The Hell's Angels Limited v. Deputy Federal Commissioner of Taxation (No. 4).

Judges:
Northrop J

Court:
Federal Court

Judgment date: Judgment handed down 20 December 1984.

Northrop J.

The Hell's Angels Limited was incorporated on 11 December 1979 under the Companies Act 1961 (Vic.) as a company limited by guarantee. Hereinafter the incorporated body is called ``The Hell's Angels Company''. In its memorandum of association The Hell's Angels Company is called the Club. The objects of the The Hell's Angels Company include the following:

``(a) To incorporate the unincorporated body hitherto known as the The Hell's Angels Motor Cycle Club and to establish, maintain and conduct a club for motor-cyclists.

(b) To foster, encourage, promote and advance the sport and recreation of motor-cycling and to promote the acceptance of the ethical code of morality of the The Hell's Angels Club.''

On the material before the court, it is not possible to determine whether The Hell's

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Angels Company has achieved object (a) or is attempting to achieve object (b). For clarity, hereinafter the unincorporated body known as The Hell's Angels Motor Cycle Club is called ``The Hell's Angels Club''.

The Hell's Angels Company did not, prior to 25 July 1983, furnish to the Commissioner of Taxation (``the Commissioner'') any income tax return for the income years ended 30 June 1980, 30 June 1981 and 30 June 1982 respectively, as required by the Income Tax Assessment Act 1936 (``the Act''). On 1 March 1983 the Deputy Commissioner of Taxation (``the Deputy Commissioner'') pursuant to sec. 167 of the Act, made a default assessment of income against The Hell's Angels Company in respect of each of those income years. That section provides:

``167. If -

  • (a) any person makes default in furnishing a return; or
  • (b) the Commissioner is not satisfied with the return furnished by any person; or
  • (c) the Commissioner has reason to believe that any person who has not furnished a return has derived taxable income,

the Commissioner may make an assessment of the amount upon which in his judgment income tax ought to be levied, and that amount shall be the taxable income of that person for the purpose of section 166.''

The amounts of taxable income assessed by the Deputy Commissioner as taxable income of The Hell's Angels Company were as follows:

The total amount of tax assessed by the Deputy Commissioner on those amounts of income and to be paid by The Hell's Angels Company amounted to $87,897.72. In addition, additional tax under subsec. 226(1) of the Act was assessed in the sum of $43,948. Under sec. 204 of the Act the amount of tax which thus became due and payable by The Hell's Angels Company amounted to $131,845.72. That amount became due and payable on 5 April 1983.

By notice dated 29 April 1983 the then solicitors for The Hell's Angels Company lodged with the Commissioner pursuant to sec. 185 of the Act objections in writing against each of the assessments made against it. The substance of each objection was that The Hell's Angels Company had derived no income for any of the three income years. In the present proceedings, the Secretary of The Hell's Angels Company has sworn on affidavit that the Company does not trade or earn income in its own right, that its sole function is to promote the activities of The Hell's Angels Club and that any moneys received by it are received as trustee for that club and are applied to the benefit of members of that club and the objects of that club. It should be noted that the objection did not include a request that the Commissioner grant an extension of time for payment of the tax; see sec. 206 of the Act.

By way of aside and because of the manner in which The Hell's Angels Company relies upon it, it should be noted that on 3 July 1983 The Hell's Angels Company received a notice of instalment of tax in respect of the income year ended 30 June 1983. By letter dated 26 July 1983 the then solicitors for The Hell's Angels Company sought a variation of the amount of instalment on the basis that the Company had received no income. By letter dated 2 August 1983 the Deputy Commissioner granted the variation sought on the basis that the estimated income tax payable for that year was nil. These matters will be discussed later as the instalment of tax variation.

On 25 July 1983 The Hell's Angels Company lodged tax returns for each of the income years ended 30 June 1980, 30 June 1981 and 30 June 1982 respectively, which showed no income had been received in any of those years.

