FEDERAL COURT OF AUSTRALIA Binetter v Commissioner of Taxation [2016] FCAFC 163 Appeal from: Bennett and Ors and Commissioner of Taxation [2015] AATA 455 Bai v Commissioner of Taxation [2015] FCA 973 Bai v Commission of Taxation (No 2) [2015] FCA 1083 File numbers: NSD 879 of 2015 NSD 880 of 2015 NSD 881 of 2015 NSD 1276 of 2015 Judges: SIOPIS, PERRAM AND DAVIES JJ Date of judgment: 2 December 2016 Catchwords: INCOME TAX – amendment of an assessment where the Commissioner is of the opinion there has been fraud or evasion – burden of proof INCOME TAX – liability of unadministered estate to assessment ADMINISTRATIVE LAW – procedural fairness – requirement of Commissioner to lodge material documents with the Administrative Appeals Tribunal Legislation: Administrative Appeals Tribunal Act 1975 (Cth) ss 25, 33, 33A(1AA), 37, 43, 44 Crimes Act 1914 (Cth) s 3ZQU Income Tax Act 1986 (Cth) Income Tax Assessment Act 1936 (Cth) ss 166, 167, 169A, 170, 174 Income Tax Assessment Act 1997 (Cth) s 995-1 Taxation Administration Act 1953 (Cth) ss 3AA(2), 14ZY, 14ZZ, 14ZZA, 14ZZF, 14ZZK, 14ZZO, Sch 1 Div 284, Sch 1 s 255-1, Sch 1 s 260-140, Sch 1 s 260-145, Sch1 s 298-20 Cases cited: Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 Commissioner of Stamps (WA) v West Australian Trustee, Executor and Agency Company Ltd (1925) 36 CLR 98 Commissioner of Taxation v H [2010] FCAFC 128 Deputy Commissioner for Taxation v Brown (1958) 100 CLR 32 Deputy Commissioner of Taxation v Jones [1999] FCA 308 Denver Chemical Manufacturing Co v Commissioner of Taxation (NSW) (1949) 79 CLR 296 Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 Fletcher v Commission of Taxation (1988) 19 FCR 442 Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 Gordon Edgell and Sons Pty Ltd v Federal Commissioner of Taxation (1949) 9 ATD 43 Jolly v Federal Commissioner of Taxation (1935) 53 CLR 206 Mack v Commissioner of Stamp Duties (NSW) (1920) 28 CLR 373 McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284 Millar v Commissioner of Taxation (2015) 67 AAR 490 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation (1963) 113 CLR 475 O'Sullivan v Repatriation Commission (2003) 128 FCR 590 R v Criminal Injuries Compensation Board, Ex parte A [1999] 2 AC 330 Re Mendonca; ex parte Commissioner for Taxation (1969) 15 FLR 256 Re Refugee Review Tribunal; Ex parte AALA (2000) 204 CLR 82 Shell Co of Australia v Federal Commissioner of Taxation (1930) 44 CLR 530 Taylor v Commissioner of Taxation (1987) 16 FCR 212 Wei v Minister for Immigration and Border Protection (2015) 327 ALR 28 WR Carpenter Holdings Pty Ltd v Federal Commissioner of Taxation (2008) 237 CLR 198 Date of hearing: 29 February 2016 to 2 March 2016 Registry: New South Wales Division: General Division National Practice Area: Taxation Category: Catchwords Number of paragraphs: 208 Counsel for the Appellants in NSD 879 - 881 of 2015 and the Respondent in Mr M Robertson QC with Ms L McBride NSD 1276 of 2015: Solicitor for the Appellants in NSD 879 - 881 of 2015: Brown Wright Stein Counsel for the Respondent in NSD 879 - 881 of 2015: Mr T Thawley SC with Ms K Morgan and Mr M Cosgrove Solicitor for the Respondent in NSD 879 - 881 of 2015: Minter Ellison Counsel for the Appellant in NSD 1276 of 2015: Mr G Kennett SC with Mr B Kasep Solicitor for the Appellant in NSD 1276 of 2015: Australian Taxation Office Dispute Resolution ORDERS NSD 879 of 2015 BETWEEN: ANDREW BINETTER Appellant AND: COMMISSIONER OF TAXATION Respondent JUDGES: SIOPIS, PERRAM AND DAVIES JJ DATE OF ORDER: 2 dECEMBER 2016 THE COURT ORDERS THAT: 1. Appeal dismissed. 2. The Appellant pay the Respondent's costs of the appeal as taxed or agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS NSD 880 of 2015 BETWEEN: MARGARET BINETTER Appellant AND: COMMISSIONER OF TAXATION Respondent JUDGES: SIOPIS, PERRAM AND DAVIES JJ DATE OF ORDER: 2 DECEMBER 2016 THE COURT ORDERS THAT: 1. Appeal dismissed. 2. The Appellant pay the Respondent's costs of the appeal as taxed or agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS NSD 881 of 2015 BETWEEN: MARGARET BINETTER FOR THE ESTATE OF ERWIN BINETTER Appellant AND: COMMISSIONER OF TAXATION Respondent JUDGES: SIOPIS, PERRAM AND DAVIES JJ DATE OF ORDER: 2 DECEMBER 2016 THE COURT ORDERS THAT: 1. Appeal dismissed. 2. The Appellant pay the Respondent's costs of the appeal as taxed or agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS NSD 1276 of 2015 BETWEEN: COMMISSIONER OF TAXATION Appellant AND: TAO BAI Respondent JUDGES: SIOPIS, PERRAM AND DAVIES JJ DATE OF ORDER: 2 DECEMBER 2016 THE COURT ORDERS THAT: 1. Appeal allowed. 2. The Respondent to the appeal pay the Appellant's costs of the appeal as taxed or agreed. 3. Set aside the orders of the primary judge made on 8 October 2015 and in lieu thereof order that the appeal by way of application from the decision of the Administrative Appeals Tribunal be dismissed with costs. 4. Cross-appeal dismissed. 5. The Cross-Appellant pay the Cross-Respondent's costs of the cross-appeal as taxed or agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT SIOPIS J: 1 I have had the advantage of reading the reasons for decision of Perram and Davies JJ. For the reasons given by their Honours, I am of the view that the appeals by each of the appellants in Binetter v Commissioner of Taxation (NSD 879 of 2015, NSD 880 of 2015 and NSD 881 of 2015) should be dismissed. 2 Further, in relation to the appeal by the Commissioner of Taxation (the Commissioner), in Commissioner of Taxation v Tao Bai (NSD 1276 of 2015), I agree with the reasons for decision of Perram and Davies JJ in respect of the grounds of appeal relating to the application of the onus of proof and the question of fraud and evasion. However, I have the misfortune to disagree with their Honours on the question of procedural fairness. I would uphold the notice of contention of the respondent, Ms Tao Bai, on that question, and would, on that basis, dismiss the Commissioner's appeal. 3 On 28 September 2010, Ms Bai commenced an application in the Administrative Appeals Tribunal (the Tribunal) for the review of a decision of the Commissioner rejecting Ms Bai's objection to an amended assessment. Prior to the issuing of the amended assessment, the Australian Federal Police and the Commissioner had seized documents from Ms Bai's Cronulla premises. 4 One of the transactions, the subject of the review proceeding in the Tribunal, related to two deposits into Ms Bai's Westpac home loan account totalling over $1 million made in October and November 2004 which the Commissioner had treated as income. Ms Bai gave affidavit evidence and oral evidence at the Tribunal explaining the background of the two deposits. Ms Bai said that the deposits had their origins in a property development in Burke Road, Cronulla, which had been undertaken by a company, High Trade Company Pty Ltd, a company associated with her ex-husband, Mr Li Zhang, but in the name of Brightfull Pty Ltd, a company with which she was associated. Ms Bai gave evidence that High Trade and Westpac Banking Corporation Limited (Westpac) had financed the acquisition of the land and the construction of the units. Ms Bai gave oral evidence that High Trade had guaranteed the Westpac project loan. Ms Bai was challenged in cross-examination on this evidence and her evidence was ultimately rejected by the Tribunal on the grounds of absence of documentary corroboration. 5 It is the following finding in the Tribunal's reasons for decision (at [32]) which is at the heart of Ms Bai's complaint about the failure of procedural fairness in the Tribunal process: Ms Bai's explanation is hard to understand. On the face of it, Brightfull (a company owned and controlled by Ms Bai, not her husband) was the registered proprietor of the property. The borrowing from Westpac appears to have been in Brightfull's name; no document supporting the assertion that the loan was guaranteed by High Trade has been produced. Construction work undertaken by Constructions was invoiced to Brightfull and apparently paid. When Brightfull sold the units the net proceeds totalling over $1 million were paid to Ms Bai (the owner and controller of Brightfull, the property owner) personally. Ms Bai's explanation does not satisfy me that those payments do not form part of her assessable income. (Emphasis added.) 6 The implication from this passage is that the Tribunal considered that the reason that Ms Bai had not produced corroborative evidence in respect of the guarantee, was because it did not exist and that weighed against the credibility of Ms Bai. 7 Ms Bai's complaint is that there was, in fact, documentary evidence which supported her oral evidence that High Trade had guaranteed the loan by Westpac, and that the adverse finding to the contrary was the consequence of a failure of procedural fairness in the conduct of the Tribunal hearing, and in the process leading up to the hearing. This failure of procedural fairness, said Ms Bai, had arisen through inadvertence. 8 More specifically, Ms Bai complained that, before and during the Tribunal hearing, the Commissioner had been in possession of a document, namely, the loan facility agreement for the Burke Road property development project loan made by Westpac to Brightfull, which showed that High Trade had agreed to guarantee the repayment of the Westpac project loan and interest. However, said Ms Bai, the Commissioner had not produced that document to the Tribunal or Ms Bai prior to, or during, the hearing; and had, during the hearing, cross-examined and made closing submissions on the misleading basis that there was no such documentary corroborative evidence. The consequence was that the Tribunal had accepted the submissions made by the Commissioner and made findings adverse to Ms Bai on the assumption that there was no evidence corroborative of Ms Bai's oral evidence. 9 The primary judge dismissed Ms Bai's claim that there was a denial of procedural fairness. However, both the parties agreed that the primary judge's decision was based on the factual misconception that Ms Bai and her legal representative, Ms Luk, actually had the corroborative document in their possession at the time of the Tribunal hearing, but they had not produced the document at the Tribunal hearing. Both parties agreed that Ms Bai and Ms Luk did not have the document in their possession at the time of the Tribunal hearing. Therefore, neither party supported the primary judge's decision on the basis upon which he decided the appeal at first instance. the statutory background 10 The Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) places special duties on the decision-maker whose decision is under review to assist the Tribunal in making its decision. Among those duties is a duty to produce to the Tribunal all documents relevant to the review of the decision under review. 11 The statutory provisions relevant to this case are s 33 and s 37 of the AAT Act: 33 Procedure of Tribunal … Decision-maker must assist Tribunal (1AA) In a proceeding before the Tribunal for a review of a decision, the person who made the decision must use his or her best endeavours to assist the Tribunal to make its decision in relation to the proceeding. … 37 Lodging of material documents with Tribunal … Decision-maker must lodge statement of reasons and relevant documents Decision-maker must lodge material documents (1) Subject to this section, a person who has made a decision that is the subject of an application for review (other than second review) by the Tribunal must, within 28 days after receiving notice of the application (or within such further period as the Tribunal allows), lodge with the Tribunal a copy of: … (b) subject to any directions given under section 18B, every other document that is in the person's possession or under the person's control and is relevant to the review of the decision by the Tribunal. … Tribunal may require other documents to be lodged (2) Where the Tribunal is of the opinion that particular other documents or that other documents included in a particular class of documents may be relevant to the review of the decision by the Tribunal, the Tribunal may cause to be given to the person a notice in writing stating that the Tribunal is of that opinion and requiring the person to lodge with the Tribunal, within a time specified in the notice, the specified number of copies of each of those other documents that is in his or her possession or under his or her control, and a person to whom such a notice is given shall comply with the notice. 12 Section 37 of the AAT Act has, however, been modified in the case of a review by the Tribunal of a reviewable objection decision by the Commissioner, by s 14ZZF(1) of the Taxation Administration Act 1953 (Cth). Section 14ZZF(1) relevantly reads as follows: Section 37 of the AAT Act applies in relation to an application for review of a reviewable objection decision as if: (a) the requirement in subsection (1) of that section to lodge with the Tribunal such numbers of copies as is prescribed of statements or other documents were instead a requirement to lodge with the Tribunal such numbers of copies as is prescribed of: (i) a statement giving the reasons for the decision; and (ii) the notice of the taxation decision concerned; and (iii) the taxation objection concerned; and (iv) the notice of the objection decision; and (v) every other document that is in the Commissioner's possession or under the Commissioner's control and is considered by the Commissioner to be necessary to the review of the objection decision concerned; and (vi) a list of the documents (if any) being lodged under subparagraph (v); and (b) the power of the Tribunal under subsection (2) of that section to cause a notice to be served containing a statement and imposing a requirement on a person were instead: (i) a power to make such a statement and impose such a requirement orally at a conference held in accordance with subsection 34(1) of the AAT Act; and (ii) a power, by such a notice, to make such a statement and impose a requirement that the person lodge with the Tribunal, within the time specified in the notice, the prescribed number of copies of each of those other documents that is in the person's possession or under the person's control; and (iii) a power, by such a notice, to make such a statement and impose a requirement that the person lodge with the Tribunal, within the time specified in the notice, the prescribed number of copies of a list of the documents in the person's possession or under the person's control considered by the person to be relevant to the review of the objection decision concerned. background facts 13 The background facts have been described in some detail by Perram and Davies JJ. However, they may briefly be summarised as follows. 14 In April 2009, the Commissioner and the Australian Federal Police seized a large number of Ms Bai's documents from her premises in Cronulla. These documents included documents relating to the affairs of Brightfull. 15 The Commissioner later issued an amended assessment which, relevantly for these purposes, treated deposits of $526,821.97 and $476,261.86 made in October 2004 and November 2004 respectively into Ms Bai's home loan account with Westpac, as income. 16 Ms Bai's objection to the amended assessment was unsuccessful. On 28 September 2010 Ms Bai commenced a review application in the Tribunal. 17 In August 2011, Ms Bai made an application under s 37(2) of the AAT Act that the Commissioner produce to the Tribunal a number of documents which had been seized from her premises in April 2009 and were in the possession of the Commissioner. The categories of documents, the subject of Ms Bai's application, were extensive, reflecting the state of the issues in contention and the number of parties to the Tribunal proceeding at that time. However, among the documents the subject of Ms Bai's application, were documents which related to the affairs of Brightfull. 18 In response to Ms Bai's s 37(2) application, the Commissioner filed a number of affidavits. In one of the affidavits, dated 12 October 2011, Mr Alan Robert Crowe, an officer of the Australian Taxation Office (the ATO), deposed that, at his request, another ATO officer, Mr Kevin Short, had conducted a search of the remaining hard copy documents which had been seized from Ms Bai's premises which were still held by the Commissioner, and Mr Short had located two documents which related to Brightfull. The first was a contract for the sale of land (with attachments), and the second was a copy of a Westpac finance agreement for the purchase of land. 19 The Westpac finance agreement to which Mr Crowe referred in his affidavit was in fact a loan facility agreement for a bank bill business loan to Brightfull for $2 million. That loan facility agreement stated that the purpose of the loan was: "to assist with the purchase and construction of 11 Burke Road, Cronulla NSW". 20 The loan facility agreement also contained a section which was headed: "The Facilities for this Borrower will be secured by the following:-". Thereafter was listed four securities for the loan, namely, a mortgage by Brightfull over 11 Burke Road, Cronulla, a fixed and floating charge by Brightfull over all its assets and uncalled capital, a debt and interest guarantee by Ms Bai and, importantly, a debt and interest guarantee by High Trade. 21 The Commissioner did not produce the Westpac loan facility agreement or any of the other documents sought by Ms Bai in her s 37(2) application. Rather, the Commissioner filed submissions, dated 25 October 2011, objecting to the production of all of the documents sought by Ms Bai. Among the objections raised by the Commissioner was that the documents were not relevant, that the application was oppressive, and that the Commissioner was precluded from producing the documents to the Tribunal by reason of s 3ZQU of the Crimes Act 1914 (Cth). The Commissioner's submissions concluded with the following paragraph: In the event that the AAT makes an order under s 37(2), the Commissioner requests that the order be stayed or that the 'time specified in the notice' be such as to permit the Commissioner to bring an application under s 39B of the Judiciary Act 1903 (Cth) or ss 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) to test the ruling. The interaction between s 37(2) of the AAT Act and s 3ZQU(4) of the Crimes Act raises the question of general importance that has not been the subject of any decision. 