" but then, without an invitation being extended to seek an extension of time, that is in fact what occurs.

HIS HONOUR: Yes, and the application for extension of time is presently unresolved.

MR CALEO: Indeed, your Honour.

HIS HONOUR: Are you able to say - and do not answer if the answer would embarrass you - whether there is power to extend time?

MR CALEO: Your Honour, I would be embarrassed in answering that, particularly in light of the recent decision -I am afraid I cannot even recall the name of the decision, your Honour, in relation to the question of whether there is a power to extend time when, by reason of a notice of assessment, no money in fact has to be paid over.

HIS HONOUR: Ryan?

MR CALEO: Yes, your Honour.

HIS HONOUR: Yes. Well, in any event, there is at the moment an unresolved application to invoke processes of the kind contemplated by Part IVC of the Taxation Administration Act 1903 , is that right?

MR CALEO: Indeed, your Honour, yes.

HIS HONOUR: What do you say, if anything, follows from the relationship between Part IVC of the Taxation Administration Act power to apply for review, an assessment and appeal from that on your way up through the either AAT or Federal Court stream and the existence of a cause of action for declaration?

MR CALEO: Two things, your Honour: first, putting to one side, of course, the issue of jurisdiction, the defendant's contention that the effect of the legislation, that is sections 175 and 177 of the Income Tax Assessment Act in the light of the production of the notices of assessment, means that the taxpayer is confined to the processes that exist under the Taxation Administration Act and that while that does not have the effect of depriving a court of jurisdiction to entertain a claim such as that brought by Mr Lindsey now, what it means is, in the same way as occurred in Richard Walter, it is necessarily the case that in exercising that jurisdiction the Court is bound, in my respectful submission, to dismiss a claim for relief. That is because the nature of the right which the taxpayer has is confined by the legislation, when a notice of assessment is produced, to a right to engage the processes which are set out in Part IVC of the Taxation Administration Act.

HIS HONOUR: Let me go back a stage because I think it may be necessary to start the inquiry at a logically anterior point. No tax at all is payable until assessment. Assessment is a necessary and essential prerequisite to any obligation of a citizen to pay an amount of tax, is it not? A citizen may be obliged to make return of income?

MR CALEO: Yes, indeed, your Honour.

HIS HONOUR: And to engage the processes whereby the Commissioner may make an assessment, but until assessment issues the citizen is not liable to pay anything for tax, is that right?

MR CALEO: Yes, your Honour, that is correct.

HIS HONOUR: Once an assessment issues, there is a debt due to the Crown in right of the Commonwealth. The amount of the debt is fixed by, is it, Part VI of the 1936 Act, as the amount assessed?

MR CALEO: Yes, your Honour.

HIS HONOUR: And there is the provisions we looked at in Ryan about when it is payable and the like. But what is fixed and what is the debt is the amount assessed, but the amount of the assessment is not unreviewable. There is provision in the Administration Act for challenging the assessment. There is also, understanding you do not pursue jurisdictional issues, there is also the capacity in this Court to review the powers and manner of exercise of power by the Commissioner as an officer of the Commonwealth, is that right?

MR CALEO: That is correct, your Honour.

HIS HONOUR: But what do you say follows from the propositions we have just identified about this action? What is the next step in the argument that you make? It is that which, I think, needs to be identified with clarity so that Mr Lindsey may have an opportunity to answer it.

MR CALEO: In this action, your Honour, what Mr Lindsey appears to contend is that, as a matter of statutory construction, the receipts of eligible termination or what were labelled "eligible termination payments" were not, in fact, correctly identified as eligible termination payments within the provisions of the Income Tax Assessment Act.

HIS HONOUR: Again, can I pause there just to tease it out with you so that I make sure I understand and I think if I can understand it, Mr Lindsey will be able to understand it. But the claim is that the Tax Act would give a certain legal characterisation to some receipts, is that right?

MR CALEO: Yes, your Honour, yes.

HIS HONOUR: And that is significant to Mr Lindsey if, but only if, the legal characterisation is carried on into a conclusion you, Mr Lindsey, owe the Crown in right of the Commonwealth, that is, the Commissioner of Taxation, a sum of money. Unless you carry on that legal characterisation into and through the process of assessment, we have no question of Mr Lindsey's rights or being subjected to anything that gives him a cause of action, is that right?

MR CALEO: Indeed, your Honour, and Mr Lindsey would contend that if a different legal characterisation is given to the receipts in question and that is carried through the process of assessment, the nature of the assessment, that is, the amount which is stated to be due as a debt to the Commonwealth, would be a lesser amount or, indeed, would not be in existence at all. There would be no debt.

HIS HONOUR: At least it is different.

MR CALEO: Yes.

HIS HONOUR: So, why do you say or how do you say he now has no cause of action?

MR CALEO: The contention, your Honour, is that the cause of action that he has or the right which he is able to pursue is one which, by the nature of - by the terms of the legislation is confined to a right to pursue the processes under the Taxation Administration Act. So that Mr Lindsey can, indeed, contend that the characterisation, the legal characterisation of the receipt, is of a particular kind and that, when carried through the processes of assessment, the result is that a lesser sum is due by Mr Lindsey to the Commonwealth. His right, however, in my submission, to contend that is a right which he is able to exercise only through the processes of Part IVC.

