Deputy Federal Commissioner of Taxation v. Pearson.

Judges:
Jacobs J

Court:
Supreme Court of South Australia

Judgment date: Judgment handed down 20 December 1983.

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Jacobs J.

This is an appeal from a decision of Deputy Master Teesdale-Smith upon competing interlocutory applications by the plaintiff and the defendant. The defendant sought to strike out the plaintiff's statement of claim as disclosing no cause of action and applied for summary dismissal of the action. The plaintiff, who had sued on a special endorsed writ, applied for summary judgment or, alternatively, to strike out two paragraphs of the defence. In the event that the plaintiff should be entitled to have summary judgment, the defendant sought a stay of proceedings. The Deputy Master, in brief published reasons, refused to strike out the plaintiff's claim as disclosing no cause of action, and gave the plaintiff leave to enter judgment. He would have been prepared to strike out two paragraphs of the defence, but that was, in the circumstances, unnecessary. In his opinion there was, in fact and in law, no defence, and he refused a stay of proceedings on the judgment.

On appeal from that order the defendant does not now seek to raise a number of matters that were argued before the Master, and he abandons his appeal in respect of those matters. All that is left are two issues. First, the defendant says that the statement of claim discloses no cause of action, and second, that if, contrary to the defendant's contention, the plaintiff has a cause of action, the Deputy Master should not have given him leave to sign judgment.

In my opinion both these grounds of appeal fail and I do not find it necessary to give any lengthy reasons.

As to the contention that the statement of claim is defective, the defendant, as I understand the argument, says that the plaintiff has not alleged the facts upon which it relies, as required by O. 19, r. 1. There is, in my judgment, no substance in that submission and there is little I can add to what the Master said.

The plaintiff is suing on an assessment to income tax, notice of which has been duly given. When one has regard to the scheme of the legislation it is the making and the service of the assessment which creates the debt and the liability to pay it - vide, in particular, Income Tax Assessment Act 1936, as amended, sec. 166, 204, 208 and 209. The plaintiff has pleaded the making of the assessment, the service of the assessment, and the non-payment of the amounts assessed. As I understand the

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ATC 4204

argument for the appellant, it is said that the pleadings should in effect go behind the assessment, and plead all the facts and calculations which culminated in the making of the assessment. It seems to me, as it seemed to the Master, that the scheme of the legislation makes that quite unnecessary, more particularly when the Act, by sec. 177, establishes a statutory machinery of proof whereby production of the notice of assessment is conclusive evidence of the due making of the assessment and that the amount and all the particulars of the assessment are correct. The purpose of the Act is to obviate the need for the plaintiff to allege and prove the particular matters which culminate in the making of an assessment, as distinct from the assessment itself - see generally
F.J. Bloemen Pty. Ltd. and Simons v. F.C. of T. 81 ATC 4280;
Clyne v. D.F.C. of T. 82 ATC 4690.

As to the second ground of appeal, reliance is placed on O. 14, r. 1(1) which requires a plaintiff who seeks to enter judgment on a specially endorsed writ

``... to file an affidavit made by himself or any other person who can swear positively to the facts verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the action....''

The argument is that the affidavit filed on behalf of the plaintiff by Brain Alan Willoughby does not ``verify the cause of action''.

No doubt one way of doing that may have been to exhibit the duplicate or a certified copy of the notice of assessment and depose to its service; but that is not the only way. The deponent has, in fact, sworn to the making and service of the assessment and the amount thereof, to the non-payment of the amount of the assessment by the due date and to the additional tax payable by reason of such non-payment. Those facts, none of which are disputed, are, in my view, clearly sufficient to verify the cause of action. This challenge to the order of the Deputy Master accordingly fails.

It is, however, necessary to add that in the course of the appeal I enquired of counsel for the defendant whether his client, either before the Master or before me, claimed to have a defence to this claim on the merits, because a Court would, of course, be slow to give leave to enter judgment when any such claim is made. The answer was in the negative. Neither, as I understand counsel, has any action been taken to require the Commissioner to consider a purported notice of objection to the assessment, although the Commissioner disputes that any such objection was given in due time or at all. In short, the defendant has not pressed any objection to this assessment that he might have been disposed to make.

There is one other matter which may be deserving of mention, although it was not raised in argument on behalf of the appellant. Section 201 of the Act provides that:

``The fact that an appeal or reference is pending shall not in the meantime interfere with or affect the assessment the subject of the appeal or reference; and income tax may be recovered on the assessment as if no appeal or reference was pending.''

It seems rather strange that this section refers to a challenge to an assessment by means of an appeal or reference, but makes no mention of a challenge by way of objection, which is the preliminary step. I am told that as a matter of administrative discretion the Commissioner often does not enforce payment pending determination of an objection. But be that as it may, counsel for the respondent says that having regard to the imperative terms of sec. 204 and 208, which create the debt and require payment of the tax assessed on the due date, it would be somewhat capricious if the Act had to be construed in such a way that an objection operated to postpone payment, but an appeal or reference to a Board of Review did not. In the present case however, it is unnecessary to express any further or considered opinion on the effect of sec. 201, if any, upon an objection, because the Commissioner asserts that no notice of objection has been given, and the taxpayer has taken no steps to establish an assertion to the contrary.

The appeal will be dismissed. The defendant, who is the appellant, is to pay the plaintiff's costs of the appeal to be taxed.

I certify for counsel.