22 In February 2012, Ms Bai's solicitor advised the Commissioner and the Tribunal that Ms Bai no longer intended to proceed with her s 37(2) application. 23 On 2 April 2012, Ms Bai filed an affidavit in the Tribunal proceeding. In para 101 of that affidavit, Ms Bai deposed that the two contentious deposits into her home loan account were related to the sale of two units in the Burke Road development, which had been undertaken by High Trade but in the name of Brightfull. Ms Bai said that the monies paid into her home loan account were derived from the sale of two of the units of that development which her husband, via High Trade, had paid to her loan account to reduce the family home loan. 24 On 25 May 2012, the Commissioner filed evidence in the Tribunal proceeding. 25 On 15 June 2012, Ms Bai filed an affidavit in reply. That affidavit annexed the contract for the purchase of 11 Burke Road, Cronulla, and the settlement statement in relation to the purchase of the Burke Road property. These documents named Brightfull as the purchaser of the property. The settlement statement referred expressly to the $2 million Westpac loan, the subject of the Westpac loan facility agreement which was then in the possession of the Commissioner. The settlement statement also referred to a deposit having been paid by High Trade for the purchase of the land, and to High Trade providing other funds at settlement. In her affidavit of 15 June 2012, Ms Bai said that she relied on the content of those documents in support of her evidence that the Burke Road development project, although carried out in the name of Brightfull, was "beneficially owned" by High Trade. 26 After the filing of Ms Bai's reply affidavit, and notwithstanding the express reference to the Westpac loan in the settlement statement, and Ms Bai's contention that, although in Brightfull's name, the Burke Road project was "beneficially owned" by High Trade, the Commissioner did not produce to Ms Bai or to the Tribunal, whether under cover of an objection or otherwise, a copy of the Westpac loan facility agreement which the Commissioner then had in his possession. 27 During the Tribunal hearing, Ms Bai's evidence as to High Trade's role in the financing of the Cronulla development project was challenged in cross-examination by the Commissioner. The following is a relevant extract from the transcript of the Tribunal hearing: THE D.PRESIDENT: My clear understanding was that Brightfall [sic] could not get funding and so it had – and so High Trade had to get the funding. THE INTERPRETER: No. Actually because the bank couldn't provide 100 per cent loan onto the project. THE D.PRESIDENT: What does that – what does that mean? According to this settlement statement, Westpac was advancing $2 million. That's more than 100 per cent. THE INTERPRETER: That's – the $2 million is the loan for buying the land and the construction. THE D.PRESIDENT: And who borrowed that $2 million? THE INTERPRETER: In the name Brightfall – the loan was in the name of Brightfall [sic]. However, the High Trade provide guarantor. High Trade and High Trade Construction provide guarantor. MR KASEP: Ms Bai, why is High Trade loaning money to Brightfall then? THE INTERPRETER: Because High Trade want to provide help for the Brightfall's project development because the loan borrowed – the loan from the bank was insufficient. MR KASEP: Ms Bai why is there not one record of any loan made to High Trade – by High Trade to Brightfall? THE INTERPRETER: There is record, and the High Trade kept all the records of Cronulla project construction and the records was kept in High Trade. And in April 2009, because of the search warrant, all the documents were seized by ATO and the documents was not returned and – was not returned. MR KASEP: Yes, Ms Bai. How was Brightfall repaying High Trade for this loan that we're just learning about? THE INTERPRETER: Based on the sales of the project. (Emphasis added.) 28 In his closing submissions, counsel for the Commissioner submitted that Ms Bai's evidence as to High Trade's role in the financing of the Cronulla development project, should not be accepted. Counsel for the Commissioner concluded his submissions on the impugned deposits aspect of the case in this way: Be that as it may, Ms Bai's explanation in relation to these deposits are unreliable, unsupported by any corroborative evidence and these deposits simply ought to be treated as Ms Bai's income, being income derived from the proceeds of sale of these properties. 29 After the hearing, and before the Tribunal delivered its reasons for decision, the Commissioner did not refer the Tribunal or Ms Bai to the fact that the Westpac loan facility agreement, which was still in his possession, supported Ms Bai's oral evidence that the Westpac project loan had been guaranteed by High Trade. 30 As mentioned, in its reasons for decision, set out at [5] above, the Tribunal rejected Ms Bai's evidence and, in doing so, placed emphasis on the fact that there was an absence of corroboration of Ms Bai's "assertion" that the Westpac project loan had been guaranteed by High Trade. 31 After the Tribunal's decision was delivered, Ms Bai was distressed by the Tribunal rejecting her evidence that the project loan from Westpac had been guaranteed by High Trade. Ms Bai subsequently found out from her former husband, Mr Zhang, that such a guarantee had been given and obtained a copy of the High Trade guarantee from him. 32 On 13 December 2013, Ms Bai then commenced, in this Court, an appeal against the Tribunal's decision. One of the grounds relied upon was the denial of procedural fairness. 33 In that proceeding, Ms Bai applied to the primary judge to lead further evidence and issued a notice to the Commissioner to produce the contract for the sale of the Burke Road land and the Westpac loan facility agreement, referred to in Mr Crowe's affidavit of 12 October 2011. 34 At the hearing of Ms Bai's interlocutory application on 13 June 2014 before the primary judge, the Commissioner objected to produce the documents named in the notice to produce on the basis that s 3ZQU of the Crimes Act precluded the Commissioner from producing the documents to the Court. The primary judge was unimpressed by the Commissioner's contention and during the hearing, ordered the Commissioner to produce the Westpac loan facility agreement and contract of sale to the Court. 35 However, as previously mentioned, at the hearing of the appeal, the primary judge rejected Ms Bai's procedural fairness complaint on a basis that neither party now supports. was there a denial of procedural fairness? 36 In my view, for the following reasons, there was objective unfairness in the manner in which the proceeding unfolded during the process leading up to, and at, the Tribunal hearing, which may properly be characterised as a denial of procedural fairness. Accordingly, Ms Bai's contention to that effect should be upheld. 37 In her affidavit of 2 April 2012, Ms Bai deposed that High Trade had undertaken the Cronulla development project, but the development units were held in the name of Brightfull. 38 In her affidavit of 15 June 2012, Ms Bai in explaining the two impugned deposits, repeated her evidence that albeit that the Burke Road development project was carried out in the name of Brightfull, the project was beneficially owned by High Trade. In support of this contention, Ms Bai annexed to her affidavit the settlement statement for the purchase by Brightfull of 11 Burke Road, Cronulla, which referred in terms to the $2 million loan from Westpac being provided at settlement. 39 Accordingly, by 15 June 2012, at the latest, given that the Commissioner disputed, or intended to dispute, Ms Bai's contention that it was High Trade, not Brightfull, which was the real, or in her words, the "beneficial" owner of the Burke Road project, the Westpac loan facility agreement was objectively a document "necessary to the review of the objection decision". (See, s 37(1)(b) of the AAT Act, as modified by s 14ZZF(1) of the Taxation Administration Act.) This is because, by then, it was at the heart of Ms Bai's case that although the Burke Road project had been undertaken in Brightfull's name, it was really High Trade's project. The Westpac loan facility agreement, with its reference to the guarantee obligation by High Trade, supported that claim because the fact that the loan was guaranteed by High Trade showed that High Trade bore the ultimate responsibility for the repayment of the Westpac project loan and interest, and, therefore, the financial risk of the project, lay with High Trade. The importance to Ms Bai's case of the fact that the Westpac project loan was guaranteed by High Trade, was correctly recognised by the Tribunal in its reasons for decision. 40 Also, and, in any event, the Westpac loan facility agreement was a "necessary" document because the settlement statement annexed to Ms Bai's affidavit, referred expressly to the $2 million Westpac loan, and the Commissioner disputed, or intended to dispute, Ms Bai's evidence about the financing arrangements for the Burke Road project. The loan referred to in the settlement statement, was the same loan which was the subject of the Westpac loan facility agreement which was then in the Commissioner's possession. 41 However, notwithstanding the content of Ms Bai's affidavits of 2 April 2012 and 15 June 2012, and the fact that the Commissioner disputed, or intended to dispute, Ms Bai's affidavit evidence on this issue, the Commissioner omitted to produce the Westpac loan facility agreement to the Tribunal or Ms Bai at any time up to the hearing. 42 There is no explanation in the evidence for this omission. In view of the obvious relevance of the Westpac loan facility agreement in the context of the Commissioner disputing, or intending to dispute the contentions advanced by Ms Bai, it is unlikely that the Commissioner did not disclose the document because he was of the view that it was not necessary for the review of the decision. (See, s 37 of the AAT Act as modified by s 14ZZF(1) of the Taxation Administration Act.) 43 It may be that the Commissioner and his legal advisers had simply forgotten about the existence of the Westpac loan facility agreement by the time that Ms Bai filed her affidavits of 2 April 2012 and 15 June 2012, or failed to appreciate its relevance. Or it may be that the Commissioner by his officers appreciated the relevance of the loan facility agreement to the fair determination of the Tribunal proceeding but were of the view that the document could not be produced to the Tribunal because of s 3ZQU of the Crimes Act. 44 In any event, whatever may have been the reason, the omission, prior to the hearing, to produce that Westpac loan facility agreement or otherwise to bring the document to the attention of Ms Bai or the Tribunal under cover of an objection to produce, in combination with the following circumstances, contributed to a failure in the fair conduct of the proceeding which, in my view, rendered the proceeding procedurally unfair. 45 In addition to omitting to produce the Westpac loan facility agreement to the Tribunal or Ms Bai, whether under cover of an objection or otherwise, the Commissioner's officers apparently also failed to bring the Westpac loan facility agreement, particularly, the High Trade guarantee element thereof, to the attention of counsel for the Commissioner prior to, or during, the Tribunal hearing. This led counsel to cross-examine Ms Bai on the basis that Ms Bai's version of High Trade's role in the financing of the Burke Road project, should be rejected because of the absence of corroborative evidence; and to make closing submissions to that effect. The submissions were inadvertently misleading because such evidence did exist; and, further, the evidence was in the possession of the Commissioner, but not in the possession of either Ms Bai or the Tribunal. This inadvertence misled the Tribunal into rejecting Ms Bai's evidence at [32] of its reasons for decision. 46 There is, of course, a professional obligation on a legal representative to correct any misleading impression which may have been created during a hearing if he or she subsequently realises that this has occurred. 47 In this case, the final oral submissions were made on 3 October 2012, and the Tribunal delivered its decision on 29 August 2013. It is apparent that Ms Bai's protest during her cross-examination as to the existence of relevant documents in the possession of the Commissioner (see [27] above), did not cause officers of the Commissioner to search for and examine the Westpac loan facility agreement at any time during the period between the end of the hearing and prior to the delivery of the Tribunal's decision. The consequence was that the misleading impression created during the hearing was, again unwittingly, not corrected prior to the delivery of the Tribunal's decision. 48 This objective unfairness in the conduct of the proceeding arose essentially from the fact that during the hearing, the Commissioner cross-examined and made submissions which were at odds with the true content and effect of a crucial document which was in his possession, but was not in the possession of the other party; and which he had not produced to the Tribunal or to the other party. This misleading conduct was inadvertent but it was objectively unfair and it misled the Tribunal. 49 For the following reasons, the failure of Ms Bai to pursue her s 37(2) application, does not, in my view, deprive Ms Bai of a remedy. 50 First, Ms Bai did not know the content of the Westpac loan facility agreement and did not know that the Commissioner intended to put in issue her affidavit evidence that although the Burke Road project was undertaken in Brightfull's name, it was "beneficially owned" by High Trade. 51 Secondly, Ms Bai did, in fact, during the Tribunal hearing, refer to the fact that the Commissioner had in his possession documents relating to the matters on which she was being cross-examined. However, no notice appears to have been taken by either the Tribunal or counsel for the Commissioner of Ms Bai's observations. Certainly, as I have said, Ms Bai's protest did not cause the officers of the Commissioner to revisit the content of the Westpac loan facility agreement then in the Commissioner's possession. 52 Thirdly, Ms Bai abandoned the s 37(2) application after the Commissioner threatened to appeal against any decision in her favour in order to test the issue of whether the Commissioner was precluded by s 3ZQU of the Crimes Act from producing to her or the Tribunal the seized documents. 53 Fourthly, Ms Bai's failure to pursue her s 37(2) application, does not purge the Commissioner's conduct of its misleading character and its causative consequence, with its attendant unfairness. The Westpac loan facility agreement was, at all material times, in the possession of the Commissioner, and was not in the possession of Ms Bai or the Tribunal. Throughout the whole of this time, it bore its corroborative character. It was the Commissioner, and not Ms Bai, who misled the Tribunal, by, albeit, inadvertently, misrepresenting the character of a crucial document in his possession. 54 There are two cases which bear some similarity to this case. 55 The first case is O'Sullivan v Repatriation Commission (2003) 128 FCR 590 (O'Sullivan) in which the applicant, Mr O'Sullivan, claimed that there had been a denial of procedural fairness at a hearing before the Administrative Appeals Tribunal. At the Tribunal hearing, Mr O'Sullivan was cross-examined on a tax return that, it turned out, was missing an important page of information. This misconceived cross-examination was influential in the Tribunal's decision to reject Mr O'Sullivan's claim. Both parties to the Tribunal proceeding had failed to appreciate during the hearing that the tax return was in fact incomplete. 56 On appeal to the Federal Court, Sackville J held that the cross-examination on the incomplete tax return constituted a denial of procedural fairness, notwithstanding the fact that it occurred through no fault of the Tribunal. In making that finding, Sackville J relevantly made the following comment at [49]: It is true that in the typical case of a denial of procedural fairness, the decision-maker is responsible for the breach. That does not mean, however, that the decision-maker must be personally at fault before there can be a denial of procedural fairness. In Hot Holdings Pty Ltd v Creasy (2002) 70 ALD 314; 193 ALR 90, for example, Gleeson CJ expressly stated (at ALD 318-19; ALR 95) that procedural unfairness can occur without personal fault on the part of the decision-maker. 57 The second case is R v Criminal Injuries Compensation Board, Ex parte A [1999] 2 AC 330. In that case, the House of Lords held that there had been a denial of procedural fairness in relation to the hearing by the Criminal Injury Compensation Board (the board) of a claim for compensation by a victim of criminal conduct. The relationship between the police and the board was such that the board relied on the police to bring the documents relevant to the crime in respect of which compensation was claimed, to the attention of the board. In that case, the police had failed to produce to the board a doctor's report which corroborated the oral evidence of the complainant. In the absence of the doctor's report, the board had rejected the complainant's evidence as to the nature of the injury she had suffered. 