The taxpayer is effectively confined, once the notice of assessment is produced, to exercising that right because if he comes to a court, the court is able to conclude that in this court your claim is unable to be pursued successfully, regardless of the merits of the substantive submission, because the legislation of the Parliament states that your right is one to go elsewhere and only elsewhere. That is save in those cases as your Honour has indicated and which are referred to in Richard Walter where an allegation of perhaps improper purpose or something of that nature might be made against the Commissioner in the process of assessment.

HIS HONOUR: Do you understand any such allegation to be made in - - -

MR CALEO: We do not understand that to be the case, your Honour, no. In the decision of this Court in F.J. Bloemen Pty Ltd v Federal Commissioner of Taxation [1981] HCA 27; (1981) 147 CLR 360, at page 376 their Honours Justices Mason and Wilson stated, and I will begin with the paragraph at about point 5 of the page:

However, the rights of review given to the taxpayer by Pt V -

that is the equivalent now, your Honour, of Part IVC -

are comprehensive. Quite evidently it was contemplated that the Commissioner would in every case take advantage of s. 177(1) and foreclose the exercise of jurisdiction to decide whether an assessment has been duly made. The general tenor of the statutory provisions suggests that a taxpayer wishing to challenge a notice of assessment served upon him will be effectively confined to the Pt V procedures.

Now, in Richard Walter, your Honour, that statement is supported by a majority of the Court, that the right of the taxpayer is confined to the procedures under the Taxation Administration Act. So, that, yes, Mr Lindsey does have his - he has used the term "cause of action", he has his right, he has an immediate right on the basis of which he can approach a tribunal or court if he has previously lodged his objection and the objection has been dismissed by the Commissioner.

The nature of the rights that are provided under the Taxation Administration Act are such that there are rights of appeal or review, depending upon the decision of the Commissioner. Indeed, by those very processes it is possible for the matter to be ventilated in the Federal Court or, indeed, in this Court, your Honour. What Mr Lindsey has done, however, is, in the case of the first payment, even after commencing to utilise the procedures under Part IVC, is come directly to this Court and, putting to one side the question of jurisdiction, in the defendant's submission, it necessarily follows that the rights which Mr Lindsey seeks to pursue in this Court must fail.

Indeed, in Richard Walter, your Honour, where the question that was posed was indeed a question that focused upon jurisdiction, the question being:

Does the production of the Notices of Assessment preclude wholly or in part challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act (Cth), by reason of the operation of s 177 of the Income Tax Assessment Act 1936 (Cth)?

Answer: No.

That is, the Court concluded that the legislation, in the light of the evidence of the production of the notice of assessment, did not preclude the action being commenced but, as the answer went on:

the challenge must fail or the review be refused.

And the reason for that is simple, your Honour. It is that while the Court had jurisdiction to hear the claim for relief, the effect of section 177, in the light of production of the notices of assessment, meant that that claim must fail. The claim was groundless and it is on that basis the defendant, in this proceeding, makes its application under Order 26 rule 18 that the effect of the legislation in light of the evidence adduced by Mr Hindson is that, in respect of the payments identified by Mr Lindsey, his claim for relief in this Court must fail. That does not involve a prejudgment of the nature of the claims which he brings, that is, the question whether his legal contention about the characterisation of the payments is incorrect, but merely that his right to pursue that contention is a right to pursue it under the procedures outlined in Part IVC of Taxation Administration Act 1936 , a right which, indeed, Mr Lindsey has commenced exercising.

So, rather than saying - contending that Mr Lindsey - the claim outlined by Mr Lindsey does not disclose a reasonable cause of action, rather, it is a cause of action which is vexatious in the sense of groundless, it is bound to fail, and the Court is able to determine that at this stage because of the evidence adduced by Mr Hindson. It is on that basis that relief is pursued under Order 26 rule 18.

Your Honour will see in the written outline that the second payment, as it has been defined, is treated in an alternative way, that is, if it is, indeed, the case that the latter returns, those for the years 1998 and 1999, and the respective notices of assessment deal with what is disclosed in the statement of claim as "the second payment", then the same argument that the defendant makes in respect of the first payment is relied upon in respect of that second payment.

If that not be the case, then, in paragraph 18 of the outline an alternative submission is made and that is to the effect the Court would be able to determine at this stage that it would decline to grant the declaration which is sought and that is principally because of the existence of the other remedies. The other remedies being, in this case, either a procedure under Part IVC if an assessment is ever made or a private ruling under Part IVAA of the Taxation Administration Act. The existence of those available procedures, in my submission, constitute reasons why this Court would not grant the declaration in any event.

In addition, of course, there is the fact that on this second alternative, the Court would be asked to grant a declaration in respect of a dispute which is hypothetical. In paragraph 13 of the outline, a submission is made to that effect in relation to the jurisdictional argument. In my respectful submission, the same matters can and are relied upon in support of the contention that assuming jurisdiction exists, the Court is able to determine at this stage that its jurisdiction would be exercised in a manner where it would not grant the declaration sought. The claim of Mr Lindsey in respect of this second payment is abstract and hypothetical. He does not point to any wrongful act of the defendant and this assumption, the receipt of the second payment has never been reported to the defendant and the defendant has never taken any step in respect of it, let alone issuing a notice of assessment.