The Hell's Angels Company did not pay any of the amounts of tax which had become due and payable on 5 April 1983. Pursuant to the powers conferred by sec. 186 of the Act, on 19 August 1983 the Deputy Commissioner disallowed each of the objections lodged by The Hell's Angels Company under sec. 185. By letter dated 19 August 1983 the Deputy Commissioner gave written notice of those decisions to The Hell's Angels Company. The letter referred to the review and appeal

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provisions contained in sec. 187 and 188 of the Act and contained the following paragraph:

``The amount of tax, if any, remaining outstanding to your account should now be paid.''

The Hell's Angels Company did not pay any of the amounts of tax then due and payable.

By notice in writing dated 25 August 1983 and pursuant to sec. 187 of the Act, The Hell's Angels Company requested the Commissioner to refer each of the decisions disallowing its objections to a Board of Review and enclosed the requisite fee under sec. 188. In addition, the notice requested that the decisions be referred to the Board of Review as soon as possible. Upon receipt of the notice and the fee under sec. 188, the Commissioner was required to refer the decisions to a Board of Review. He did not do this. It should be noted that the notice by The Hell's Angels Company did not include a request that the Commissioner grant an extension of time for payment of the tax then due and payable. In this regard, sec. 206 of the Act should be noted:

``206. The Commissioner may in any case grant such extension of time for payment, or permit payment to be made by such instalments and within such time as he considers the circumstances warrant; and in such case the tax shall be due and payable accordingly.''

The power of the Commissioner to grant an extension of time is of importance since if an extension is granted, the tax becomes due and payable in accordance with the extension so granted. The importance of that provision arises from the combined effect of sec. 201 and 204 of the Act. The relevant part of sec. 204 provides:

``204. Subject to the provisions of this Part, any income tax assessed shall be due and payable by the person liable to pay the tax on the date specified in the notice as the date upon which tax is due and payable...''

Section 201 of the Act provides:

``201. 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 were pending.''

In the present case no request had been made to the Commissioner to grant an extension of time under sec. 206 and no extension of time had been granted. Accordingly, under sec. 204 and 201 the amounts of tax for the three income years were due and payable by The Hell's Angels Company notwithstanding the request made under sec. 187 and 188 of the Act. Under sec. 208, those amounts were a debt due to the Commonwealth and payable to the Commissioner. Section 209, which provides for the recovery of tax, is set out:

``209. Any tax unpaid may be sued for and recovered in any court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his official name.''

The Commissioner did not refer the decisions to a Board of Review. On 24 February 1984 the Deputy Commissioner caused a Supreme Court writ to be issued against The Hell's Angels Company claiming the sum of $131,845.72 being the total amount of tax and additional tax under subsec. 226(1) of the Act for the three income tax years together with the sum of $23,407.10 being additional tax for late payment under sec. 207 of the Act together with interest under sec. 78 Supreme Court Act 1958 from the date of the writ. The Hell's Angels Company entered an appearance to the writ and on 28 March 1984 the Deputy Commissioner took out a summons for final judgment returnable on 2 April 1984. In April 1984 the then solicitors for The Hell's Angels Company lodged with the Deputy Commissioner a notice under sec. 189 of the Act and a request for an extension of time under sec. 206 of the Act. The notice was in the following terms:

``Re: The Hell's Angels Ltd.

Further to our previous correspondence and objections filed pursuant to section 189, the Defendant gives notice requieing (sic) the Commission (sic) of Taxation to refer the matter to the Board of Review.

Kindly attend to this matter as a matter of urgency.''

The request was in the following terms:

``Re: The Hell's Angels Ltd.

Pursuant to section 206 of the Act on behalf of the Defendant we request time for

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payment until after objection is determined by the Board of Review.

Please advise urgently.''

The summons for final judgment came on for hearing before Beach J. on 6 April 1984 [reported at 84 ATC 4545]. On that day his Honour refused an adjournment of the hearing of the summons for final judgment to enable The Hell's Angels Company to make an application to the Federal Court under the Administrative Decisions (Judicial Review) Act 1977 (``the Judicial Review Act''). On 11 April 1984 Beach J. [reported at 84 ATC 4548] gave leave to the Deputy Commissioner to enter final judgment in the sum of $87,897.62 [sic] being the amounts of income tax assessed but excluding the amounts of additional tax payable under subsec. 226(1) of the Act and under sec. 207 of the Act, together with $1,329.74 interest pursuant to sec. 78 Supreme Court Act 1958 and costs. His Honour ordered that The Hell's Angels Company have leave to defend the action in respect of the balance of the claim. His Honour refused a stay pending the hearing and determination by the Board of Review of the decisions of the Deputy Commissioner to disallow the objections to the assessments of tax but granted a stay of 21 days to allow The Hell's Angels Company to appeal. No appeal has been lodged.