58 Lord Slynn of Hadley observed at 347: I consider therefore, on the special effects of this case and in the light of the importance of the role of the police in co-operating with the board in the obtaining of evidence, that there was unfairness in the failure to put the doctor's evidence before the board and if necessary to grant an adjournment for that purpose. I do not think it is possible to say here that justice was done or seen to be done. 59 Lord Slynn of Hadley also observed at 345: It does not seem to me to be necessary to find that anyone was at fault in order to arrive at this result. It is sufficient if objectively there is unfairness. Thus I would accept that it is in the ordinary way for the applicant to produce the necessary evidence. There is no onus on the board to go out to look for evidence, nor does the board have a duty to adjourn the case for further inquiries if the applicant does not ask for one. 60 As in the two cases referred to above, in this case also, it appears that no one was at fault. However, in my view, there was objective unfairness in the manner in which the proceeding before the Tribunal unfolded, which is to be characterised as a denial of procedural fairness. 61 In light of this conclusion, it is unnecessary for me to consider Ms Bai's contention that the Commissioner's conduct before and during the hearing contravened s 33A(1AA) of the AAT Act; and so gave rise to relief under the principle in Wei v Minister for Immigration and Border Protection (2015) 327 ALR 28. 62 It is apparent from its reasons for decision that the Tribunal was misled by the Commissioner's cross-examination and submissions into rejecting Ms Bai's oral evidence that High Trade had guaranteed the Westpac project loan, because of the absence of documentary evidence corroborating her "assertion". It cannot, therefore, be said that the denial of the procedural fairness made no difference to the outcome (Re Refugee Review Tribunal; Ex parte AALA (2000) 204 CLR 82). 63 Ms Bai's notice of contention should be upheld and her review application should be remitted to a differently constituted Tribunal for rehearing according to law. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate: Dated: 2 December 2016 PERRAM AND DAVIES JJ: 1. Introduction 64 There are four appeals before the Court. They are: Margaret Binetter v Commissioner of Taxation; Andrew Binetter v Commissioner of Taxation; Margaret Binetter for the estate of Erwin Binetter v Commissioner of Taxation; and Commissioner of Taxation v Tao Bai. 65 The first three cases involving the Binetter family are brought from decisions adverse to them made by the Administrative Appeals Tribunal ('the Tribunal'). The fourth appeal is brought from orders made by a judge of this Court, who upheld an appeal by Mrs Bai against an earlier determination by the Tribunal. 66 As will be seen, the issues raised in each appeal are not the same, but there is one issue which is common to all four appeals and which explains their conjoint listing before this Court. The issue is technical, and involves the question whether a taxpayer bears the onus in taxation appeals before the Tribunal of proving the absence of fraud or evasion where the Commissioner has previously issued an amended assessment out of time on such a basis. 67 It is convenient to deal with the appeals in the order that they are set out above. 2. Mrs Margaret Binetter's Appeal 68 Mrs Margaret Binetter lodged returns for the income years 2002 to 2007. These resulted in the issue to her of notices of assessment the latest of which was dated 27 October 2008. On 19 April 2010, the Australian Taxation Office ('the ATO') informed her that it was going to conduct an audit of her taxation affairs. On 16 November 2010, the ATO concluded that she had not returned as income in the income years 2002 to 2007 deposits made into an account with the Commonwealth Bank of Australia ('CBA') in the joint names of her and her husband, Mr Erwin Binetter, since deceased. 69 The Commissioner then decided that the earlier notices of assessment issued to Mrs Binetter for the years 2002 to 2007 should be amended to include her 50% share of the amounts in the CBA account in her assessable income. The power of the Commissioner to amend the earlier notices of assessment issued to Mrs Binetter for the income years 2002 to 2007, however, was constrained by time limits imposed by s 170 of the Income Tax Assessment Act 1936 (Cth) ('the ITAA 1936'). 70 The time limits differed as between the 2002 to 2004 income years, on the one hand, and the 2005 to 2007 income years on the other, as a result of legislative amendments. Insofar as the former are concerned, the time limit was governed by the former s 170 of the ITAA 1936, which provided that where there had been an avoidance of tax by the taxpayer, the time for the Commissioner to amend the relevant assessment was limited to four years from the date of the notice of assessment. However, by subs (2) the Commissioner could nevertheless amend an assessment at any time if he were of the opinion that the avoidance of tax had itself been due to fraud or evasion. 71 Insofar as the income years 2005 to 2007 are concerned, the general period in which amendment of a notice of assessment was allowed was two years from its date but, by s 170(1) item 5, the Commissioner could 'amend an assessment at any time if he or she is of the opinion that there has been fraud or evasion'. 72 For the purposes of this appeal, there is no material difference between the statutory requirements of s 170(2) in the income years 2002 to 2004 and those for the income years 2005 to 2007 contained in s 170(1) item 5. Both permitted the Commissioner to amend a notice of assessment issued for an income year at any time so long as he first formed the opinion that there had been fraud or evasion in relation to that year. For completeness, the difference in the language between the two sets of provisions relates to a perception that the earlier wording of s 170(2) (which turned on the identification of tax which had been avoided) was not apt to be engaged where tax credits had been fraudulently claimed (and where it could not necessarily be said that tax had been avoided). 73 It was not in dispute that the Commissioner was out of time to amend the assessments for the 2002 to 2007 income years unless he was of the opinion that there had been fraud or evasion. 74 The Commissioner did, in fact, form the opinion that there had been 'evasion' (although not fraud). In relation to the 2002 to 2004 income years, he did so on 29 July 2010. In relation to the 2005 to 2007 income years, he did so on 20 September 2011. His power to do so having then been enlivened, the Commissioner issued amended assessments for the income years 2002 to 2007 including the following amounts in Mrs Binetter's assessable income: $107,657 for the 2002 income year; $110,136 for the 2003 income year; $143,173 for the 2004 income year; $897,973 for the 2005 income year; $170,600 for the 2006 income year; and $145,839 for the 2007 income year. 75 He also imposed penalties under Division 284 of Schedule 1 to the Taxation Administration Act 1953 (Cth) ('the TA Act'), and concluded that he should not exercise his discretion to remit those penalties under s 298-20 of Schedule 1. 76 Between February 2011 and December 2011, Mrs Binetter lodged objections to the amended notices of assessment. These were disallowed in full on 19 March 2013. Those decisions were made under s 14ZY(1) of the TA Act which provides: 14ZY Commissioner to decide taxation objections (1) Subject to subsection (1A), if the taxation objection has been lodged with the Commissioner within the required period, the Commissioner must decide whether to: (a) allow it, wholly or in part; or (b) disallow it. 77 The next step for Mrs Binetter was an appeal from the objection decision of 19 March 2013. Taxation appeals are regulated under Part IVC of the TA Act and two paths are provided for such an appeal. In the case of what Part IVC refers to as a 'reviewable objection decision' (and it is not in dispute that the decision against Mrs Binetter was such a decision), s 14ZZ(1) provides relevantly that: 14ZZ Person may seek review of, or appeal against, Commissioner's decision (1) If the person is dissatisfied with the Commissioner's objection decision (including a decision under paragraph 14ZY(1A)(b) to make a different private ruling), the person may: (a) if the decision is a reviewable objection decision—either: (i) apply to the Tribunal for review of the decision; or (ii) appeal to the Federal Court against the decision; or (b) otherwise—appeal to the Federal Court against the decision. 78 The nature of these two streams of review in subss (1)(a)(i) and (ii) is, for constitutional reasons, somewhat different. The latter, to put the matter a little loosely, is concerned with the legality of the objection decision, whilst the former is concerned, subject to certain limitations, with its merits. Mrs Binetter elected to seek a review before the Tribunal, which she did by filing an application for review on 16 May 2013. Such a review is regulated by Division 4 of Part IVC of the TA Act. 79 A number of the provisions of Division 4 are significant for the disposition of Mrs Binetter's appeal, but for present purposes the principal issue may be identified by reference only to s 14ZZK. It provides: 14ZZK Grounds of objection and burden of proof On an application for review of a reviewable objection decision: (a) the applicant is, unless the Tribunal orders otherwise, limited to the grounds stated in the taxation objection to which the decision relates; and (b) the applicant has the burden of proving: (i) if the taxation decision concerned is an assessment—that the assessment is excessive or otherwise incorrect and what the assessment should have been; or (ii) in any other case—that the taxation decision concerned should not have been made or should have been made differently. (Emphasis added.) 80 The Commissioner's position before the Tribunal, and in this Court, was that the effect of s 14ZZK(b)(i) was to cast upon Mrs Binetter the onus of satisfying the Tribunal that she had not engaged in fraud or evasion in each of the relevant years. 81 The reasoning underpinning this was that s 14ZZK(b)(i) required the taxpayer to prove that the relevant assessment was excessive. In a case where the issue of an amended notice of assessment which would otherwise be out of time was authorised only if the Commissioner had formed the requisite opinion that there had been fraud or evasion, the burden was on the taxpayer to prove that the condition for the exercise of the amendment power was not met, either by proving that the Commissioner had amended the assessments without forming such an opinion or by proving that there had been no fraud or evasion. For her part, Mrs Binetter submitted both to the Tribunal and in this Court that s 14ZZK(b)(i) did not apply to the formation of opinions which had the effect of creating, or perhaps imposing, tax liabilities. On this view, there was a distinction to be drawn between provisions of the ITAA 1936 (or, where relevant, the Income Tax Assessment Act 1997 (Cth) ('the ITAA 1997')) by which the Commissioner engaged in the process of assessing the liabilities imposed by those statutes, and situations where the formation by the Commissioner of a particular opinion was itself the factum which generated the taxpayer's liability to tax or was an essential step along the way to the imposition of such a liability. Mrs Binetter pointed to a series of cases concerned with the former Taxation Board of Review that contained statements which suggested, in what were said to be largely equivalent circumstances, that the Board had always had to form its own opinion where there had been the antecedent formation of such an opinion by the Commissioner. 82 The state of the evidence before the Tribunal in this case was, to say the least, sparse. Under s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) ('the AAT Act'), a decision maker subject to review by the Tribunal is obliged by subsection (1) to provide documents to the Tribunal in these terms: 37 Lodging of material documents with Tribunal … (1) Subject to this section, a person who has made a decision that is the subject of an application for review (other than second review) by the Tribunal must, within 28 days after receiving notice of the application (or within such further period as the Tribunal allows), lodge with the Tribunal a copy of: (a) a statement setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision; and (b) subject to any directions given under section 18B, every other document that is in the person's possession or under the person's control and is relevant to the review of the decision by the Tribunal. 83 According to Mrs Binetter's submissions in this Court, the Commissioner adopted the position of providing the Tribunal under s 37(1) only the first and last page of a 10 page document dealing with the formation of his fraud and evasion opinions. It was also said that the Commissioner had not provided his reasons for decision. Whether this be so or not, the Commissioner did provide the Tribunal with the objection decision and it was that decision, rather than the earlier decision underpinning the amended notices of assessment, which was the subject matter of the review by the Tribunal under Div 4 of Part IVC. 84 In the lead up to the hearing before the Tribunal, Mrs Binetter had sought to have the Commissioner provide particulars of the fraud or evasion upon which he relied, but this invitation was declined on the basis that to do so would be inconsistent with the function being performed by the Tribunal. In effect, this was an expression of the Commissioner's view that s 14ZZK(b)(i) required Mrs Binetter to disprove fraud or evasion, and that it was not for him to prove it. On that view, since the Commissioner did not have to prove anything, the provision of particulars indicating how he would go about doing something he was not bound to do was to be seen as a redundant exercise. Despite this refusal, Mrs Binetter nevertheless filed affidavits in her case before the Tribunal, but at a directions hearing held on 13 February 2015 her representatives indicated that she would not be relying on that material. 85 At this point it was clear that the evidentiary material before the Tribunal would consist, in effect, of the expurgated fraud or evasion opinions, and the objection decision itself. If the Commissioner's view on the operation of s 14ZZK(b)(i) were correct, this would mean that the burden on Mrs Binetter imposed by s 14ZZK(b)(i) to prove that the Commissioner lacked the power to amend would not be discharged. If, on the other hand, Mrs Binetter's view were correct and the Tribunal had to form its own opinion on the issue of fraud or evasion, it was at least arguable that the material before the Tribunal would not suffice for that purpose. Mrs Binetter sought therefore to have the Tribunal refer to this Court, under s 45 of the AAT Act, the question of the correct operation of s 14ZZK(b)(i). The learned Deputy President, a former and senior member of this Court, declined that application. In any event, the Deputy President heard the matter on 4 to 6 March 2015 and delivered his decision to affirm the objection decision on 29 June 2015: Bennett and Ors and Commissioner of Taxation [2015] AATA 455 (the proceedings were conducted under a pseudonym before the Tribunal). At [30] the Tribunal agreed with the Commissioner and concluded that '[i]t is for the Applicant to disprove fraud or evasion'. 86 The first question in Mrs Binetter's appeal is whether that conclusion was correct. 87 Mrs Binetter's argument that the Tribunal erred by affirming the amended assessments without itself forming the opinion that there was fraud or evasion in relation to each relevant year relied on two propositions. 88 The first proposition was that as the relevant jurisdictional fact under s 170 of the ITAA 1936 to enliven the amendment power was the formation by the Commissioner of the opinion that there was fraud or evasion, the onus imposed on Mrs Binetter by s 14ZZK of the TA Act required her only to prove that the Commissioner had not formed the requisite opinion. 89 The second proposition was that the s 14ZZK onus to prove the absence of the fact of an opinion formed by the Commissioner 'has nothing to do with a full merits review of the opinion of the existence of the fact' (paragraph 30 of Mrs Binetter's submissions). Mrs Binetter argued that the Tribunal, on review, 'standing in the shoes of the Commissioner', must itself form the opinion there was fraud or evasion to enliven the amendment power and that that opinion becomes, by operation of s 43(6) of the AAT Act and s 169A(3) of the ITAA 1936, the authority under s 170 of the ITAA 1936 for making the amended assessment. If the Tribunal did not form an opinion (or if on appeal the Court holds that the Tribunal did not properly form its opinion), the argument went, then the jurisdictional fact necessary to authorise the amendment of the assessment under s 170 'has disappeared and not been replaced' and the amended assessment 'must be set aside as excessive under s 14ZZK' (paragraph 39 of Mrs Binetter's submissions). As in this case the Tribunal did not form its own opinion that there was fraud or evasion and the Tribunal's own opinion was required as a precondition to the authority to amend, the Tribunal could not lawfully affirm the amended assessments. 90 The fundamental difficulty with Mrs Binetter's argument is that it disregards the effect of s 14ZZK of the TA Act which by s 14ZZA of the TA Act modifies the powers of the Tribunal in relation to an application for review of a taxation decision. 