Those factors make it quite different to the facts that were the subject of the decision of Justice Dawson in the Oil Basins Ltd v The Commonwealth Case [1993] HCA 60; (1993) 178 CLR 643. In paragraph 14, your Honour, I set out briefly the respects in which the facts before Justice Dawson and the facts before the Court in this instance are significantly different. It was crucial to the decision of Justice Dawson that in that instance there had been a notice of assessment. The question was as to who was the person charged with the liability to pay the debt which had been found due to the Commonwealth. The producers, that is two of the four defendants to the proceeding in this Court, had been issued with the notice of assessment. They contended, however, that they had received the royalties effectively on behalf of the plaintiff. And the plaintiff came to this Court seeking a declaration that it was not the plaintiff but, rather, those two producers who were assessable as having received that royalty. Controversy had been joined, and that is not the case in this instance, in respect of the second payment if the alternative factual scenario, the second alternative, be adopted.

It is for those reasons, your Honour, that the defendant seeks an order under Order 26 rule 18 that this proceeding be summarily terminated. It is submitted in line with the test in General Steel that this is a clear case. As a further alternative, however, your Honour, paragraph 3 of the summons seeks relief pursuant to Order 20 rule 29.

HIS HONOUR: Well, those would be matters for amendment, would they not?

MR CALEO: Indeed, they would, your Honour.

HIS HONOUR: Yes. Need we trouble ourselves with those for the moment, at least?

MR CALEO: No, I was not going to go into them any further, your Honour. If your Honour pleases, they are the submissions for the defendant.

HIS HONOUR: Yes. Now, Mr Lindsey, first, you understand that the Commissioner seeks to have the action brought to an end once and for all today?

MR LINDSEY: That is correct, your Honour, and I oppose or object to the summons application. Basically, your Honour - I am not going to go into lengthy argument because I have been sitting here for hours and my legs are playing up but the fact of the matter is the main reason that I am here before this honourable jurisdiction is one - or two reasons. The first reason is to have my questions answered as I am not getting the answers from the defendant. Basically, I need determined by this honourable Court the first payment in 1991. It is irrelevant that there was a notice of assessment and the original notice of assessment that I have - and I am not quite sure whether the notice of assessment which was produced but is attached to Mr Hindson's affidavit seems to be contradicting each other as far as dates are concerned and the one produced by Mr Hindson submitting material facts which are on the original notice of assessment.

So as far as the evidence is concerned, that is irrelevant because, basically, what I need determined by this honourable Court is the following: the payment in 1991 was resultant of termination of employment. I was terminated on medical grounds. I was paid a payment. I was employed by Carlton United Breweries. I contributed to the Carlton United Breweries Staff Superannuation Fund. Low and behold, I received a cheque from Elders. Do not ask me how; do not ask me why, but the fact of the matter is it was my money.

Now, there was an amount of tax deducted out of that sum. Unbeknown to me, which has been put before this Court, I was ignorant. I did not know about the 1936 Income Tax Assessment Act section 27A(1)(a)(i) until 1997 when I was before the WorkCover Conciliation Service arguing this - 1997-1998 arguing the same grounds that by the law the 1936 Income Tax Assessment Act, the amount in 1991 and the amount paid to me in 1994 which was the disability component of the superannuation which was resultant of litigation. It was paid to me resultant of litigation. I was not obligated to inform the Taxation Commissioner because it was not paid to me by my employer just like that. I had to go through the process of litigating for it.

I had to ask: they said no. Like always, they forced me into litigation. So, I litigated and it was paid to me. Now, that was a capital sum. Now, that was my money but because it was the superannuation I rolled it over into a fund at the National Bank. Now, in 1997 I withdrew an amount of that money, $124,000, which was my money, and I should not have put it in or rolled it over in a roll-over fund, but I utilised some of that money and my arguments was I was under the Workcare-WorkCover system. The Workcare - WorkCover system changed in such a way that I could use some of my superannuation which was rolled over. My money. So I used some of it, and my arguments were section 27A(1)(a)(i), that I could use or utilise my money without it affecting me or precluding me from suspension of my weekly compensation payments.

Now, in 1997 I argued that point before my second employer, Carlton United Breweries. I placed before them a prima facie case - established a prima facie case on the 1936 Income Tax Assessment Act, the law which stood and which stands, and my second employer was quite happy with that and they continued to pay my weekly compensation payments until such time as in July 1999 the insurance company, after two-odd years decided to go against the Commonwealth law and suspend my payments.

Now, the fact of the matter is, your Honour, I need determined by the High Court: (1) Was the payment in 1991 by the 1936 Income Tax Assessment Act, section 27A(1)(a)(i) an eligible termination payment pursuant and by the provisions of that interpretation? Now, if it is not deemed an eligible termination payment then my cause is the money that was paid in tax instalments in 1991 should not have been paid and the Taxation Commissioner knows of this section. Now, we are not little boys and girls. This argument or this matter has been before the High Court before.