On 30 April 1984 The Hell's Angels Company commenced these proceedings seeking orders of review under sec. 5 Judicial Review Act. The Hell's Angels Company moved the court for interlocutory orders restraining the Deputy Commissioner from entering judgment pursuant to the leave granted by Beach J. The Deputy Commissioner gave notice of objection to competency. On 18 May 1984, upon the Deputy Commissioner undertaking that pending the determination of the motions he would not enter judgment in the Supreme Court action, directions were given relating to the hearing of the motions. On 30 May 1984 the Deputy Commissioner referred the three decisions to disallow the objections to the assessment of tax to a Board of Review; see sec. 189 of the Act.

The motions came on for hearing on 26 and 27 July 1984 [reported at 84 ATC 4683]. On the last of those days the court gave its reasons for decision and the orders it proposed to make on those motions. On 1 August 1984, upon The Hell's Angels Company, in the order referred to as ``the Applicant'', giving undertakings as follows:

``1. The Applicant undertakes that it will pay to the Respondent such compensation if any as the Court thinks just in such manner as the Court directs.

2. The Applicant further undertakes:

  • (a) That it does not own any property whether real or personal save that it is the registered proprietor of the land and buildings known as and situate at 633 and 639 Heidelberg Road, Fairfield in the State of Victoria which it holds as trustee for the Hell's Angels Motor Cycle Club;
  • (b) That it will not agree to sell, dispose of, charge or otherwise encumber the said properties unless with the consent of the Respondent or upon the giving of not less than 14 days prior notice to the Respondent of any such intended agreement disposition, charging or dealing, pending the hearing and determination of the application herein or further order''

the court ordered that the Deputy Commissioner be restrained from entering final judgment in the Supreme Court action. At the same time the court gave directions for the hearing of the application of The Hell's Angels Company.

It is noted that it appears that the amounts of tax assessed by the Deputy Commissioner are based largely on statements of accounts with the Commonwealth Savings Bank of Australia, Fairfield, in the name ``Hells' Angels'' and ``Hells Angels''. The Hell's Angels Company claims that the only property it owns is that referred to in para. 2(a) of the undertaking set out above and that the accounts with the Commonwealth Savings Bank are not accounts of The Hell's Angels Company. These matters, however, are not directly relevant for the issues raised by the application to this court. Neither are matters relating to the making of the assessments and the calculations of tax relevant to the issues before this court; see subsec. 3(1) of the Judicial Review Act and Sch. 1 of that Act.

By its amended application, The Hell's Angels Company is seeking orders of review of

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two decisions of the Deputy Commissioner being:

The Hell's Angels Company is seeking orders setting aside each of those decisions and that the matters be remitted to the Deputy Commissioner for reconsideration according to law. The grounds relied upon are many and the particulars given with respect to each ground overlap. With respect to each decision The Hell's Angels Company relies upon para. 5(1)(e) of the Judicial Review Act. The particular matters alleged that arise under that paragraph are those referred to in para. 5(2)(a), (b), (d), (g) and (j). Those grounds can be summarised in the form that the Deputy Commissioner:

The Taxation Administration Act 1953 provides for the appointment of a Commissioner of Taxation (sec. 4) and the appointment of Deputy Commissioners of Taxation (sec. 7). By sec. 8 of that Act the Commissioner is empowered to delegate to a Deputy Commissioner or other person any of his powers under the Income Tax Assessment Act. Section 8 of the Income Tax Assessment Act provides that the Commissioner shall have the general administration of that Act. In the present case, the decisions being challenged were made by persons other than the Commissioner or the Deputy Commissioner.