91 It is well established that the term 'excessive' in s 14ZZK and s 14ZZO relates to the taxpayer's substantive liability for the amount of tax assessed, and that to discharge that onus the taxpayer must prove that the assessed amount is greater than the liability of the taxpayer under the relevant tax Act: Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614. It is also well established that satisfaction of the requirements of s 170(2) of the ITAA 1936 (and its cognate provisions) is a matter going to substantive liability, so that a taxpayer challenging the authority of the Commissioner to make an amended assessment bears the onus of proving that the statutory requirements for the authority to amend the assessment were not satisfied: McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263; Dalco at 622; WR Carpenter Holdings Pty Ltd v FCT (2008) 237 CLR 198 at [6]. 92 The seminal decision is McAndrew. In McAndrew it was held that s 190(b) (the predecessor provision to ss 144ZZK and 14ZZO) imposed the burden on the taxpayer to show that there had not been an avoidance of tax due to fraud or evasion. McAndrew was followed by the High Court in Dalco. Brennan J at 622 stated that: McAndrew's Case … establishes that s.170(2) creates a condition precedent governing the power to make an amended assessment and that the satisfaction of the requirements of s. 170(2) is not merely part of the due making of the assessment which does not affect substantive liability. It was held that s.170(2) creates a condition precedent, the satisfaction of which was not protected from challenge in appeal proceedings by s.177(1). As the amount of the amended assessment would be shown to be excessive if the requirements of s.170(2) were not satisfied, s.190(b) imposed on the taxpayer the burden of showing that the requirements had not been satisfied. In Dalco the High Court affirmed the dissenting remarks of Mason J in Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 at 89, that there was no onus on the Commissioner to show that the assessments were correctly made, and that unless the taxpayer discharged the onus imposed by s 190(b) the assessment stood. As stated by Brennan J (as his Honour then was) at 624, the Commissioner is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed. 93 In cases where the amendment power depends on the formation of an opinion by the Commissioner of fraud or evasion, the difference between merits review by the Tribunal and an appeal to the Court is that the Tribunal re-considers whether, on the evidence before it, there was an avoidance of tax due to fraud or evasion, whereas the Court will only interfere with the Commissioner's exercise of the amendment power if the Commissioner did not form the requisite opinion or the Commissioner's opinion that there was fraud or evasion is vitiated by some error of law: s 43 of the AAT Act; Shell Co of Australia v Federal Commissioner of Taxation (1930) 44 CLR 530 at 544-5; Jolly v Federal Commissioner of Taxation (1935) 53 CLR 206 at 212-4; Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360. Although the Tribunal re-examines whether, on the evidence before it, there was an avoidance of tax due to fraud or evasion, and is able to substitute its opinion for that of the Commissioner, the issue for the Tribunal is whether the taxpayer has discharged the onus of showing that the opinion that there was fraud or evasion should not have been formed, and therefore, that the statutory condition for the power to amend is not satisfied. Unless the taxpayer discharges that onus, the assessments are not shown to be excessive and the effect of s 14ZZK is that the Tribunal must affirm the amended assessments, such assessments having been made by the Commissioner in compliance with the statutory requirements: McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284 at 303; Millar v Commissioner of Taxation (2015) 67 AAR 490. In Millar Griffiths J correctly held that on a merits review before the Tribunal, the onus of proof imposed by s 14ZZK places on the taxpayer the burden of disproving fraud or evasion. 94 Mrs Binetter's reliance upon earlier decisions such as Denver Chemical Manufacturing Co v Commissioner of Taxation (NSW) (1949) 79 CLR 296 and Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation (1963) 113 CLR 475, dealing with the powers of the former Taxation Board of Review (which were cited in support of Mrs Binetter's argument), do not direct a different answer. Those cases do illustrate that the powers of the former Taxation Board of Review were not materially different from the powers now conferred on the Tribunal and so much may be accepted: see also Fletcher v Commission of Taxation (1988) 19 FCR 442 at 454. However, nothing was said in Denver (or in other cases on the power of the Board) to support the proposition that the Tribunal must form a view that there has been fraud or evasion to support the amendment power, and independently exercise any discretion conferred on the Commissioner on which a taxpayer's liability to tax depends, failing which the 'jurisdictional fact' for the imposition of the tax liability does not exist. 95 The Tribunal was correct to hold that Mrs Binetter bore the onus of proving that the conditions for the exercise of the amendment power did not exist. Mrs Binetter's contention that the Tribunal must itself on review form the opinion that there was fraud and evasion 'before there is power to amend the assessments' fails to take account of, or give due regard to, the effect of s 144ZZK of the TA Act. 96 Mrs Binetter's remaining arguments may be dealt with briefly. 97 Mrs Binetter submitted that the Tribunal had erred in concluding that the amended assessments had been made under s 167 when, in fact, they had been made under s 166. Sections 166 and 167 of the ITAA 1936 provide: 166 Assessment From the returns, and from any other information in the Commissioner's possession, or from any one or more of these sources, the Commissioner must make an assessment of: (a) the amount of the taxable income (or that there is no taxable income) of any taxpayer; and (b) the amount of the tax payable thereon (or that no tax is payable); and (c) the total of the taxpayer's tax offset refunds (or that the taxpayer can get no such refunds). … 167 Default assessment 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 or her judgment income tax ought to be levied, and that amount shall be the taxable income of that person for the purpose of section 166. 98 It is difficult, with respect, to follow Mrs Binetter's argument in relation to this, and it is best to let her submissions speak for themselves: 51. The Tribunal erred in finding that the process of assessment undertaken by the respondent was a default determination of taxable income under s 167 ITAA36. 52. The Tribunal should have found that the assessment process was by way of specific inclusion under s 170 of items of assessable income. The Tribunal should have ignored the respondent's mislabelling, at the end of that process, of the assessments as being "default" assessments under s 167. 53. The distinction affects how the appellant was required to prove the amended assessments (if authorised by s 170) were excessive: i.e., whether she, and the Tribunal, had to deal only with the respondent's inclusion of amounts received into her joint bank account or whether she instead had to prove her true taxable income. 99 This obscure argument should be rejected for two reasons. First, it is immaterial. Regardless of which provision the assessments were produced under, Mrs Binetter failed to show in relation to either that the assessments were excessive. Secondly, the Tribunal found as a fact that the Commissioner had proceeded under s 167. It is doubtful, therefore, whether the question whether the Commissioner proceeded under s 166 or s 167 is a question of law within the meaning of s 44 of the AAT Act in respect of which this Court has jurisdiction. 100 Lastly, Mrs Binetter submitted that the Tribunal had denied her procedural fairness by failing to give her an opportunity to make additional submissions on the issue of penalty. This argument should be rejected, again for two reasons. First, there was no denial of procedural fairness because she, or at least her representatives, were aware that it was being suggested to the Tribunal that a determination of the fraud and evasion issue would resolve the matter in its entirety. Mrs Binetter submitted that the Tribunal had requested the parties to submit to it a document setting out what each thought the issues to be. The Tribunal recorded this at [10] in its reasons. It is apparent that the Commissioner's document included the issue of penalty, whereas Mrs Binetter's did not. The Tribunal then decided for itself which issues it would deal with at [11], and these included the issue of penalty. If Mrs Binetter wished to be heard against that expressly articulated position of the Commissioner, the time to do so was on the receipt of the Commissioner's document. It is not now. 101 Secondly, in any event, it would have made no difference. The argument it was desired to put was that the degree of blameworthiness of Mrs Binetter might be downplayed if the reason she had lost was because of s 14ZZK rather than an actual finding that she had evaded tax. But once the Tribunal arrived at the position that the objection decision was correct and affirmed it, there could be no basis for such an argument. 102 Mrs Binetter's appeal should be dismissed with costs. 3. Mr Andrew Binetter's Appeal 103 Subject to one minor point, it was accepted by the parties that Mr Andrew Binetter's appeal should be disposed of in the same way as Mrs Binetter's. The only point was that the Commissioner had formed the opinion in Mr Andrew Binetter's case that there had been 'fraud or evasion', whereas in the case of his mother the opinion had only been that there had been 'evasion'. It was then said that such an opinion (i.e., 'fraud or evasion') was not contemplated by s 170. However, that is exactly what s 170, in terms, says. In any event, the point appears to go nowhere; certainly, where it went was not explained. 4. The Appeal of Margaret Binetter for the Estate of Erwin Binetter 104 On 5 May 2009, Mr Erwin Binetter was notified of assessments of income tax for the income years ending 30 June 2002 to 30 June 2008. He later died on 25 August 2009. It does not appear thereafter that any person applied for a grant of probate under the terms of a will or for letters of administration. It was agreed in this Court that, at all material times, the estate of the late Mr Erwin Binetter was unadministered in that sense. 105 Because it is the duty of those charged with the administration of a deceased estate to get in the assets of the deceased and pay out the debts, the failure to appoint a person to administer an estate can delay the recovery of debts by creditors. General provisions exist which permit creditors to apply for probate or letters of administration where executors fail to do so themselves: see e.g. Probate and Administration Act 1898 (NSW), s 75. 106 In the case of the Commissioner, however, special provisions also exist to aid him in the recovery of unpaid tax from unadministered deceased estates. These are contained in s 260-145 of Schedule 1 to the TA Act. It is in these terms: 260-145 Unadministered estate (1) This section applies if neither of the following is granted within 6 months after a person's death: (a) probate of the person's will; (b) letters of administration of the person's estate. (2) The Commissioner may determine the total amount of *outstanding tax-related liabilities that the person had at the time of death. (3) The Commissioner must publish notice of the determination twice in a daily newspaper circulating in the State or Territory in which the person resided at the time of death. (4) A notice of the determination is conclusive evidence of the *outstanding tax-related liabilities, unless the determination is amended. (5) A person who is dissatisfied with the determination may object in the manner set out in Part IVC if the person: (a) claims an interest in the estate; or (b) is granted probate of the deceased person's will or letters of administration of the estate. (6) Part IVC applies in relation to the objection as if the person making it were the deceased person. 107 It is this section and the definition of the expression 'outstanding tax-related liability' with which the present argument is concerned. The latter definition appears in s 995-1 of the ITAA 1997. The application of the definitions in that statute to the schedule to this one flows from s 3AA(2) of the TA Act ('An expression has the same meaning in Schedule 1 as in the Income Tax Assessment Act 1997'). The definition of 'outstanding tax-related liability' in s 995-1 of the ITAA 1997 is as follows: outstanding tax-related liability of an entity at a particular time means a *tax related-liability of the entity: (a) that has arisen at or before that time (whether or not it is due and payable at that time); and (b) an amount of which has not been paid before that time. 108 It appears that three sets of formal events occurred in relation to the late Mr Binetter's tax affairs. In order they were: (a) the issue on 5 May 2009 of notices of assessment for the income years 2002 to 2008; (b) the issue after his death of a notice of assessment dated 14 May 2010 for the 2009 income year to 'Executor For Erwin Binetter'. No such person, in fact, existed. The submissions made on behalf of the estate suggested some criticism of this error on the Commissioner's part. However, the issue of this notice followed upon the lodging of a return by somebody, not identified in this Court, purporting to be the executor of the estate. No issue arises before this Court as to whether the unidentified person has become liable to the tax as an executor de son tort; and (c) in July 2010, the Commissioner formed the view that there had been an avoidance of tax due to evasion in the 2002 to 2004 income years. On 16 November 2010, the Commissioner issued an audit finalisation letter and 'Reasons for decision' to 'Executor for Mr Erwin Binetter' setting out the adjustments to the 2002 to 2009 assessments. Amended assessments were then issued to the 'Executor' in December 2010. 109 The parties to the appeal proceeded upon the assumption that the assessments in (b) and (c) had no legal effect upon the estate itself, an assumption which appears sound and which it is convenient to adopt. 110 In March 2013, the Commissioner sought to utilise the machinery of s 260-145. This involved the making of a determination of the estate's outstanding tax-related liability. As required by subsection (3), notice of the determination was published twice in a daily newspaper. The effect of the determination was to assess as taxable income the late Mr Binetter's 50% share in the amounts deposited into the joint account with Mrs Binetter at the CBA (in effect, just as she was assessed). Mrs Binetter lodged an objection to that determination on 4 November 2014 as an interested person. The objection was disallowed on 8 December 2014. A review was sought in the Tribunal on 22 December 2014 and dismissed on 29 June 2015. 111 Mrs Binetter submitted (on the estate's behalf) that the definition of an 'outstanding tax-related liability' explicitly refers to a tax-related liability 'that has arisen at or before that time' and this, in turn, refers to the time in s 260-145(2), that is to say, the time of death. So what must exist is a 'tax-related liability' arising before death. She then points to the definition of a 'tax-related liability' in s 255-1 of Schedule 1 of the TA Act: (1) A tax-related liability is a pecuniary liability to the Commonwealth arising directly under a *taxation law (including a liability the amount of which is not yet due and payable). 112 'Taxation law' is defined in s 995-1 of the ITAA 1997 to mean 'an Act of which the Commissioner has the general administration'. This would include the ITAA 1936, the ITAA 1997, the TA Act and, importantly, for reasons which will become apparent, the Income Tax Act 1986 (Cth). 113 The argument on behalf of the estate is that a taxpayer's liability to tax only arises on the completion of the process of assessment which occurs when a notice of assessment is issued under s 174 of the ITAA 1936. This had the consequence, so it was submitted, that s 260-145 only empowered the Commissioner to determine the total amount of income tax debts that had already been created by the issue of notices of assessment under s 174 to the deceased whilst alive, and did not extend to his additional tax due under the amended assessment. 114 An assessment of this submission's correctness invites a consideration of the somewhat broader issue of the liability of the estates of deceased persons to be assessed post-mortem in respect of income earned ante-mortem. The issue may arise in two legally distinct situations. The first, more common perhaps, occurs where the deceased's estate is being administered under a grant of probate or letters of administration. In such cases, there is in a practical sense a person with whom the Commissioner may deal. Provision for the collection of tax in the case of such administered estates is made by s 260-140 of Schedule 1 of the TA Act. It is as follows: 260‑140 Administered estate (1) This section applies if: (a) a person has an *outstanding tax‑related liability when the person dies; and (b) either of the following is granted after the death: (i) probate of the person's will; (ii) letters of administration of the person's estate. (2) The Commissioner may, in respect of the liability, deal with the trustee of the deceased person's estate as if: (a) the deceased person were still alive; and (b) the trustee were the deceased person. (3) Without limiting subsection (2), the trustee must: (a) provide any returns and other information that the deceased person was liable to provide, or would have been liable to provide if he or she were still alive; and (b) provide any additional returns or other information relating to the liability that the Commissioner requires; and (c) in the trustee's representative capacity, discharge the liability and any penalty imposed in respect of the liability under a *taxation law (including any *general interest charge) for which the deceased person would be liable if he or she were still alive. (4) If: (a) the amount of the liability requires an *assessment under a *taxation law but the assessment has not been made; and (b) the trustee fails to provide a return or other information in relation to assessing that amount as required by the Commissioner; the Commissioner may assess that amount. If the Commissioner does so, the assessment has the same effect as if it were made under that taxation law. (5) A trustee who is dissatisfied with an *assessment under subsection (4) may object in the manner set out in Part IVC. (6) Part IVC applies in relation to the objection as if the trustee were the deceased person. 