Now, if it is deemed not an eligible termination payment, then I am entitled to that sum of money paid in tax instalments in 1991. If the second payment I received in 1994, which was resultant of litigation, once again is deemed not an eligible termination payment then I am not subject to tax assessment. Now, I do fall within the parameters of the interpretation of what is and what is not an eligible termination payment:

Section 27G, in regards to invalidity: now, I was paid my disablement and disablement is totally separate and distinct to invalidity. Now, section 27G, which the defendant relies upon, did not come into effect until 1 July 1994. So, the fact of the matter is the first payment in1991, if it is established it is not an eligible termination payment, the second payment in 1994, if that is deemed not an eligible termination payment by the law, the 1936 Income Tax Assessment Act - I do everything by the law, I am not doing anything against the law - then I am entitled to reimbursement of those tax instalments by the law because that money should not have been taken from me in the first place because I am exempt because I fall under these provisions of the Income Tax Assessment Act. Now that is one reason why I am before this honourable Court.

Now, if those questions are answered, then the matter is - or the remedy of relief side of things. Now, the remedy of relief that I am seeking, once those questions are answered and determined, is a declaration that basically I was exempt from paying the tax in the first place and those payments were non-eligible termination payments, then once I had that declaration I would go back before the defendant and say, "Well, the questions of law have been answered. They weren't an eligible termination payment. I have a declaration saying such which means I am back before - I am knocking on your door for a refund cheque of the tax instalments which were taken from me against the law." So, two reasons I am before the High Court. One is to have those questions answered. Two: once they are answered, to have a declaration saying to the defendant that they were not eligible termination payments and therefore I am entitled to my money back.

HIS HONOUR: Now, the answer the Commissioner makes to that, as I understand it, is this: the Commissioner says first, "You owe nothing until I issue an assessment but once I issue an assessment you owe what I assess unless and until you go through the review and appeal route that the Taxation Administration Act provides." Now, that is the answer that is made against you. What do you say about that answer?

MR LINDSEY: Well, if your Honour pleases, I refute what is being put before the Court because it is totally confusing because, firstly, before a notice of assessment is made I have to lodge an income tax return, right, and then the notice of assessment is handed down. Now, I, hypothetically, may have to pay provisional tax the following year if my salary is over a certain amount but before this is issued I have to issue a tax return and the fact of the matter is back then in 1991 I went to my tax agent. I said, "These are my group certificates." He did my tax. Now, that was filed before taxation people. Okay. I was ignorant of the law. I am not ignorant of the law now, okay, but the fact of the matter is the reason I am out of time is, one, I did not know the law until such time as 1997 when I was arguing my matter before my second employer, Carlton United Breweries and then before the WorkCover Conciliation Service.

Then I approached the solicitor and the solicitor was of the same interpretation, that it did not fall - well, it was not deemed an eligible termination payment and did fall within this provision of the interpretation by the 1936 Income Tax Assessment Act. The solicitor then goes on to say - your Honour, I am not quite sure whether you have a copy of this?

HIS HONOUR: Yes, I have got that one.

MR LINDSEY: It is exhibit JBH-3. It is a letter by Mr Christopher Browne on my behalf - Mr Christopher Farrell of Browne & Co on my behalf to the Taxation Commissioner. Basically, Mr Farrell goes on to say:

The payment is not an Eligible Termination Payment under any of the other paragraphs of the definition.

On this basis, the payment from the Superannuation Fund should not have been subject to tax.

In these circumstances, it is submitted that the tax installments deducted from the payment of -

well, that is the amount of tax instalments -

$2,218.45 should not have been deducted and should be repaid to the taxpayer.

Now, the fact of the matter is the defendant rejected this claim and then the defendant did talk me into re-lodging another claim but more along the lines of an objection because I was out of time, apparently, of more than four years. Now, I did this. I was asked by the defendant - well, Mr Hindson - would I like a private ruling but I read the Lynette Scully judgment and I declined his offer of a private ruling basically because I saw or read what had transpired as far as her circumstance was concerned.

I am similar but I am not the same as Lynette Scully. So, I declined his offer of a private ruling and I said to the defendant through correspondence, and a copy of that correspondence should be before your Honour, that, "I'm not going to beat around the bush, I'll go before the High Court and have my questions answered." Now, basically, there are two parts. Well, I have invoked the correct jurisdiction, so the High Court has jurisdiction to answer my questions when I place the evidence before them. Two, but the fact of the matter is the remedy and relief that I am seeking is this declaration. That might have to be sought somewhere else. But the reason why I am before the High Court is to have my questions answered. I cannot get the answers from the defendant.

Now, it is a question of law, a question of Commonwealth law regarding interpretation: who is right and who is wrong? Now, I read the law, the 1936 Income Tax Assessment Act, section 27A(1)(a)(i) and I do not have to read no more, your Honour, because it is quite clear that an:

"eligible termination payment", in relation to a taxpayer, means:

(a) any payment made in respect of the taxpayer in consequence of the termination of any employment of the taxpayer, other than a payment:

(i) made from a superannuation fund in respect of the taxpayer by reason that the taxpayer is or was a member of the fund.