There was no evidence of the delegation of powers to those persons by the Commissioner. In fact there was no evidence of the actual person who made a decision refusing the application of an extension of time for payment of the income tax under sec. 206. The parties presented their cases on the assumption that the persons making the decisions did so pursuant to valid delegations. These reasons proceed on that assumption even though, except where otherwise clearly stated, reference will be made to the Deputy Commissioner being the person named as the respondent to this application.

Before referring to further material placed before the court during the hearing of the application, consideration should be given to the nature of the decisions being challenged. Under sec. 206 of the Act, the Deputy Commissioner has an unfettered discretion. He is empowered to ``grant such extension of time for payment... as he considers the circumstances warrant''. The exercise of the power need not depend upon an application for an extension being made by a taxpayer. Where an application for an extension is made, no action by the Deputy Commissioner within a reasonable time may constitute evidence of a refusal to grant the extension; see reasons given herein on 27 July 1984. Even though the discretion is unfettered it must be exercised according to law; see for example
Ahern v. D.F.C. of T. 83 ATC 4698 and
Thurecht & Ors v. D.F.C. of T. 84 ATC 4480. In other words, the power must not be exercised improperly. In this regard any of the matters referred to in para. 5(2)(a), (b), (d), (g) and (j) of the Judicial Review Act, if established, could establish an improper exercise of the power. During the course of submissions reference was made to the fact that in some of the paragraphs of subsec. 5(2) of the Judicial Review Act the words used made reference to the exercise of a power (see para. (a), (b), (c), (g), (h) and (j)) while in others the words used made reference to the exercise of a discretionary power (see para. (d), (e) and (f)). In the present case nothing turns on that distinction. In exercising the power conferred by sec. 206, the Deputy Commissioner should have regard to the provisions of the Act under which the income tax assessed is due and payable by the person liable to pay the tax (see sec. 204); it is a debt due to the Commonwealth and payable to the Commissioner (see sec. 208) and that even if an appeal or reference is pending, the income

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tax may be recovered on the assessment as if no appeal or reference is pending (see sec. 201). These statutory provisions are clear. They have been criticised, see
Clyne v. D.F.C. of T. 82 ATC 4510 per Mason A.C.J. at pp. 4511-4512, cited in the reasons given herein on 27 July 1984. The harshness of the statutory provisions may be softened by the courts in which recovery of tax is sought by staying or adjourning the recovery proceedings pending the hearing and determination of the appeal or reference. The Supreme Court of Victoria refused an application by The Hell's Angels Company for such a stay or adjournment and this court does not review that decision by the Supreme Court.

Logically, in the present case, the review of the decision under sec. 206 should be considered first since unless an extension of time for payment is granted, the income tax remains due and payable by The Hell's Angels Company and is a debt due to the Commonwealth and payable to the Commissioner. In the context of the Act, sec. 209 confers a facultative power on the Commissioner or a Deputy Commissioner to sue in any court of competent jurisdiction in the name of the Commissioner or Deputy Commissioner for any unpaid tax. That section is to be read in conjunction with sec. 39 Judiciary Act 1903 and enables the claim to be made in the name of the Commissioner or Deputy Commissioner. The use of the word ``may'' in that section does not refer to any discretion conferred upon the Commissioner or a Deputy Commissioner. The discretion to sue for the recovery of income tax arises from sec. 208 of the Act in conjunction with sec. 8 of the Act which confers upon the Commissioner the general administration of the Act. In passing, the provisions of subsec. 13(b) of the Act should be noted.

On the facts of this case, assessments of tax had been issued, objections against those assessments had been lodged, those objections had been disallowed by the Deputy Commissioner and a request had been made that the decision of the Deputy Commissioner be referred to a Board of Review. The income tax so assessed is due and payable and is a debt due to the Commonwealth. Unless an extension of time had been granted under sec. 206, one would have expected a Deputy Commissioner to authorise the issue of legal proceedings to recover the amount of unpaid income tax in a court of competent jurisdiction. Under the provisions of the Act, and in the proper administration of the Act, action to recover income tax by legal proceedings should be taken unless an extension of time in which to pay is granted. In the present case, a complicating factor has arisen namely, legal proceedings have been instituted by the Deputy Commissioner of Taxation in a court of competent jurisdiction to recover the amount of tax due and payable by The Hell's Angels Company. The Supreme Court has given leave to enter final judgment for part of that amount. Any extension of time to pay the amount of tax due and payable of necessity would affect the conduct of those legal proceedings in the Supreme Court. This matter will be referred to later in these reasons. For this reason it is desirable that consideration be given first to the challenge directed to the decision to issue proceedings in the Supreme Court.