115 As in the case of s 260-145 (set out above), this provision uses the defined term 'outstanding tax-related liability'. Subsection (1)(a) makes clear that the liability under discussion is a liability which must have arisen on or before the deceased's death. But subsection (4)(a) explicitly reveals that one kind of liability with which the provision is concerned is a liability which requires an assessment but where the assessment has not yet been carried out. 116 Subsection (4)(a) unquestionably empowers the Commissioner to assess the trustee of the estate for tax in relation to income earned before the taxpayer's death which has not yet been assessed. Its wording permits of no other view. It is true, no doubt, that subsection (1)(a) says that the provision operates by reference to the defined concept of an 'outstanding tax-related liability'. We return to the proper construction of that term below. But even if one were able to accept the taxpayer's argument that the definition in its own terms could only apply to situations where a notice of assessment had already been issued, it is apparent that such an approach would be unworkable in s 260-140(4)(a) which is to the precise contrary. 117 The definition of 'outstanding tax-related liability' is contained in s 995-1 of the ITAA 1997, which begins with the prefatory words 'except so far as the contrary intention appears'. This definition applies to Schedule 1 of the TA Act by reason of s 3AA(2) of the TA Act. In the case of s 260-140 it is possible to say, therefore, that even if the taxpayer were correct about the meaning of the definition of 'outstanding tax-related liability' in s 955-1, he would not be correct about the meaning of that expression in 260-140, for the contrary intention plainly appears. 118 Of course, the taxpayer's case is not concerned with an estate which is being administered, but rather with the second category of case foreshadowed above, namely, the situation in which no person has been appointed to represent the affairs of the deceased. This situation is regulated by the immediately following provision, s 260-145, which has already been set out above. The section works, once again, by reference to the idea of an 'outstanding tax-related liability'. It is therefore at s 260-145 that the taxpayer's submission about the phrase is actually directed. 119 There can, however, be no reason to think that 'outstanding tax-related liability' might include a liability which has not yet been the subject of an assessment under s 260-140 (if an estate is being administered) but does not do so under s 260-145 (if it is not). There is, to the contrary, every reason to think that the meaning is the same in both provisions and in both cases includes unassessed tax. 120 That approach to the operation of ss 260-140 and 260-145 means that it is not strictly necessary to consider whether the definition of 'outstanding tax-related liability' does, on its own terms, encompass an as yet unassessed tax liability. For the reasons which follow, however, in my view it does. 121 Involved in the resolution of this issue are two questions. First, whether there is some kind of liability in a taxpayer prior to the issue of a notice of assessment; and secondly, if so, whether that liability falls within the definition of an 'outstanding tax-related liability' in s 995-1. 122 The first question is the subject of some dispute in the authorities, and it may fairly be said that it is not free from difficulty. 123 The first High Court decision to consider the matter was Commissioner of Stamps (WA) v West Australian Trustee, Executor and Agency Company Ltd (1925) 36 CLR 98 ('Mortimer Kelly's Case'), where it was held that the expression 'debts due by the deceased person' included federal tax on income earned whilst the deceased was alive but which had not been assessed during his lifetime. Assessments had been issued after Mortimer Kelly's death to his executor. The provision in question was s 88 of the West Australian Administration Act 1903. That statute provided for estate duty on the value of the estate, but s 88 permitted there to be deducted from that value 'debts due by the deceased person' at the time of death. The question, therefore, was whether unassessed federal income tax was a debt due by Mortimer Kelly at the date of his death. Section 54 of the Income Tax Assessment Act 1922 made the amount stated in a notice of assessment a debt due and payable 30 days after the service by post of the notice of assessment, and s 57 made any such amount due and payable to be a debt to the Crown. 124 A majority of the Court concluded that the underlying tax liability was imposed by the statute imposing the tax, the Income Tax Act 1922, and that within the meaning of s 88 a debt, albeit not a debt which was due and payable, arose on the earning of the income. On this view, the deceased had a tax debt even before an assessment had been issued. The majority consisted of Knox CJ, Higgins and Starke J. Isaacs and Rich JJ dissented. In their view, the Income Tax Act 1922 created no obligation to pay anything. A debt came into existence on assessment and not before. It may be that their Honours also recognised that the Income Tax Act 1922 did create some form of inchoate liability falling short of a debt, but whether this is so is not altogether clear. At 107 they said: Sec. 54 (1) says: "Income tax shall be due and payable thirty days after the service by post of a notice of assessment." Now, if nothing further were said, it might be open to some discussion whether the Legislature treated the inchoate obligation to pay whatever sum might ultimately be the amount of assessment as a "debt" as from some antecedent date, that debt becoming "due and payable" upon assessment. It would be very difficult to sustain such a proposition even if nothing more were said. Would a "debt" exist, say on 2nd July or 31st December, accruing de die in diem? In view of increased rates or possible losses, that seems impossible. Suppose the income stopped then, does the "debt" then arise? Or would it arise only on 30th June of the following year? What words in the Act make the debt arise on 30th June if it does not arise before? Questions of that kind would obviously present serious difficulties. But Parliament has settled it by sec. 57 in the only sensible way possible. Manifestly regarding all the preliminary operations as mere machinery to ascertain and establish a fixed liability, it declares that, when that liability is established—even provisionally it may be—by assessment, then there is to be a "debt." (Emphasis added.) 125 One reading of the italicised portion is that their Honours did accept that the Income Tax Act 1922 created an inchoate liability falling short of a debt. An alternate interpretation is that the statement was made only for the sake of argument. 126 Returning to the majority judgments, it is for reasons which will become apparent necessary to exercise some care in identifying the ratio decidendi of the majority judgments. There were two issues in play, both of which all members of the Court decided. 127 The first was the construction of s 88 and, in particular, the identification of the debts to which it extended. It was the view of Knox CJ that the expression 'debts due by the deceased' did not mean 'debts due and payable' (at 102), and he adopted his own earlier reasoning in Mack v Commissioner of Stamp Duties (NSW) (1920) 28 CLR 373 at 379. The relevant issue in that case was whether an indenture under which a testator had agreed, on demand, to pay £3,000 but in respect of which no demand had been made during the testator's life, was a 'debt actually due and owing' at the time of the testator's death (and hence which was required to be deducted from the value of the estate for estate tax purposes). Of this Knox CJ said (at 379): All the learned Judges held that the debts created by the indentures were debts actually due and owing by the testator within the meaning of sec. 53; and in this conclusion I agree. It is sufficient to say that there is nothing in the section to require that the phrase "debts actually due and owing" should be read as meaning "debts actually due and payable," and, on the contrary, in sub-sec. 4 of sec. 53 the expression "due and payable" is used, showing that the Legislature or the draftsman appreciated the difference between the two expressions. Moreover, the construction contended for by the respondent would preclude the deduction of all trade or other debts payable at a date after the death of a testator, and it is impossible to suppose that the Legislature meant to do this. 128 This reasoning, it will be observed, hinged in part on practical considerations concerning the position of trade creditors dealing with a deceased person. Returning to Mortimer Kelly's Case, Higgins J likewise thought that 'debt' had to be given an extended meaning and included debts 'which at the time of the death are contingent or unascertained, such as liability for calls on shares held by the deceased, liability for rent for assigned leaseholds, &c.' (at 115). Starke J was of a similar view. The expression did not require 'that the debts should be actually payable at the time of death' (at 117). Isaacs and Rich JJ dissented from the view holding that 'debt' meant 'debt'. 129 The resolution of this first issue had some influence on the second. Each of the majority thought that the liability to income tax arose from the statute imposing it, the Income Tax Act 1922, and all that the process of assessment under the Income Tax Assessment Act 1922 did was to quantify and perfect that liability. That liability was then held to be a debt within the meaning of s 88. So for example, Knox CJ said (at 105): Counsel for the appellant contended that no obligation to pay income tax was created before the assessment by the Commissioner. In my opinion this contention cannot be sustained. It is true that income tax is not payable until thirty days after assessment, but the liability or obligation to pay imposed by the Income Tax Act comes into existence on the passing of that Act. It is true also that "income tax" is defined in the Income Tax Assessment Act as meaning the income tax imposed by any Act as assessed under this Act. But this seems to me to mean no more than that the amount payable in discharge of the obligation created by the Income Tax Act is to be ascertained according to the method prescribed by the Income Tax Assessment Act. In effect, the assessment is no more than a demand for the payment of a definite sum which had not theretofore been precisely ascertained. There are certain cases in which the ascertainment of the amount of tax involves the exercise of a discretion by the Commissioner, but in the great majority of cases the amount of tax payable could be accurately determined by any skilled person conversant with the relevant facts. 130 Isaacs and Rich JJ, by contrast, thought that the only liability generated was for the debt which arose on the issue of the assessment (at 107-109) and that there was no debt at the time the income was earned. 131 The ratio of the decision appears to be that the meaning of the word 'debt' in provisions like s 88 is broad enough to capture effectively contingent or uncrystallised debts, and that unassessed tax is such a contingent or uncrystallised debt. Depending on the view one takes about the significance of the reference to the 'inchoate obligation' in the reasons of Isaacs and Rich JJ at 107, it may also be that all the Justices accepted that the Income Tax Act 1922 generated some kind of liability, although this proposition is difficult to assert with certainty. Some support for this view can be found in the dissenting judgment of Kitto J in Deputy Commissioner for Taxation v Brown (1958) 100 CLR 32 at 58, where talking of Mortimer Kelly's Case and s 88 his Honour said: …In this state of the legislation, even those members of the Court who, in Mortimer Kelly's Case, dissented from the decision that the income tax which there had been imposed, though not assessed, at the death of a deceased person was one of the "debts due by the deceased person" within the meaning of a Western Australian statute, would have held that there was, at the death of the deceased person to whose estate the present case relates, a liability actually existing. 132 In the same case Taylor J, also in dissent, noted (at 63) that Mortimer Kelly's Case stood for the proposition that income tax on a deceased person's income whilst not assessed was 'a debt due by the deceased'. The majority did not find it necessary to mention the issue. 133 It was against that somewhat complex backdrop that Gibbs J, sitting in the former Federal Bankruptcy Court, came to consider the issue in Re Mendonca; ex parte Commissioner for Taxation (1969) 15 FLR 256. Mendonca was a bankruptcy case. Mr Mendonca received on 25 November 1968 six notices of amended assessment requiring payment of a substantial amount of tax by 30 December 1968. He then went on a spending spree funded on hire purchase, borrowed $2,000 from a finance company and made withdrawals from his bank account taking it into overdraft. Gibbs J explained what happened next in these terms (at 257): …Having thus made provision for his future, he departed from his house at Watson in the small hours of the morning of 13th December, 1968, and, on the following day, with his family, left Sydney on an aircraft bound for Europe. 134 This colourful departure was an act of bankruptcy. The Commissioner presented a petition based on the notices of amended assessment. Of course, as at the date of the act of bankruptcy, the tax debt was not actually payable for another 17 days. The question for Gibbs J was whether the Commissioner had a sufficient debt at the date of the act of bankruptcy to found the petition. 135 This was a different situation to Mortimer Kelly's Case, where no notice of assessment had been issued before the death. However, as Gibbs J observed (at 259), the effect of the provisions of the ITAA 1936 as it then stood was that the tax assessed in a notice of assessment 'shall be due and payable … on the date specified in the notice' (s 204). Taken at face value, s 204 had the effect that no tax was due and payable on the day that Mr Mendonca departed Australia. It was in the search for some explanation of how it could be said that Mr Mendonca had a tax debt on that day that Gibbs J said in a well-known passage at 259: … It is now settled that the effect of these and similar provisions is that the liability to income tax is imposed by the statute itself and that assessment is only a method of ascertaining the extent of the liability, so that the tax is a debt due and owing, although not payable, notwithstanding that no assessment has been made (Commissioner of Stamps (W.A.) v. West Australian Trustee, Executor and Agency Co. Ltd.; Aitken v. Federal Commissioner of Taxation; In re Brown; cf. Deputy Federal Commissioner of Taxation v. Brown. At the dates of the acts of bankruptcy in the present case the tax in respect of the years 1962 to 1967 was therefore due and owing, and since, at those dates, the notices of assessments had been issued, fixing both the time for payment and the amount payable, the debt was for a liquidated sum payable at a certain future time. (Footnotes omitted.) 136 Despite that statement, there was some support for the proposition that s 204 meant what it said. Indeed, in Gordon Edgell and Sons Pty Ltd v Federal Commissioner of Taxation (1949) 9 ATD 43 at 46 Williams J had expressed the view that the effect of s 204 was to make a debt for tax due at the same time it was payable. If that view had been applied in Mendonca, it meant that the Commissioner could not succeed. Gibbs J's treatment appears to us to be, therefore, an explanation whose effect was to outflank s 204. 137 This is important context in the development of this line of authority. 138 The question then came before the High Court in Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1. The facts of Clyne were closer to Mendonca than they were to those of Mortimer Kelly's Case. Mr Clyne, a famous taxpayer, had been issued on 9 July 1979 with a notice of assessment requiring payment by 8 August 1979. 139 On 10 July 1979, the day after the notice of assessment had been issued, the Deputy Commissioner issued a garnishee notice to a bank with whom Mr Clyne held money on deposit requiring it to pay any money held by it of Mr Clyne's up to the value of the tax. The power to issue such a garnishee notice was conferred by s 218(1)(a)(i) of the ITAA 1936 in respect of 'the amount due by the taxpayer in respect of any tax.' Of course, at that time, the effect of s 204 was, if taken literally, that Mr Clyne's tax debt would not become due or payable until 8 August 1979, and hence cannot have been due on 10 July 1979. 