Well, I was a taxpayer. I was a member of the superannuation fund and by these - well, by the law, it is not deemed an eligible termination payment.

Now, there are certain arguments that the defendant may like to throw up further down the track forever along the road and I can refute his arguments regarding section 27G, invalidity, because that did not come into effect until 1 July 1994. So, the payment prior to 1991 falls under this interpretation. The payment in 1994 was resultant of litigation. It is the capital sum of a capital nature and therefore, in respect of personal injury, which I have the evidence here, the writ, proving that there was litigation. It was in respect of the injuries that I received through Carlton United Breweries, or Carlton United Brewery. So, therefore, it does fall under the provisions pursuant to section 27A(1)(n).

So, the fact of the matter is, your Honour, it is a question of law that needs to be answered. Who is right? Who is wrong? Whose interpretation is correct? Whose interpretation is wrong? Now, if my interpretation is correct - and I am not prepared to go into defending a summons application, your Honour, the fact of the matter is I have not had - I am not privy or have not been privy to reading these judgments in their entirety. So, basically, the fact of the matter is these questions have to be answered because I am now on a disability pension. My WorkCover payments were suspended. And I am not bringing WorkCover into this because that is State compensation scheme, State legislation. I have abandoned my claim against my second employer. I will not alight on his doorstep ever again. But I am on a disability support pension. Now, the fact of the matter is those amounts of money, by the law, are not deemed eligible termination payments. I would like my money back. I would like those questions answered.

Then we get to the remedy of relief regarding the declaration decree. Now, the High Court may be able to answer part A but direct part B to another jurisdiction if it is the issue of the remedy of relief that I am seeking, but it is the questions of law which need to be answered and the only ones that can answer the questions of law are the High Court of Australia because they are familiar with this issue - scenario.

Now, regarding the remedy of relief, there is no need to have this matter dismissed or declared vexatious because it is not a vexatious proceeding or matter. It is not vexatious of me, your Honour, to come in here and say, "G'day, I'm David Lindsey, can I ask my question", and you can either say, "Mr Lindsey, you are correct" or "Mr Lindsey, you are wrong." It is not vexatious of me to come in here and ask you that question and I am not coming in here being smart by asking you that question because I cannot get the answer from the defendant and every time I put the evidence before him - unless evidence has been put before him, the 1991 tax return plus the original assessment or photocopy of the original assessment - this has all been put before him and he still rejects it.

Now, the law is the law, and the fact of the matter is despite the fact that that wrongful scenario or situation or circumstance took place back in 1991, if it can be deemed that that payment was not an eligible termination payment, I am entitled to a refund of those tax instalments or the tax deductions that were taken from me.

Now, that question has to be answered, "Are those two payments eligible termination payments or are they not?", and the High Court has to answer those questions. That is part A. Part B, the remedy of relief: well, the High Court can use its discretion to direct me to an alternative venue of jurisdiction regarding the remedy of relief.

HIS HONOUR: But the purpose of having the questions answered is, as I understand it, so that you may get money back from the Commissioner which you say has been overpaid for tax?

MR LINDSEY: A refund.

HIS HONOUR: Am I right?

MR LINDSEY: That is correct, your Honour.

HIS HONOUR: That is as I understood the way you put it and I just wanted to be sure that that is - the questions are preparatory to your getting an order for money back from someone.

MR LINDSEY: See, once the question is determined that they are not eligible termination payments, by the law, right, then once they are deemed not eligible termination payments, then it is the remedy of relief. I need a declaration from the Court or a verbal order from the Court, "Mr Taxman, they are not deemed eligible termination payments. Refund Mr Lindsey his money" and that is the end of it. So, once the questions are asked, then the remedy of relief is more simplified because the fact of the matter is if they are not deemed eligible termination payments then I am entitled to a refund. So, the remedy of relief I can only get from a court of law anyway, a declaration enforcing the Taxation Commissioner to refund me my money. It is just as simple as that, your Honour. I mean, I am perplexed why I am here today answering a summons application because the fact of the matter is this summons application does not stay procedures regarding this matter and the fact of the matter is the defendant is behind with his defence and it should have been filed on 19 April in the year of the Lord 2000.

Just because he issued a summons application seeking the Court to dismiss this case does not stay the proceedings. So, I am behind in the procedural part of it because by 4 May in the year of the Lord 2000 I should be filing a reply, a plaintiff reply in reply to the defendant's defence. Now, the defendant said they filed an entry of appearance. "We want to defend this proceeding." Well, I want to run it. I want to put my questions before the High Court. I want to state my case.

As Justice Kirby said - and I seek leave of your Honour to rely on my affidavit dated 20th day of April in the year of the Lord 2000 - and I direct your attention to page 4(i).

HIS HONOUR: Yes, I have that.

MR LINDSEY:

As his Honour Kirby, J., said in Re Attorney-General of the Commonwealth & Anor; ex parte Skyring (High Court, Kirby, J., Unreported, 26 February 1996 -

His Honour said:

First, it is always important for every Judge to keep an open mind in case a person who has been rejected by courts -

and, if your Honour pleases, I do not really like to interject in between these words of wisdom but I have been declared a vexatious litigant in the lower jurisdictions and Mr Caleo was the Attorney-General's representative.