In the present case The Hell's Angels Company challenges the decision to sue and for that purpose has identified the decision made under an enactment being sec. 201 and 209 of the Act. On a proper analysis of the Act the decision to sue arises from sec. 8 and 208 of the Act. On any view, the decision is a decision to which the Judicial Review Act applies; see sec. 3 of that Act. Further, in all probability, reasons for that decision cannot be compelled to be given under sec. 13 of the Judicial Review Act, see para. 13(11)(c) and para. (f) of Sch. 2 of that Act. Subject to what is said hereafter, reasons for the decision under sec. 206 of the Act may be compellable in appropriate cases but there is no evidence before the court that The Hell's Angels Company made a request under sec. 13 of the Judicial Review Act relating to the decision under sec. 206.

At the hearing of the application, the Deputy Commissioner relied upon two affidavits sworn by Laurette Corcoran and John Addison respectively. In her affidavit Miss Corcoran stated that she was an Assistant Recovery Manager in the Recovery Section of the Taxation Office, that she was authorised to make decisions whether legal proceedings should be commenced to sue for the recovery of unpaid income tax and that she had made the decision that legal proceedings be commenced in the Supreme Court of Victoria to recover the

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amount of tax unpaid by The Hell's Angels Company. In her affidavit Miss Corcoran stated the reasons for the decision were that:

One of the functions of the Appeals Branch is to consider and take appropriate action in connection with appeals and reviews against assessments. Miss Corcoran was cross-examined on her affidavit.

In his affidavit Mr Addison stated that he was the manager of the Revenue Control Sub-section of the Taxation Office in Melbourne and was authorised to process applications for variation of the amounts of instalments of tax payable by companies pursuant to Div. 1A of Pt. VI of the Act. The material in his affidavit was of a general nature describing the procedure and practice under that Part of that Division which relates to the instalment of tax variation relied upon by The Hell's Angels Company as evidence of an improper exercise of power in the making of the two decisions challenged in these proceedings. Mr Addison gave no evidence relating to the particular variation sought by The Hell's Angels Company. Mr Addison was not cross-examined. I accept what he said in his affidavit. I reject the submissions made on behalf of The Hell's Angels Company relying upon the instalment of tax variation as supporting the view that the Deputy Commissioner accepted as a fact that The Hell's Angels Company had received no income during the income tax year ending 30 June 1983 and therefore should have accepted the fact that The Hell's Angels Company, in all probability, had received no income during the three previous income tax years. The provisions of Div. 1A of Pt. VI of the Act contain their own penalty provisions. No implication adverse to the Deputy Commissioner arises from the instalment of tax variation. No inference adverse to the Deputy Commissioner can be drawn from the instalment of tax variation. Further, I reject the submission that the instalment of tax variation is evidence that the Deputy Commissioner exercised the powers conferred upon him in bad faith.

In addition, that part of the recovery file of the Deputy Commissioner relating to The Hell's Angels Company from its beginning until the issue of the Supreme Court Writ was received in evidence. The contents of the file include copy documents and reports from other files kept by the Deputy Commissioner relating to The Hell's Angels Company including the appeals file kept by the Appeals Branch. The first document in the file is a cut out news item from the Herald newspaper of 16 February 1983 relating to committal proceedings in the Magistrates' Court, Melbourne, involving members of the ``Hell's Angels Motorbike Group''. The file contains documents relating to unsuccessful attempts to obtain payment of the unpaid tax owed by The Hell's Angels Company including attempts pursuant to sec. 118 of the Act to recover money standing to the credit of The Hell's Angels in the Commonwealth Savings Bank, Fairfield. It includes reports by officers of the Taxation Office, disclosing close liaison between those officers and members of the Police Force relating to members of The Hell's Angels Club. The reports contain comments, including that action may be taken against members of The Hell's Angels Club, as well as references to the criminal proceedings pending against some of them.