140 So far as is presently relevant, there were two issues before the Court. First, given s 204, how was it that Mr Clyne could be said to have a tax debt on 10 July 1979? Secondly, if despite s 204 saying it was not due until 8 August 1979, it was in fact 'due' before then, did 'due' in s 218(1)(a)(i) mean 'due' in that sense or 'due and payable'. 141 On this second issue, all of the Justices were of the view that in s 218(1)(a)(i) 'due' meant owing and each thought that the issue of the notice of assessment made the tax owing even before the time for payment had come: see Gibbs CJ (at 10), Mason J (at 17) and Brennan (at 24). Aickin and Wilson JJ agreed with Mason J. 142 One of the submissions with which the High Court was obliged to deal was a submission that no tax was owing after the issue of a notice of assessment until the date at which payment was required. Authority for that proposition was said to lie in the decision of Williams J in Gordon Edgell and Sons Pty Ltd v Federal Commissioner of Taxation (1949) 9 ATD 43 to which reference has already been made. There his Honour said that the effect of s 204 was to make the tax due at the same time as it was payable. Hence (at 46): Service of notice of the assessment does not therefore make the taxpayer legally liable to pay the tax although its payment rests in the future. It is not a case of debitum in praesenti solvendum in futuro. But when the respondent makes an assessment of the amount of the tax and serves notice of the assessment, the taxpayer is bound to pay the tax within the thirty days or incur the penalty provided by s. 207. The Act therefore plainly contemplates and intends that a taxpayer shall pay the tax within the thirty days. I am of opinion that a taxpayer is not taxed until he is served with the notice of assessment… 143 In Clyne's Case, therefore, the High Court was confronted with the conundrum of explaining how it was possible to issue a garnishee notice in relation to a notice which had been issued but the time for payment of which had not yet arrived. That required an explanation of how a debt could be due for the purposes of s 208(1)(a)(i) which was, by s 204, not yet due or payable. 144 The Court was unanimous in its view that despite s 204 saying tax was a debt and payable on the date specified in the notice for payment, it was in fact due for the purposes of s 218(1)(a)(i) on the day it was issued. 145 For Gibbs CJ it was relatively easy to arrive at this conclusion. His own reasoning in Mendonca provided the answer (at 9-10): …These provisions suggest that the tax is due, in the sense of owing, once the taxable income during a year of income has been derived because there then arises a legal liability to pay it, notwithstanding that the extent of the liability remains to be ascertained and that payment is to be made in the future. That this is so, at least for certain purposes, is shown by the decision in Commissioner of Stamps (W.A.) v. West Australian Trustee, Executor and Agency Co. Ltd. and Re Mendonca; Ex parte Federal Commissioner of Taxation, and by statements in the judgments of Knox C.J. in Commissioner of Stamps (W.A.) v. West Australian Trustee, Executor and Agency Co. Ltd.; Latham C.J. in Aitken v. Federal Commissioner of Taxation; and Kitto and Taylor JJ. (dissenting) in Deputy Federal Commissioner of Taxation v. Brown. On the other hand it has been said that tax is not due until it is assessed (see George v. Federal Commissioner of Taxation and per Dixon C.J. in Deputy Federal Commissioner of Taxation v. Brown). This may be the correct view for most practical purposes. Certainly a notice under s. 218 could not be given before the taxpayer had been assessed, for until that time "the amount due by the taxpayer" could not be ascertained. However, all the authorities to which I have referred are opposed to the view which Williams J. expressed in Gordon Edgell and Sons Pty. Ltd. v. Federal Commissioner of Taxation and seems to have repeated in Deputy Federal Commissioner of Taxation v. Brown, that tax becomes due only when it is payable. At the latest when tax is assessed it becomes a debt due to the Crown although it is not payable until the later date specified in the notice of assessment. For these reasons when the word "due" is used in the Act, without the accompanying words "and payable", it will prima facie mean simply owing. (Footnotes omitted.) 146 Mason J took a different position. Whilst it was true that Williams J in Gordon Edgell had thought that the language of s 204 meant that tax was only due when it was payable, this was not so (at 16-17): However the correct view in my opinion is that income tax is due when it is assessed and notice is served of that assessment and that the tax does not become payable before the date fixed by s. 204. Dixon C.J., McTiernan, Williams, Webb and Fullagar JJ. in George v. Federal Commissioner of Taxation said that "tax is only due after it is 'assessed' (see, for example, s. 204)". I recognize that on other occasions members of this Court have said that "tax is a debt due and owing, although not payable, notwithstanding that no assessment has been made", in the words of Gibbs J. in Re Mendonca; Ex parte Federal Commissioner of Taxation. This approach can be traced back to the majority decision of this Court in Commissioner of Stamps (W.A.) v. West Australian Trustee, Executor and Agency Co. Ltd. (Mortimer Kelly's Case). I think that the decision is to be explained on the footing that it was held that a debt for income tax not assessed until after the deceased's death was a "debt due by the deceased" for the purposes of Acts imposing death and probate duties. The decision was so explained by Taylor J. (dissenting) in Deputy Federal Commissioner of Taxation v. Brown and this explanation derives support from the judgments of Higgins and Starke JJ., if not from the judgment of the third member of the majority, Knox C.J., in Mortimer Kelly's Case. (Footnotes omitted.) 147 Each of Aickin, Wilson and Brennan JJ agreed with this reasoning. The reasoning of Mason J nevertheless is difficult, with respect, to pin down. Mortimer Kelly's Case was not, after all, overruled. It appears that it was distinguished on the basis that it was to be understood as being about the particular phrase 'a debt due by the deceased'. As a matter of logic, however, there is no doubt that three Justices and quite possibly five Justices held in Mortimer Kelly's Case that the Income Tax Act 1922 created some kind of liability. The reasons of Mason J do not provide much guidance on the status of that reasoning, which was an essential aspect of the decision. 148 However, the context of the remarks related to whether a debt was due. The reconciliation between those remarks and Mortimer Kelly's Case would appear to be that the Income Tax Act 1922 imposed an inchoate liability to tax before an assessment was issued, but that inchoate liability was not a debt due. The only time a debt becomes due is, therefore, on the issue of a notice of assessment and it becomes payable (and, given s 204, apparently due for a second time) at the date specified in the notice for payment. 149 The existence of this inchoate liability has been accepted by the Full Court of this Court before. In Taylor v Commissioner of Taxation (1987) 16 FCR 212, the question was whether unassessed tax was a 'liability' within the meaning of s 82 of the Bankruptcy Act 1966 (Cth). Woodward and Northrop JJ surveyed Mendonca and Clyne and concluded (at 218): In the light of these expressions of opinion, it is necessary to consider whether the provisions of s 82 of the Bankruptcy Act apply where an assessment has not been issued and served at the time of the bankruptcy. It should be emphasised that this question arises from the application of an Act other than the Income Tax Act: cf what Mason J said in Clyne's case (supra). On a literal application, the liability imposed by s 17 of the Income Tax Act would seem to be a liability within s 82 of the Bankruptcy Act. In the absence of an assessment, the tax is not due, in the sense of owing, and is certainly not payable. It is a liability contingent on an assessment being issued and served. If an assessment is issued and served before the discharge of the bankrupt, does the bankrupt become subject to that liability "by reason of an obligation incurred before the date of the bankruptcy"? 150 See also Commissioner of Taxation v H [2010] FCAFC 128 at [39]-[42] per Downes, Edmonds and Greenwood JJ and Deputy Commissioner of Taxation v Jones [1999] FCA 308 at [28] per Hill, Sackville and Hely JJ, which are both to the same effect. 151 The question then is whether that kind of inchoate liability falls within the definition of 'outstanding tax-related liability'. That definition and the accompanying definition of 'tax-related liability' are set out above. Between them they include pecuniary liabilities to the Commonwealth arising under a tax law which are neither due nor payable. It is clear that this would include the kind of inchoate liability which the modern statute imposing the income tax, the Income Tax Act 1986 (Cth), would have created in this case. Consequently, the definition of 'outstanding tax-related liability' is broad enough to include tax on income earned by a deceased person but not assessed during his life. The taxpayer's argument fails. 5. The Case of Mrs Tao Bai 5.1 Introduction 152 In her return for the 2005 income year Mrs Bai returned assessable income of $13,790. Following an audit, amended assessments were issued which after objection assessed her as having had assessable income of $1,1,83,398. A substantial assessment for income tax was issued. Administrative penalties were also imposed. An appeal to the Tribunal was partially successful. A further appeal to this Court succeeded when the primary judge found that the Tribunal had erroneously applied the criminal standard of proof. The Tribunal's decision was set aside and the matter remitted for further hearing. From that conclusion the Commissioner now appeals. For her apart, Mrs Bai renews an argument that she unsuccessfully pursued before the primary judge that the Tribunal had denied her procedural fairness. She also advances the argument pursued in the Binetters' appeals that the Tribunal had to form its own view on fraud or evasion. It too was rejected by the primary judge. In relation to those two matters Mrs Bai cross-appeals. 153 It is convenient to deal with these issues in the following order: (a) the procedural fairness issue; (b) the criminal standard of proof issue; and (c) the question of fraud or evasion. 5.2 Procedural Fairness 154 As mentioned above, this case concerns only Mrs Tao Bai's liability to income tax (and penalties) in the 2005 income year. The evidence before this Court did not disclose when Mrs Bai's return for that year had been filed or when the initial notice of assessment was issued in respect of it. What is clear, however, is that for the 2005 year she returned modest assessable income of only $13,790. On 18 October 2006, the Commissioner commenced an audit into Mrs Bai's taxation affairs. This audit concerned income years apart from 2005, but those years are not presently relevant. 155 On 19 June 2008, an official formed the opinion that there had been fraud or evasion by Mrs Bai in relation to the 2005 income year for the purposes of item 5 of the table to s 170(1) of the ITAA 1936 thereby, as explained above at paragraphs [70]–[73], empowering the Commissioner to issue an amended notice of assessment at any time. 156 Before any amended assessment was issued, however, search warrants were executed at six locations including Mrs Bai's own residence. These warrants related to the position of several taxpayers quite apart from Mrs Bai. Hard drives, electronic devices and a large volume of paper were removed from the various premises. We return to the detail of these seizures below, but for present purposes their general relevance relates to a contention by Mrs Bai that she has experienced difficulty in discharging the burden cast upon her by s 14ZZK of the TA Act because her tax records were taken by the Commonwealth. 157 On 22 June 2009, following the audit, a Deputy Commissioner of Taxation concluded that Mrs Bai had substantially understated her income for the 2005 income year. He concluded that the following deposits into accounts in her name should have been included in her assessable income: HSBC account $200.00 CBA account $80,000.00 CBA credit card $71,324.94 Westpac account $1,018,083.83 Total $1,169,608.77 158 He found that her assessable income for the 2005 income year had been understated by some $1,169,608.00 and should have been $1,183,398.00. In consequence, there had been a tax shortfall of $558,570.73. He also concluded that Mrs Bai had been reckless in relation to the misstatement of her income for that year in her return, and imposed an administrative penalty of 50% of the tax shortfall, that is to say, $279,285.35. On the same day, 22 June 2009, the Commissioner issued an amended notice of assessment for the tax shortfall in the 2005 year and (presumably) a notice of assessment as to administrative penalty for that year, too. 159 On 21 August 2009, Mrs Bai objected to the assessment for the 2005 year. The deposited sums set out above were totals of a much larger number of smaller deposits. By her objection and in her subsequent proceedings before the Tribunal, Mrs Bai experienced some limited success in demonstrating that a number of these deposits were not income. There were, however, three deposits where this was not so and it is these three that lie at the heart of the first issue. They were made into Mrs Bai's account with Westpac as follows: 11 October 2004 $15,000.00 15 October 2004 $526,821.97 5 November 2004 $476,261.86 160 During the course of the objection process, Mrs Bai provided an explanation for the source of these deposits. The explanation was this: at the suggestion of her husband, Mr Li Zhang, she had purchased a property for $2.9 million at Sylvania Waters. Mr Zhang had arranged the finance from Westpac and the deposit. She said that the three deposits into her Westpac account had been made by Mr Zhang and had been used by her to reduce the indebtedness to Westpac. This explanation was given by Mrs Bai in an affidavit dated 30 January 2010 which was provided to the ATO in the course of the objection process on 12 February 2010. 161 She also provided a statement from Mr Zhang dated 19 February 2010. Mr Zhang explained that he was a director of High Trade Company Pty Ltd ('High Trade'). In 2001, it had won a tender to develop the Kogarah Town Square project. This required High Trade to be capitalised. This Mr Zhang said he did by borrowing HK $6 million from an unidentified friend overseas. He then on-lent these funds to High Trade. According to Mr Zhang, and this is of significance in what follows, this was recorded as a directors loan. 162 Mr Zhang went on to explain that in subsequent years, when High Trade's cash flows had improved, he requested the repayment of his loan. This was done and Mr Zhang says he directed High Trade to pay the three amounts into Mrs Bai's Westpac account to reduce the amount of her loan with Westpac. No mention was made of repaying the unidentified friend in Hong Kong. 163 The objections officer was unimpressed by Mr Zhang's evidence because the transactions did not appear in High Trade's journal or ledger entries. Because of this, he reasoned in the objection decision apparently delivered on 27 August 2010 that Mr Zhang's account was not a 'reliable explanation' of what transpired. There being no other explanation put forward by Mrs Bai, he concluded that Mrs Bai had not demonstrated (as s 14ZZK required) on the balance of probabilities that the three deposits were not income. 164 Nevertheless, whilst rejecting the claims made by Mrs Bai in relation to the three deposits, the objections officer did accept other aspects of her objection. These other items are not material to this particular issue, but they do explain why the Commissioner issued another amended assessment for the 2005 income year on 20 October 2010. This was in the amount of $1,163,498.00 upon which shortfall tax of $548,919.23 was due. This was $9,651.50 less than the initial amended assessment of $558,570.73 reflecting Mrs Bai's modest success. The administrative penalty was reduced correspondingly. 165 On 28 September 2010, Mrs Bai applied for a review of the objection decision in the Tribunal. In preparation for the hearing in the Tribunal, Mrs Bai affirmed an affidavit dated 2 April 2012 in which she gave a new explanation of the source of the three deposits. The difference from her previous version was that the loan by Mr Zhang to High Trade was no longer said to have been advanced by him to assist in the development of Kogarah Town Square. Instead, it was now said to have been used by High Trade to develop, this time not a town square in Kogarah, but instead a block of six units at 11 Burke Road, Cronulla. This property, perhaps confusingly, had not been held in the name of High Trade but instead had been held in the name of another entity, Brightfull. When units 4 and 6 of the Cronulla property were eventually sold, High Trade used the proceeds to repay the loan from Mr Zhang and he, in turn, directed High Trade to pay the proceeds to Mrs Bai (not apparently to the unnamed friend in Hong Kong) who then used them to reduce the amount of the loan from Westpac which she had used to purchase the Sylvania Waters property. The deposit on 15 October 2004 of $526,821.97 represented the proceeds of sale of Unit 6 less a $150 settlement fee. So too, the deposit of $476,261.86 into Mrs Bai's Westpac account on 5 November 2004 was the proceeds of Unit 4 less a settlement fee of $150. The settlement sheets for both conveyances were included by Mrs Bai with her affidavit in the Tribunal, and these did show that these two sums appeared to be the proceeds of the unit sales. Those copies were not before this Court, but it did not appear to be a matter in dispute. 