HIS HONOUR: Well, that is a problem for elsewhere, is it not, Mr Lindsey, not here?

MR LINDSEY: That is the problem I am leaving behind. The fact of the matter is I think I should inform your Honour that I am affectionately known as "Mr Vexatious" thanks to Mr Caleo.

HIS HONOUR: Well, thank you for that, but let us move to this one.

MR LINDSEY: But I go on to say, your Honour:

who has been rejected by courts in the past may have, hidden amongst the verbiage of his or her arguments, a point which has not been previously seen and which may have merit. Vigilance, and not impatience, are specially required where that person is not legally represented;

Secondly, it is regarded as a serious thing in this country to keep a person out of the courts. The rule of law requires that, ordinarily, a person should have access to the courts in order to invoke their jurisdiction. It is a rare thing to declare a person a vexatious litigant.

I go on to say in my affidavit, your Honour, that the words of Justice Kirby should also incorporate and go one better, one further, to include vexatious proceedings because it is up to a judge on the day to declare whether a proceedings is vexatious or not. I mean, your Honour, you cannot predict the future; you cannot predict the justice who may preside over this hearing, the questions of law. He might say, "Mr Lindsey, it is not a vexatious proceeding whatsoever. This is my finding. I hand down a decision in your favour. They are not deemed an eligible termination payment. I order the Taxation Commissioner to refund you your money."

Now, I have not presented the evidence which I would like to present before this honourable Court. I am arguing my case more so in all different areas of the 1936 Income Tax Assessment Act rather than argue one point. I fall under different categories; different interpretations; different provisions; different laws, but I have not had the chance to put this evidence or run my case before the honourable Justice, whoever that honourable Justice may be, whether he be he or madam.

So, basically, that is it, your Honour. I am asking that, one, my matter proceed; that your Honour settle the issues that are to be tried and to have this matter set down forthwith for hearing, within reason. I mean, you know, not tomorrow or next week.

HIS HONOUR: Well, for the moment the question is confined to whether the action should be permitted to go ahead or not. Any question of trial of the action would depend upon what steps were to be taken after that.

MR LINDSEY: I ask your Honour to allow me to proceed with this matter because the questions of law have to be answered and there is only one place that can answer these questions and this is the honourable High Court of Australia. Otherwise, it is just going to be one of those scenarios. I think Mr Caleo said, "Okay, decision has not been made, if it is made." That is the scenario that I am facing. I am like a dog on a leash, "Here, boy, come and get your food." Taken off the leash. Go for a run. "Here, boy, come back again. Here's some more pocket money", this, that and the other. But the fact of the matter is a decision has not been made and it has been over 59 days already since the second application before the defendant in March. Yes, 1 March.

So, it has been 50-odd days already. Despite the fact that this proceeding has commenced, being instigated and running along, they have not gotten back to me with an answer in relation to the second request and that is the scenario that I will be facing if this matter is dropped. I ask your Honour, I humbly beseech your Honour if the question of the remedy is overshadowing things, well, just put that to one side and I ask your Honour to at least allow the four, five questions which I put before the honourable Court by way of affidavit to be answered and then once those questions are answered then I will reapproach the defendant regarding the remedy and relief.

Now, if it can be determined by an independent umpire, the answer to the questions, well, then, that is the way it should be, your Honour, and I think the defendant would probably humbly submit to that fact as well. I go to him. I say, "This is how the law is." He comes to me and says, "Well, no, this is how the law is and that's the way we are going to be.", like two gladiators.

So, the questions of law have to be answered by an independent umpire based on the evidence which I present, the evidence of fact, the evidence of law. Thank you.

HIS HONOUR: Yes. Mr Caleo.

MR CALEO: No matters in reply.

HIS HONOUR: The parties will understand the reasons which I am about to give are reasons which are subject to revision.

On 23 February 2000, Mr David James Lindsey commenced an action in this Court against the Commissioner for Taxation of the Commonwealth of Australia. By the statement of claim delivered with the writ, the plaintiff claimed:

"a decree from the defendant that the payments made to the plaintiff from the Superannuation Fund with respect to personal injury to the taxpayer are recognised as `considerations of a capital nature for or in respect of person injury to the taxpayer' by reason of said membership of the Fund and hereby deemed non-eligible termination payments by the and pursuant to the provisions of section 27A of the Income Tax Assessment Act (Cth)".

The defendant now applies, among other things, for an order pursuant to Order 26 rule 18 of the Rules that the statement of claim be struck out and the proceeding dismissed, alternatively stayed, on the ground that it does not disclose a reasonable cause of action, or is frivolous or vexatious; alternatively, an order pursuant to Order 20 rule 29 that the statement of claim be struck out on the ground that it may tend to prejudice or embarrass the fair trial of the action and some other orders, the detail of which need not now be noticed.

It is as well in these circumstances to refer in some detail to the allegations that are made in the statement of claim. After an allegation that this Court has jurisdiction in the matter because the Commonwealth or a person being sued on behalf of the Commonwealth is a party (see Constitution, section 75(iii)) the plaintiff refers, in paragraph ii of his statement of claim, to the decision of the Court in Commissioner of Taxation v Scully (2000) 169 ALR 459.