I accept Miss Corcoran as a witness of truth. Her oral evidence is supported by reference to documents contained in the recovery file. I find that Miss Corcoran made the decision that the Supreme Court proceedings be instituted. In making that decision she had regard to the relevant provisions of the Act as already discussed. She had regard to the fact that The Hell's Angels Company had not sought an extension of time under sec. 206 of the Act. The legal proceedings appear to have been instituted with more speed than in other cases but that of itself that does not establish an improper exercise of power. Normally complaints are made if the Deputy Commissioner delays too long in instituting legal proceedings to protect the revenue of the Commonwealth. Miss Corcoran had regard to the recommendation from the Appeals Branch.

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The recommendation was contained in a report dated 14 February 1984 from a Senior Advising Officer to an Assistant Deputy (Appeals). The report set out the background to the assessments and a summary of the grounds of objection lodged by The Hell's Angels Company. Counsel for The Hell's Angels Company challenged the accuracy of that summary. It is not for this court however to determine whether the summary of the grounds of the objection are sufficiently summarised in the recommendation. What is of importance is that reference is made to both the objection and views expressed as to the likelihood of the objection being successful. The report states the grounds of objection as follows:

``4. The grounds of the objection are very broad (f. 4-12/1982 retn). The main ones are:

  • a. The taxpayer company is a charitable organisation within the meaning of sec. 23(e).
  • b. The taxpayer is a club or friendly society within the meaning of sec. 23(g)(iii).

5. A comprehensive report was prepared at objection level (f. 14-17/1982 retn). A perusal of the case suggests that the taxpayer's chance of success is remote.''

The report then summarised the attempts that had been made to recover the amount of tax owed. It then continued:

``REASON FOR ISSUING SUPREME COURT WRIT

13. It is stated in the Investigator's report that the Recovery Manager advised that this office should obtain a judgment on a Supreme Court Writ in the circumstances of this case (f. 55 Invest. file).

14. This matter has been discussed with Mr. M. Doyle, Recovery Manager. He is of the opinion that this office would obtain a judgment if a Supreme Court Writ was issued against the taxpayer company but a stay of execution would be granted by the Court as is usually the case where an issue remains unresolved. However, he also considers this office would have a strong case to put to the Master that security should be supplied as a condition of the stay considering the fact that directors of the taxpayer company have criminal charges against them and they may endeavour to convert assets of the taxpayer company (f. 55/Invest file).

RECOMMENDATION

15. In view of the facts that:

  • a. the chance of success by the taxpayer company in the reference is considered remote,
  • b. the risk that payment of tax will be avoided is strong, and
  • c. the revenue can be protected by obtaining judgment and seeking security against known assets.

Your approval is sought to issue a Supreme Court Writ against the taxpayer company.''

On the same date, an executive officer made the following notation on the report:

``E.O.

I am not so forthright as saying the chance of success of the company is remote. The assessments were based on bankings and evidence given by company officials could make our task of defending assessments no easy task.

However in view of the factors of risk of diversion of assets and to protect the revenue I favour the seeking of a Supreme Court writ.''

Thereafter and on the same date an Assistant Deputy (Appeals) approved the making of the recommendation contained in the report.

I am satisfied that Miss Corcoran acted on that report and recommendation. She had skimmed through the recovery file. She had had conversations with officers attached to the Appeals Branch concerning the matter. On 12 December 1983 she had been directly involved in attempts to recover moneys held in accounts with the Commonwealth Savings Bank, Fairfield, in the name of Hell's Angels. She knew of the apparent confusion between The Hell's Angels Company and The Hell's Angels Club before she received the recommendation upon which she acted.