166 This may have left it a little mysterious why High Trade had placed the property in the name of the entity Brightfull. In a reply affidavit dated 15 June 2012, however, Mrs Bai returned to this question. She said (at 6.3) that the purchaser of the Cronulla property had been Brightfull but that the property was, nevertheless, beneficially owned by High Trade. She attached a copy of the settlement statement for the purchase and the front page of the contract and these did, indeed, show that Brightfull was the purchaser of the property. The settlement sheet recorded that the vendors (a Mr and Mrs Maurici) were to receive $1,611,394.73 which was to be accounted for as follows: Vendor's allowance for water usage $30.58 Deposit paid by High Trade $160,000.00 Westpac Banking Corp $2,000,000.00 Balance settlement funds from High Trade $331,364.15 Loan Funds received by High Trade -$880,000.00 $1,611,394,73 167 It was unclear from the settlement sheet who had borrowed the $2 million from Westpac. The last two entries on the settlement sheet also suggested that, in substance, there was a net flow of funds to High Trade funded in part by the Westpac loan. In any event, the characterisation placed upon all of this by Mrs Bai was that High Trade was the beneficial owner of the property at Cronulla. 168 The hearing before the Tribunal took place over seven days on 24 to 28 September and 2 to 3 October 2012. Mrs Bai was cross-examined. The contention in her affidavits had, to that time, been that the beneficial owner of the Cronulla development was High Trade. But those affidavits did not clearly explain what Brightfull's role was. 169 Under cross-examination, Mrs Bai gave a different (and third) version of events. It was now said that the developer of the project had been Brightfull and that High Trade had been both a lender to it and had also provided a guarantee to Westpac to allow Brightfull to borrow money for the Cronulla project. Mrs Bai gave evidence to this effect at T333.41-334.14 which appeared to characterise the $331,364.15 appearing in the settlement sheet (there recorded as 'Balance settlement funds from High Trade') as a loan by High Trade to Brightfull. Presumably, a similar position was taken in relation to the deposit although this is not altogether clear. As for the $2,000,000 loan from Westpac also recorded in the settlement sheet, her evidence was that this had been borrowed by Brightfull (T339.3-339.5) with High Trade providing a guarantee of this loan. 170 Pausing there, it is worth observing that the settlement sheet is arguably consistent with the second and third versions of Mrs Bai's case (although not the first). If Brightfull was effectively a nominee for High Trade, then the $331,364.15 could be seen as the settlement of trust monies and the Westpac loan could be a trust obligation. On the other hand, the settlement sheet is also consistent with the loan/guarantee structure described by Mrs Bai in her oral evidence to the Tribunal. 171 At several points in her cross-examination, Mrs Bai was challenged with the suggestion that the concept of a loan by High Trade to Brightfull made no sense if the investor was High Trade and not Brightfull: see, for e.g., T334.5, T334.46, and T335.11. At T339 this aspect of the cross-examination crystallized into the exchange which is relevant to Mrs Bai's case in this Court on procedural fairness. It was in these terms (T339.7-19): MR KASEP: Ms Bai, why is High Trade loaning money to Brightfall then? THE INTERPRETER: Because High Trade want to provide help for the Brightfall's project development because the loan borrowed – the loan from the bank was insufficient. MR KASEP: Ms Bai, why is there not one record of any loan made to High Trade – by High Trade to Brightfall? THE INTERPRETER: There is record, and the High Trade kept all the records of Cronulla project construction and the records was kept in High Trade. And in April 2009, because of the search warrant, all the documents were seized by ATO and the documents was not returned and – was not returned. (Errors in original.) 172 There were, in fact, two documents in existence which, so Mrs Bai submitted, recorded a loan by High Trade to Brightfull. The first of these was a loan agreement between Westpac as lender and Brightfull as borrower dated 12 December 2002. It was a $2 million facility to 'assist with the purchase and construction of 11 Burke Road, Cronulla'. Interest and fees on the loan were to be capitalised. The loan was to be secured by four securities: a mortgage granted by Brightfull over the land situated at 11 Burke Road, Cronulla; a fixed and floating charge over all of Brightfull's assets and uncalled capital; a debt and interest guarantee by Mrs Bai; and a debt and interest guarantee by High Trade. 173 It is not necessarily self-evident that this provided direct evidence that High Trade had lent the $331,364.15 (or the deposit), but it does suggest that Brightfull's role involved borrowing money for the development. It also arguably supports a case that the developer was Brightfull, with High Trade's role being, in part, as a guarantor of Brightfull's facilities with Westpac and, in part, as a creditor. 174 The second document was a guarantee and indemnity between various High Trade entities, Mr Zhang and Mr and Mrs Maurici, the vendors of the premises at 11 Burke Road, Cronulla. Under it High Trade guaranteed the performance by Brightfull of its obligations under the contract of sale. Mrs Bai's evidence under cross-examination had, it is true, touched upon a guarantee given by High Trade of Brightfull's obligations, but these were its obligations to Westpac (T339.3), not the vendors. Contrary to Mrs Bai's submissions, this document does not therefore corroborate her case. It may be put to one side. This perhaps is not a conclusion of great moment, since the loan agreement with Westpac does refer to a guarantee by High Trade and it may be reasonably inferred, at least for the purposes of a procedural fairness argument, that such a guarantee may well have been executed. 175 It is therefore appropriate to proceed upon the basis that the Westpac loan document of 12 December 2002 was capable of corroborating the new version of events that Mrs Bai gave in the witness box. 176 Following Mrs Bai's oral evidence submissions were made. At T414 Counsel for the Commissioner submitted: In relation to the assertions that are made in relation to loans that were made to High Trade and the repayment of loans there is very little evidence that is capable of corroborating those assertions. It would certainly seem that monies were provided in some capacity by Ms Bai to High Trade, but it's the characterisation of those funds in which there is absolutely no corroboration. There's no loan account. None of these loans appear to be reflected in the High Trade ledger. You recall, Deputy President, I referred you to in relation to Mr Chang's proceedings the passage extracted at paragraph 15 of my memorandum from the decision of Hill J in Imperial Bottleshops Pty Ltd about the requirement or the expectation that there be some sort of corroborative evidence in relation to the assertions that are made by a taxpayer. Well, that statement equally applies in these proceedings. There is very little evidence that corroborates the assertions that Ms Bai makes in relation to loans that were said to have been advanced to High Trade and the repayment of those loans. One would expect to see very clear evidence of those sorts of transactions, yet there appears to be none, or very little. 177 The Tribunal, in effect, accepted this submission at [32]: 32. Ms Bai's explanation is hard to understand. On the face of it, Brightfull (a company owned and controlled by Ms Bai, not her husband) was the registered proprietor of the property. The borrowing from Westpac appears to have been in Brightfull's name; no document supporting the assertion that the loan was guaranteed by High Trade has been produced. Construction work undertaken by Constructions was invoiced to Brightfull and apparently paid. When Brightfull sold the units the net proceeds totalling over $1 million were paid to Ms Bai (the owner and controller of Brightfull, the property owner) personally. Ms Bai's explanation does not satisfy me that those payments do not form part of her assessable income. (Emphasis added.) 178 The loan agreement of 12 December 2002 arguably could have leant material assistance to Mrs Bai's case in relation to the italicised portion. Mrs Bai's submission, in a nutshell, is that the Commissioner did have the loan agreement because it had been seized from her under warrant on 15 April 2009. Furthermore, not only did the Commissioner have the document, but the consequence of his having it was that she did not. There was, therefore, a distinct procedural unfairness in the Commissioner submitting to the Tribunal (and in the Tribunal then finding) that there was no corroborative material. This unfairness was said to have been exacerbated by the fact that the Commissioner had refused to return the seized documents to Mrs Bai. Finally, when there was brought to account the fact that s 14ZZK of the TA Act required Mrs Bai to prove that the assessment was excessive, the apparent unfairness was aggravated. How could she discharge her burden of proving the assessment was excessive when the Commissioner had taken the documents which might assist her in doing so and would not return them to her? Further, how could it be fair for the Commissioner to submit that her account was uncorroborated when he held the very corroborating document himself which, at the same time, he was refusing to return to her? 179 On its face, and couched in general terms, this argument is attractive. It requires, however, close attention. It is useful to begin with some consideration of the materials which were seized, their volume and Mrs Bai's efforts to obtain access to them. 180 As we have said, search warrants were executed on 15 April 2009. Mrs Bai gave evidence about this in the Tribunal. According to her affidavit of 2 April 2012, she had on that day been absent from her home on holidays in the Hunter Valley. It was in her absence that the Australian Federal Police together, according to her, with officers of the Commissioner gained access under warrant to her home in Cronulla. A number of items were removed, including a filing cabinet. Following demands from her solicitors, the filing cabinet was returned but without some of the documents it had contained. Evidence from an officer of the ATO as to what was seized from the Cronulla premises established that the Westpac loan agreement was part of that material. An inventory of what had been seized was kept, and the loan agreement was item LIZ001 in that record. 181 In the course of preparing for the hearing in the Tribunal, Mrs Bai's solicitors sought access to some of the material held by the Commissioner. The first such request was made on 7 February 2011, and as a result the Commissioner augmented the T documents which had been filed. By a letter dated 1 March 2011, however, Mrs Bai's solicitors sought further documents. This commenced a process which culminated in the preparation by Mrs Bai's solicitors of an application under s 37(2) of the AAT Act requiring production by the Commissioner of a broad range of documents. This application appears to have had its genesis at a directions hearing in the Tribunal on 2 March 2011, at which procedural directions were made for the preparation of such an application. 182 Submissions were produced in relation to that application on 14 March 2011, by which time it appeared that the request was relatively broad in scope. It is useful to interpolate at this point that, as then constituted, the proceedings involved two taxpayers and several income years. Correspondingly there were more entities involved than just Brightfull and High Trade. Indeed, the submissions sought documents relating to five companies which did, however, include Brightfull and High Trade. The documents sought were those which recorded or related to the making of payments to or from Mrs Bai, Mr Zhang and another man, Mr Peter Chang. The range of documents sought was very broad and included, relevantly, loan agreements. 183 The Commissioner resisted production. Evidence elicited on his behalf suggested that the quantity of material held by him was very large, for it appeared that several warrants had been executed in relation to a number of people at multiple premises. Further, a second set of warrants had been executed on 17 February 2010. The material seized by the Australian Federal Police was provided to the ATO pursuant to s 3ZQU(1)(a) of the Crimes Act 1914 (Cth) for the purpose of the ATO investigating offences under the Criminal Code. There is no need to set out that section. It suffices to observe that it did not authorise the sharing of documents with the ATO for the purposes of assessing income. Evidence was given by an ATO solicitor on the s 37(2) application, which indicated that none of the material seized under warrant by the AFP and shared with the ATO under s 3ZQU(1) had been seen by the officer who had determined the objection decision. 184 The solicitor went on to explain that the material seized was very voluminous. In relation to physical documents, the total volume of paper was in the order of two to three pallet loads. Insofar as electronic records were concerned, there were approximately 300 million pages. She estimated that it would take several months to go through the material in response to, inter alia, Mrs Bai's application. The evidence went into detail about the nature of the problems which existed (such as, for example, the format of the data being such as not to permit key word searching). This affidavit was prepared on 21 April 2011. The Commissioner continued his preparations for the s 37(2) application as the year progressed. On 12 October 2011 an affidavit of an ATO official, Mr Crowe, was delivered. He was the ATO officer in charge of the on-going investigation which had resulted in the issue of the search warrants. He gave evidence that, in fact, many of Mrs Bai's documents had been returned to her. He also gave this evidence: 15. On 4 October 2011 I requested Kevin Short a member of my team to review all of the remaining hard copy documents held by the ATO which had been seized from the Cronulla premises. 16. I am informed by Kevin Short and believe that two documents relating to Brightfull Pty Ltd were located. One is a Contract for Sale of Land (with various attachments) and the other is a copy of a Westpac finance agreement for the purchase of land. These documents were located in item LIZ001 on the property seizure record. 185 This was important evidence. It shows that from 12 October 2011, Mrs Bai's solicitors had been explicitly informed that the Commissioner held the Westpac loan agreement for the Cronulla property. 186 At the same time, and in parallel, a debate was taking place between the parties about the degree of access which should be given to certain hard drives. That debate is not material to the issues relating to the loan agreement, and although some attention was devoted to it in argument, no more need be said about it in these reasons. 187 On 10 February 2012, Mrs Bai's solicitors indicated that they would not be pursuing the s 37(2) application. In this Court Mrs Bai gave evidence about this decision. Paragraphs 12 to 18 of her affidavit of 30 April 2014 were as follows: 12. The Respondent resisted my application on grounds that included that (i) the documents were not considered relevant to his objection decision (ii) I had not proved that they would be relevant to the hearing in any way (iii) I could obtain them from other sources (iv) searching for the documents requested would potentially cost $140,000 and (v) I should only be entitled to seek specific documents. At Tab 3 of the Exhibit is a copy of the Respondent's submissions on this application. 13. At this time, the Respondent had not ever suggested that he believed that High Trade had not provided a guarantee to Westpac or that High Trade had not provided funding to Brightfull. Nor could he properly make that suggestion, because the documents in his possession showed it to be untrue. 14. If the Respondent had made such a suggestion, then I would have proceeded with my application for those specific documents and made particular efforts to obtain them from other sources. 15. Ms. Luk decided not to contest the Respondent's strong opposition to providing me with all the documents that he had seized. She had agreed to represent me on a no win no fee basis. Rather, Ms. Luk followed up the Respondent's suggestion by seeking access to the 4 hard drives provided by the ATO to High Trade's earlier legal representative Ernst & Young. She engaged a forensic data expert to examine the hard drives. 16. Having regard to the data expert advice, I believe that two of the hard drives contain electronic images that could only be viewed using a specialized computer, and one of the hard drives was corrupted/not initialized and could not be accessed. I also asked through Ms. Luk if the ATO could offer help with these two matters, but that request was unsuccessful. At Tab 4 of the Exhibit is a copy of Ms. Luk's letter to the ATO. 17. Before the Tribunal hearing I also rang my ex-husband Li Zhang, who at that time was living in China, to ask him if he could obtain any documents. He told me that he had obtained electronic versions of the documents seized by the ATO. He said the task would be huge and that some of the files could not be read properly. However he said he would review the files whenever time was available and he would do what he could about those files with difficulties. 18. As I have said, until the hearing I did not know that the Respondent would be making the suggestion that no High Trade loan documents existed or that the matter of High Trade's guarantee would take on such importance for the Tribunal. Had I realized the importance of the Westpac loan document and the guarantee given by High Trade, I would have insisted on waiting to obtain the relevant documents, notwithstanding the costs and time involved. 