He records in subsequent paragraphs of his statement of claim some details of his employment, first, with the Commonwealth and then later with Carlton and United Breweries Limited. He alleges that on 15 May 1991 his employment with Carlton and United Breweries was terminated following his suffering (in 1984 and on two occasions in 1987) injuries in the course of his employment by that company. He alleges that after his employment was terminated he received an amount paid by Elders Superannuation Limited from which an amount of $2,218.45 was deducted in tax instalments. Subsequently, so he alleges, a further sum of $124,817.46 was paid to him from the same superannuation fund and this sum, he contends:

"falls within the exclusion of section 27A(1)(a)(i), section 27A(1)(k) and section 27A(1)(n) of the Income Tax Assessment Act 1936 and is a non-eligible termination payment not assessable to taxation."

(In the course of oral submissions the plaintiff informed me that some part or all of this sum which had been rolled over into another superannuation fund was withdrawn by him in 1997.) His statement of claim continued by stating five questions of law which were said to arise from the facts set out earlier in the pleading. Essentially, those questions of law revolve around the proper characterisation of sums received by the plaintiff from the superannuation fund, or the process of roll over of the superannuation fund, and their characterisation under section 27A of the Income Tax Assessment Act 1953 .

In the course of oral argument it emerged, however, that the plaintiff seeks the declaration referred to in the statement of claim and poses the questions of law which are set out in the statement of claim in aid of a claim which the plaintiff would make (whether in this Court or in some other court or tribunal) to repayment of sums which he contends would thus be demonstrated to have been overpaid by way of tax.

In support of the application for summary termination of the proceeding, the defendant filed an affidavit by an officer of the Australian Taxation Office deposing to the course of events in relation to the submission of taxation returns by the plaintiff and the issue of assessments by the Commissioner in response to those returns. The affidavit produced, and there was received in evidence, notices of assessment in respect of the years ended June 1991, 1998 and 1999. It appeared from this affidavit that the plaintiff had filed an income tax return for the year ended 30 June 1991 in which he reported receiving an eligible termination payment from Elders Superannuation Limited during the taxation year in an amount of $27,105.28. On 4 February 1992 a notice of assessment was issued to the plaintiff in respect of that year on the basis of information contained in the 1991 return.

More than seven years later, on 9 November 1999, solicitors acting on behalf of the plaintiff asked the Deputy Commissioner of Taxation to review the plaintiff's 1991 assessment in relation to the payment which the plaintiff had received from the Elders Superannuation Fund. The Commissioner's response to that request was to contend that it could not be considered because it was too late but that, in any event, the Elders Superannuation payment was "correctly included" in the plaintiff's 1991 return of income. On 1 February 2000, the plaintiff wrote to the Deputy Commissioner of Taxation requesting that the letter from his solicitors be treated as a valid objection and as an application for extension of time for that objection. No decision has yet been made on those requests.

The affidavit relied on by the defendant further deposes that in the plaintiff's 1998 return of income the plaintiff reported receipt of a second eligible termination payment. On 15 October 1998 a notice of assessment was issued to the plaintiff in respect of that year of income. In his 1999 return, the plaintiff reported a further eligible termination payment and, on 16 September 1999, a notice of assessment was issued to the plaintiff in respect of that tax year.

There may be some question whether the sums that were reported in the 1998 and 1999 returns are identical with or include the amounts that are mentioned in the plaintiff's statement of claim but for the moment it is, I think, convenient to leave that question to one side for, in my view, the plaintiff's position can be no better if his claim in the present proceeding relates to amounts not included in any return of income to the Commissioner from the position that would obtain if the amounts were returned and taken into account by the assessments that have issued.

The defendant contends that I should now be satisfied that the action must fail. The defendant acknowledges that the test to be satisfied in determining that application is an onerous test expressed as it is by the various formulae conveniently collected in General Steel Industries Inc v Commissioner for Railways (N.S.W.) [1964] HCA 69; (1964) 112 CLR 125, particularly at 128 to 129, (per Barwick CJ).

In considering the defendant's contention it is necessary to begin from certain basic propositions about a taxpayer's liability to income taxation that have been recognised in many decisions of this Court and are conveniently reflected in what was said by Chief Justice Dixon in Deputy Federal Commissioner of Taxation v Brown [1958] HCA 2; (1958) 100 CLR 32, at 40.

The general machinery for assessment is only too familiar. It is unnecessary to refer to it except for the purpose of noting the following points, viz: - (1) that tax is not due and payable until assessed; (2) that it then becomes a debt to the Crown payable on the date specified in the notice of assessment or, if there be none, on the thirtieth day after service of the notice; (3) that the assessment of liability is conclusive except upon the processes of review and appeal.

No question can then arise of the plaintiff being liable to income tax without first there having been an assessment and, as I understand it, the plaintiff's claim in this matter depends upon there having been, in each of the relevant years of income, an assessment which he has in fact met to the extent that payment was required under it.

Of more significance for present purposes, however, is that subject to some important qualifications to which it will be necessary to return briefly, an assessment of liability to tax, once made under the Income Tax Assessment Act, is conclusive except upon the processes of review and appeal under Part IVC of the Taxation Administration Act (Cth). See Income Tax Assessment Act 1936 , section 177.