The recommendation from the Appeals Branch had been given because The Hell's Angels Company had sought a review by a Board of Review. The Appeals Branch handled that matter. If no appeal or review had been lodged, the Recovery Branch would not have

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sought a recommendation from the Appeals Branch. Miss Corcoran was not concerned to consider whether the assessments were correct or not, she acted on the basis that the assessments were correct. That is in accord with the provisions of the Act. She knew the basis of the assessment and had discussed with officers of the Appeals Branch the problem of the names in which accounts were held in the Commonwealth Savings Bank at Fairfield. The major factors on which she based her decision were the large amount of tax outstanding, the fact that there had been no payment and no application for an extension of time to pay and the recommendation of the Appeals Branch. She knew of and considered the press reports and other reports in the recovery file and she knew that directors of The Hell's Angels Company were facing criminal charges and she believed that there was a possibility that assets of the company could be disposed of to pay for the defence of those charges. She wanted to ensure as far as possible that the Commonwealth receive payment of the tax due from The Hell's Angels Company. In all the circumstances she was quite entitled to consider all those matters. On 22 February 1984 she made the decision approving the issue of the Supreme Court proceedings. That approval appears from the document being folio 93 in the Recovery Branch file.

The expressions of opinion in
Director-General of Social Services v. Hales (1982) 47 A.L.R. 281 do not assist in the determination of the present proceedings. In Hales' case a decision had been made by a delegate of the Director-General that action be taken against Mrs Hales to recover overpayments of benefits paid to her under the Social Security Act 1947. On appeal, the Administrative Appeals Tribunal made a decision that the overpayments not be recovered. In making that decision the Tribunal had regard to the financial position of Mrs Hales and the absence of moral turpitude on her part. On an appeal on a question of law from that decision by the Tribunal, the court held that the Tribunal was not in error in having regard to those matters. Those expressions of opinion do not mean that as a matter of law the Commissioner must take similar matters into account when considering whether to sue for the recovery of tax under the provisions of the Income Tax Assessment Act.

The particulars of the grounds under para. 5(1)(e) of the Judicial Review Act as expanded in para. 5(2)(a), (b), (d), (g) and (j) overlap. Nevertheless the relevant particulars should be set out. They are as follows. Under para. 5(2)(a):

``(i) The fact that officers of The Hell's Angels Company had been charged with criminal offences;

(ii) The fact that property held by The Hell's Angels Company was likely to be applied towards the cost of defending officers of the Company in respect of the said charges;.''

Under para. 5(2)(b):

``(i) That there were outstanding objections dated 29 April 1983 to the said assessments which raised a bona fide dispute concerning the correctness of the assessment;

(ii) That the said assessments were made pursuant to sec. 166 and 167 of the Act having regard to bank accounts purportedly operated by The Hell's Angels Company;

(iii) That the Deputy Commissioner well knew that the said bank accounts were carried on in the name and style of Hell's Angels and not The Hell's Angels Ltd.;.''

Paragraphs (iv) to (vii) refer to the instalment of tax variation.

``(viii) That on 25 August 1983 The Hell's Angels Company gave notice to the Deputy Commissioner pursuant to sec. 187 of the Act;

(ix) That the Deputy Commissioner failed, neglected or refused to refer the said objections to the Board of Review;

(x) That the Deputy Commissioner failed, neglected or refused to provide The Hell's Angels Company with any reasons for the basis of the assessments;.''

Under para. 5(2)(j):

``The said power was exercised for unlawful purpose, that is to say, the purpose of preventing The Hell's Angels Company to permit such of its assets as it held to be applied for the purpose of meeting costs of defending its officers and members of The Hell's Angels Motorcycle Club against criminal charges;.''

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Under para. 5(2)(d) all previous particulars as well as the other grounds were relied upon.

It is not necessary to refer in detail to all the material contained in the recovery file and to all the evidence given by Miss Corcoran and the other witnesses called on behalf of the Deputy Commissioner. From a consideration of all that material I am not satisfied that The Hell's Angels Company has established any of the grounds contained in para. 5(1)(e) and expanded in subsec. 5(2) of the Act.

It follows therefore that The Hell's Angels Company has failed to establish its case in so far as it relates to the decision to commence the proceedings in the Supreme Court.