188 There are a number of aspects of this which deserve emphasis. First, paragraphs 13 and 18 suggest surprise on Mrs Bai's part that the Commissioner's counsel had submitted that there appeared to be no evidence that High Trade had provided a guarantee to Westpac or lent funds to Brightfull. However, it needs to be kept in mind that there was no occasion for the Commissioner to have referred to the loan documentation until, unexpectedly, Mrs Bai gave for the first time a different account in the witness box of the relationship between Brightfull and High Trade. It was only when Mrs Bai went off piste from her own affidavit evidence (that the investor was High Trade with Brightfull a mere nominee) and reformulated her account as involving a loan/guarantee by High Trade to Brightfull that the need for making such a submission arose. The unexpected development in paragraphs 13 and 18 has to be seen in a context, therefore, where it had been caused by Mrs Bai's own assertion of a new case from the witness box. That context makes it difficult to put the blame for what happened at the feet of the Commissioner's representatives. More is this so when the ATO officers involved in the objection process have never seen the material which had been seized under warrant (which, it will be recalled, included the loan agreement). 189 Secondly, Mrs Bai's solicitors had been told by means of Mr Crowe's affidavit that the Commissioner held, amongst the documents seized, the Westpac loan agreement. Once counsel for the Commissioner submitted that there was no evidence of a loan or a guarantee by High Trade, it was entirely within Mrs Bai's abilities to obtain the loan agreement from the Commissioner by summons. This was not done. 190 Thirdly, that observation is particularly material when one takes into account the fact that Mrs Bai was represented at the hearing. Not only that, she had been represented in relation to the abandoned s 37(2) application. 191 Fourthly, it may well have been the case that production of all of the material seized under warrant would have been onerous for all concerned. But that production was not necessary. Only Mrs Bai could have known that she was going to give entirely unforeshadowed evidence about the loan and the guarantee. The proper course would have been for this new case to have been advanced in a fresh affidavit, rather than disgorged unexpectedly during cross-examination. Had that approach been taken, it would have focussed Mrs Bai's representatives (and Mrs Bai) on the need for corroborating evidence. This, it would have been obvious at that point, would have included the loan agreement. Given that the Commissioner had told Mrs Bai's solicitors that he held the loan agreement, its production could readily have been arranged. 192 These matters rather suggest that the procedural disadvantage of which Mrs Bai complains is something of an own goal. It is not that it would not have been convenient if the Commissioner had volunteered the loan agreement – it would have been, no doubt. But we can perceive no procedural unfairness in the way in which the hearing was conducted. 193 The trial judge rejected Mrs Bai's procedural fairness case on the basis that she had both documents at the time of the Tribunal hearing. In this Court, both parties agreed that this was not correct. Nevertheless, for the reasons just given, Mrs Bai's claim that she was denied procedural fairness should be rejected. 5.3 The Standard of Proof Issue 194 A different controversy upon which the Tribunal was called to decide concerned an alleged arrangement under which Mr Zhang would pay Mrs Bai $80,000 per year towards her living expenses. This arrangement was said to explain some of the deposits which had appeared in her accounts. The Tribunal was not hostile to this kind of explanation in principle, but it did not accept it on the facts before it. It reasoned this way: 43. Twenty of the deposits are described by Ms Bai as payments "arranged by my husband for family expenses" or something similar. They total $358,788.30 over four income years. (There is an additional deposit of $44,500 which bears the same description, but the Commissioner removed this from Ms Bai's assessment as an instance of double counting since it was also included in Li Zhang's assessment.) 44. Ms Bai's explanation of these deposits is that she and Mr Zhang came to an arrangement by which he would pay her $80,000 per year towards her family expenses. That in itself, conceptually, is not unusual. What is unusual is the irregular nature of the payments, the inconsistent amounts, the fact that he paid more than she says he agreed to pay – over 25 per cent more – and the fact that these payments are said to have been made during periods when the High Trade companies were repeatedly forced to borrow money (not only from banks, but also from associates, even employees) to fund their activities. That makes it difficult to accept that Mr Zhang was – at any stage during the relevant years – able to pay amounts of that magnitude to his wife, for "family expenses". 45. This alleged $80,000-a-year arrangement is said to be the justification for the following payments: • $15,000 on 8 July 2002; • the next amount, $33,034.30, over a year later, on 29 July 2003; • two days later, $18,700; • nothing further until 16 April 2004, $8,500; • five days later (21 April 2004), $14,800; • one month later (18 May 2004), $41,000; • six weeks later (28 June 2004), $15,000. 46. Meanwhile, on 24 February 2004, Ms Bai said that she lent $50,000 of her own money to High Trade. 47. Her explanation simply does not ring true, and I do not accept it. 48. As a result, there is no satisfactory explanation for these deposits. It follows that I cannot exclude the possibility that these are receipts of income that Ms Bai knowingly failed to declare. In other words, and in respect of each of the relevant years, I am not satisfied that evasion was not present. 195 Before the primary judge, and on appeal, it was submitted that the second sentence of [48] involved the impermissible imposition of the criminal standard of proof. The trial judge accepted this submission in these terms: 31 There is a substantive difference in requiring the exclusion of a possibility and the conventional civil onus of proof of establishing a matter on the balance of probabilities. It is one thing not to be satisfied about a matter because, weighing all the evidence, the decision-maker is not persuaded that it is more likely than not that a fact existed or did not exist, and quite another thing to require the proof of that matter by excluding all other possibilities. The latter is akin to applying the criminal onus of proof beyond reasonable doubt. The difference in onuses cannot be elided by treating the Tribunal's statement of why it was not satisfied that there was no evasion as a mere slip of expression or an otherwise legally correct application of the standard of proof: see the discussion by Weinberg, Bennett and Rares JJ in relation to the civil onus of proof in judicial proceedings in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 at 479-482 [29]-[38]. 32 At no point in its reasons, including in [22]-[25] where it discussed the onus of proof, did the Tribunal refer to the balance of probabilities or to a test other than that it said that it had applied in [48] of its reasons. It did, however, expressly refer at [23] to what Brennan J had said in Dalco 168 CLR at 624 that the Commissioner was entitled to "rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment". Thus, when the Tribunal used the expression "exclude the possibility" in [48] of its reasons, it appears to have related this to Brennan J's expression of "deficiency in proof" of the excessiveness of an assessment. It appears to have reasoned that there was a deficiency in the taxpayer's proof of excessiveness in the Commissioner's opinion that there was evasion because she had not excluded a possibility, relevantly for the amended 2005 assessment, that the two contentious receipts were not income. 33 I am satisfied that the Tribunal applied the wrong onus of proof imposed on the taxpayer by s 14ZZK(b)(i) to its consideration of whether the Commissioner's opinion, that there was fraud or evasion, was excessive, i.e.: that the taxpayer had failed to disclose income in her 2005 return and so evaded or avoided the correct assessment of her taxation liability. That was the criterion that underpinned the Commissioner's power to amend the 2005 assessment: WR Carpenter 237 CLR at 205 [10]. As the Tribunal noted at [51], had she established this part of her objection, the whole amended 2005 assessment would have been invalid and the original assessment would have remained in place. 196 In a nutshell, his Honour's criticism was that to require Mrs Bai to exclude any possibility that the receipts were income was to impose a much higher standard of proof than was required. 197 The Commissioner made two submissions about this. One was that this was not a reasonable interpretation of what the Tribunal had actually done, particularly when regard was had to the well-known principle that the reasons of an administrative decision-maker should not be examined minutely with an eye keenly attuned to the perception of error: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272 per Brennan CJ, Toohey, McHugh and Gummow JJ. The second argument was that even if the Tribunal had impermissibly applied a higher standard of proof than it should have, this was an immaterial error. It was immaterial, so the argument ran, because the Tribunal's conclusions at [48] followed from its earlier conclusion that it did not accept Mrs Bai's account of how the money came to be in her account. Once that conclusion was reached, the only result then open to the Tribunal was that she had not discharged her onus under s 14ZZK(b)(i). Put another way, Mrs Bai was required to prove on the balance of probabilities that the amended assessment was excessive. The only way she sought to accomplish that was by giving a particular account as to the origin of the deposits. That account was rejected. There was no other explanation put forward by Mrs Bai as to where the funds might have come from. The application of the civil standard could only, therefore, have led to her failing to discharge the onus. 198 In this Court Mrs Bai relied upon the reasons of the primary judge to support his Honour's conclusion on this issue. 199 The Commissioner's primary submission should be accepted for three reasons. 200 First, the task at hand is to discern what the Tribunal's reasons were for its decision. In the case of the reasons of an administrative decision-maker, this is a task undertaken with an understanding that such reasons may not have been prepared with the same care as judicial reasons. In this case, so far as [48] was concerned, the task for a reviewing Court is not to work out whether the paragraph might, or could be, construed as imposing the criminal standard of proof. It is, rather, to determine whether that is in fact what the Tribunal did. 201 Secondly, paragraphs 47 and 48 were one instance of fact finding by the Tribunal. There were others, including some where Mrs Bai was successful in her submissions. For example, the Tribunal rejected Mrs Bai's contention about the deposits of $526,821.97 and $476,261.86 in these terms at [32], which is set out above at [177] but which it is convenient here to restate: 32. Ms Bai's explanation is hard to understand. On the face of it, Brightfull (a company owned and controlled by Ms Bai, not her husband) was the registered proprietor of the property. The borrowing from Westpac appears to have been in Brightfull's name; no document supporting the assertion that the loan was guaranteed by High Trade has been produced. Construction work undertaken by Constructions was invoiced to Brightfull and apparently paid. When Brightfull sold the units the net proceeds totalling over $1 million were paid to Ms Bai (the owner and controller of Brightfull, the property owner) personally. Ms Bai's explanation does not satisfy me that those payments do not form part of her assessable income. 202 One can discern in this no imposition of the criminal standard of proof. The primary judge referred to the fact that the reasons did not otherwise refer to the civil standard, but it seems to us much more significant that they did not refer to the criminal standard. Similarly, in a discussion of certain other payments in respect of which it accepted that Mrs Bai had succeeded, the Tribunal said this (at [37]-[38]): 37. These three payments – of $217,000, $122,000 and $500,000 – do not, in my opinion, bear the character of income in Ms Bai's hands. They are examples of what appears to me to have been a regular flow of funds – which occurred in both directions – between Ms Bai and various companies in the High Trade group but which are not of an income character. 38. While I have found myself unable to accept Ms Bai's evidence in its entirety (because some of it lacked either plausibility or corroboration, or both), I do accept that over a period of time she had lent money to her husband for use in his companies. Unfortunately the state of the evidence renders it impossible for me to make any reliable finding as to the precise amount she lent, or the precise times when she did so. I also accept that some of the money that was deposited into her accounts, and which originated from her husband or from one of the companies in the High Trade group, was a repayment, or a partial repayment, of the amounts that she had previously lent. The amounts of $217,000 and $122,000 are in that category. The amount of $500,000 is, in my opinion, properly regarded as an inducement to purchase the second unit in the Sylvania development, but it bears no relationship to any income-producing activities of Ms Bai and does not form part of her income. 203 Again, what is important about these passages is that they contain no suggestion that the Tribunal was applying the criminal standard. This is a matter of importance, because it is most unlikely that the Tribunal decided eccentrically to apply the criminal standard to some findings of fact but not others. This leads to two possible outcomes. Either these earlier paragraphs must be construed as applying the criminal standard or paragraph [48] must be read as if it did not. With respect to the primary judge, it seems to us quite impossible to read paragraphs [32] and [37]-[38] as applying the criminal standard. 204 Thirdly, the Tribunal gave detailed consideration to the regime in Part IVC, which does not contain anything which might require the imposition of the criminal standard. This matters because a question must surely arise as to where, on the primary judge's reading of paragraph [48], the Tribunal first obtained the idea that fact finding in tax appeals was to be done at the criminal standard. The Tribunal's review of the onus provisions must show that any such idea cannot have come from Part IVC, where it cannot be found. It also could not have come from the parties, who made no such submission. With respect to the primary judge, the imposition of the criminal standard of proof in civil tax proceedings would be such an egregious error on the Tribunal's part, that the conclusion that the Tribunal had made such an error must surely have been an occasion for a moment of reflection. That observation applies even before the reasons are approached with the liberality required by decisions such as Wu Shang Liang. 205 These three matters provide powerful reasons why paragraph [48] should not be read as the primary judge read it. For completeness, we do not in any event agree with the primary judge that his Honour's reading of paragraph [48] is even open. Reading paragraph [48] with [47], it is apparent that the fact finding process had concluded at paragraph [47], where Mrs Bai's account was rejected. With respect to the primary judge, paragraph [48] is about the Tribunal's internal reasoning process (hence its reference to what it, not Mrs Bai, could exclude). Even if it could be read as imposing the criminal standard, for the reasons we have just given, such a reading would be contrary to established principle about the interpretation of administrative decisions. When the Tribunal's reasons are read fairly and as a whole, they do not support the idea that the Taxation Appeals Division of the Tribunal mistakenly thought the case should have the criminal standard of proof applied to it. 206 The Commissioner's appeal should be allowed with costs. It is not necessary in that circumstance to deal with the Commissioner's alternate argument, that even if the Tribunal had applied the criminal standard, the application of the correct standard would have led to the same result in light of the finding of fact at paragraph [47]. 5.4 Disproof of fraud or evasion 207 Mrs Bai also made the submission that the Tribunal erred in concluding that it was for Mrs Bai to disprove fraud or evasion. This submission should be rejected for the reasons given in Binetter v Commissioner of Taxation [2016] FCAFC 163. 5.5 Result 208 The following orders should be made: 1. Appeal allowed. 2. The Respondent to the appeal pay the Appellant's costs of the appeal. 3. Set aside the orders of the primary judge made on 8 October 2015 and in lieu thereof order that the appeal by way of application from the decision of the Administrative Appeals Tribunal be dismissed with costs. 4. Cross-appeal dismissed. 5. The Cross-Appellant pay the Cross-Respondent's costs of the cross-appeal. I certify that the preceding one hundred and forty-five (145) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Perram and Davies. Associate: Dated: 2 December 2016