The qualification which I have mentioned arises out of the constitutional jurisdiction of this Court under section 75 and the statutory jurisdiction of the Federal Court of Australia under Judiciary Act 1903 (Cth) section 39B to review administrative action by officers of the Commonwealth, by declaring and enforcing the law which determines the limits and governs the exercise of the power of those officers. cf Attorney-General (New South Wales) v Quin (1990) 170 CLR 1, at 36, per Brennan J. Questions relating to the nature and extent of that power of review were considered by this Court in Deputy Commissioner of Taxation v Richard Walter Pty Limited [1995] HCA 23; (1995) 183 CLR 168, but I need not and do not stay to examine those issues further.

As I have already noted, the plaintiff's claim in the present proceeding seeks to have certain questions of law answered and a declaration of right made in aid of the ultimate recovery by him of sums that he contends have been overpaid as and for tax. He does not, by this action, seek to have this Court declare or enforce the law which determines the limits and governs the exercise of the Commissioner's power to issue an assessment; rather, he seeks to have questions answered and a declaration made about what is said to be an underlying error of law in the application of provisions of the Income Tax Assessment Act 1953 in the course of the Commissioner making an assessment of income tax due from the taxpayer.

I leave aside for the moment any question that may arise from the fact that the plaintiff has met the assessments that have issued in so far as they required payment by him. It may be that questions arise from that consideration but they are not questions which have been agitated in the course of the present application before me and I express no view upon them.

At the core of the plaintiff's claim, however, is the proposition that the assessment or assessments, which have been made by the Commissioner, in particular tax years have erred in law. Those are matters which fall squarely within the review and appeal processes provided for by Part IVC of the Taxation Administration Act. If the plaintiff is still able to and does resort to the processes of Part IVC, the assessments that have been issued in the past may be altered or they may not. If the assessments that have issued are not altered, any debt created by the issue of the assessment remains unaffected. If the assessments which have issued were altered by resort to the processes of Part IVC, his obligation in debt under the Act would be fixed differently and it may be - I express no view on it - that this may have legal significance in any ultimate claim for recovery of moneys overpaid.

The declaration of right which he seeks in the present action is, in the end, a declaration which, if it were to be made at all, could be properly made only to declare the rights and obligations of the parties, that is, the rights of the Commissioner and the obligations of the taxpayer, under the Income Tax Assessment Act. But for present purposes those rights and obligations relevantly are fixed by the production of a notice of assessment or document under the hand of certain specified officers purporting to be a copy of a notice of assessment which, pursuant to section 177(1) of the Income Tax Assessment Act, shall be conclusive evidence of the due making of the assessment and except in proceedings under Part IVC of the Taxation Administration Act on a review or appeal relating to the assessment that the amount and all the particulars of the assessment are correct.

In these circumstances, it is plain that a declaration of the kind sought by the plaintiff in this matter will not be made. Further, it is plain that the questions of law which the plaintiff asserts arise are questions which are either hypothetical or, if they are not, are resolved against him upon production of evidence of the kind contemplated by section 177(1) of the Income Tax Assessment Act 1936 . That being so, the claim which the plaintiff makes is a claim which, in my opinion, is bound to fail. The application therefore should be allowed and there should be judgment in the action for the defendant.

MR CALEO: Your Honour, the defendant seeks the costs of the proceeding including the costs of this application.

HIS HONOUR: Yes. Mr Lindsey, can you resist the application for costs?

MR LINDSEY: Your Honour, I do not know how to resist anything. I am taken aback in relation to all this. The fact of the matter is what can I say is I am a disabled pensioner and I receive a pension per fortnight. I honestly cannot understand, basically, what occurs now. Have I got avenues or somewhere else in another jurisdiction or is that it for me, or is that it, or, is that it?

HIS HONOUR: Rather than my offering you any advice, Mr Lindsey, I can only suggest that you seek advice from someone else because any advice that I may give you may not take proper account of all the matters that should be taken into account. I am sorry, but I cannot and will not give you advice about what other courses are open to you. You must seek advice elsewhere.

MR LINDSEY: Well, as far as the costs are concerned, your Honour, I am a disabled pensioner and I receive a pension per fortnight. I have got obligations. I have got debts to meet, and this, that and the other, and I think over the years the Australian Taxation, it might be said, have got quite a bit of money out of me that meets their requirements as far as the Income Tax Assessment Act is concerned. But as far as all the costs are concerned, if you go against me on the costs, well, I seek leave of the Court to pay per fortnight a sum of money.

HIS HONOUR: Yes. I would not consider for the moment any question of the way in which costs are to be met. That assumes that if an order for costs is made that the Commissioner would actually seek to enforce it, and I think that that is a separate question. I can understand the Commissioner seeking an order for costs. I simply do not know whether the Commissioner will seek to take any steps to recover it.

There will be judgment for the defendant with costs including the costs of this application. I will certify that this was a matter proper for the attendance of counsel.

MR CALEO: If the Court pleases.

HIS HONOUR: I will adjourn.

AT 12.50 PM THE MATTER WAS CONCLUDED