It remains to consider the decision under sec. 206 of the Act. That was a decision to refuse to grant an extension of time to pay the income tax. Any order to set aside that decision would not, in the circumstances in this case, amount to an order that an extension of time be granted. The position would remain as it is, namely that the amount of tax owed by The Hell's Angels Company would constitute a debt owed to the Commonwealth and payable to the Commissioner. If the Commissioner granted an extension of time to pay the tax, the basis for the Supreme Court writ and the leave given to enter judgment for part of the debt owed would disappear. The legal proceedings depend upon there being a debt owed by The Hell's Angels Company to the Commonwealth. That basis depends upon the absence of an extension of time under which the income tax assessed ceases to be due and payable. There is an absence of material before the court directed to the decision under sec. 206 of the Act. Of necessity, the decision made on the application for an extension was made after the issue of the Supreme Court writ. In fact, one of the matters relied upon in deciding to issue the writ was the absence of an application under sec. 206. Once legal proceedings had been instituted, a decision to refuse to grant an extension of time would constitute a decision in connection with the conduct of proceedings in a civil court thus preventing the decision maker from being compelled to give reasons for the decision; see subsec. 13(11) Judicial Review Act and para. (f) of Sch. 2 to that Act. The court does not know the reasons for the refusal to grant the extension of time. The court does not know the identity of the person who made that decision. The facts of this case are so different from those of Ahern's case, above, and Thurecht's case, above, that no assistance can be drawn from a consideration of the reasons for judgment in those cases. In all the circumstances of the case, and having regard to the fact that The Hell's Angels Company has failed in its attempt to obtain a review of the decision to institute legal proceedings, the court finds that the application in so far as it relates to the decision under sec. 206 of the Act, fails.

In relation to the attack on each of the decisions challenged, counsel for The Hell's Angels Company relied strongly on opinions expressed in Ahern's case, above, and in Thurecht's case above. In each of those cases the material before the court included guidelines prepared for the guidance of officers exercising delegated powers under the Act. In each of those cases reasons for the decision had been given pursuant to sec. 13 of the Judicial Review Act. In the present case no guidelines are before the court relating to the exercise of either power and no reasons for decision have been supplied in relation to the exercise of either power. Arguments based upon the inability of The Hell's Angels Company to pay the tax have no relevance to the exercise of the discretion and thus are not persuasive in deciding this application. Some information has been given by the Deputy Commissioner as to the basis of the assessments, namely the movements of amounts in accounts in the name of Hell's Angels in the Commonwealth Savings Bank at Fairfield. The question of who is the person entitled to the benefit of those accounts is an issue between the parties and may well form the subject of the hearing before the Board of Review. That issue affects also the question of the ability of The Hell's Angels Company to pay the tax. In making the decision to issue the legal proceedings, Miss Corcoran did consider the existence of the reference to the Board of Review and the basis of the assessment and in so doing relied upon the recommendation of the Appeals Branch being the relevant branch of the Taxation Office responsible for those matters. In all the circumstances I am satisfied that the Deputy Commissioner in making the decisions did not fail to take into account any relevant consideration. I am satisfied that he did not take into account any irrelevant consideration nor was the exercise of the powers so unreasonable that no reasonable person could have so exercised the powers. I am satisfied that he did

ATC 4044

not exercise his powers in a way that constitutes an abuse of those powers and I am satisfied that he did not exercise his powers in bad faith.

Accordingly, the application should be dismissed. The effect of that order is that the order made on 1 August 1984 in so far as it restrained the Deputy Commissioner from entering final judgment in the Supreme Court proceedings being No. 712 of 1984, is vacated. Upon that order being vacated, The Hell's Angels Company is released from the undertakings given on its behalf on 1 August 1984. The Hell's Angels Company should pay the costs, including all reserved costs, of the Deputy Commissioner.

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The order made on 1 August 1984 restraining the Deputy Commissioner entering final judgment in Supreme Court proceedings No. 712 of 1984 be vacated and The Hell's Angels Company be released from the undertaking given on its behalf on 1 August 1984.

3. The applicant pay the costs including all reserved costs of the Deputy Commissioner.

 

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