FEDERAL COURT OF AUSTRALIA Engler v Commissioner of Taxation [2002] FCA 226 PRACTICE AND PROCEDURE - income tax - application for various forms of relief against Commissioner - application defective in form - based upon untenable propositions of law - application struck out - leave to amend with filing of statement of claim - amendment permitted but delayed pending determination of pending Administrative Appeals Tribunal proceedings. Income Tax Assessment Act 1936 (Cth) s 166, s 170, s 173, s 175, s 177 Federal Court of Australia Act 1976 CLAUDIA CHARLOTTE ENGLER and JEFFREY KENNETH GATES v COMMISSIONER OF TAXATION W245 of 2001 FRENCH J 8 MARCH 2002 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W245 OF 2001 BETWEEN: CLAUDIA CHARLOTTE ENGLER FIRST APPLICANT JEFFREY KENNETH GATES SECOND APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: FRENCH J DATE OF ORDER: 8 MARCH 2002 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The application is struck out. 2. The applicants' motion dated 23 January 2002 is dismissed. 3. The applicants have leave to file an amended application within twenty-one days of the determination of the pending proceedings in the Administrative Appeals Tribunal. 4. Any amended application is to be accompanied by a statement of claim which complies with the requirements of the Rules. 5. The applicants are to pay the respondent's costs of the respondent's motion filed 14 November 2001. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W245 OF 2001 BETWEEN: CLAUDIA CHARLOTTE ENGLER FIRST APPLICANT JEFFREY KENNETH GATES SECOND APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: FRENCH J DATE: 8 MARCH 2002 PLACE: PERTH REASONS FOR JUDGMENT Introduction 1 The applicants in these proceedings sue the Commissioner of Taxation alleging a multiplicity of wrongdoing by officers of the Australian Taxation Office ("ATO") and asserting the invalidity of various amended assessments issued to them under the Income Tax Assessment Act 1936 (Cth) ("ITAA"). Broad accusations of dishonesty, fraud, conspiracy, collusive and malicious conduct, malfeasance in public office, want of good faith and negligence, among others, are made. 2 The Commissioner moves to strike out their application. The proceedings reflect the typical difficulties expressed by unrepresented litigants in formulating an intelligible case. They also reflect those experienced by official respondents who not infrequently face wide ranging allegations of seriously improper conduct of the kind asserted in this application. History of these Proceedings 3 On 18 June 2001, Claudia Charlotte Engler and Jeffrey Kenneth Gates commenced proceedings in this Court against the Commissioner of Taxation. On the basis of affidavits accompanying their application they seek declaratory relief that various notices and amended notices of assessment issued to them under the ITAAare void, these being: 1. Amended Notices of Assessment issued to Engler on 24 September 1998 relating to the financial years ended 30 June 1992, 1993, 1994, 1995 and 1996 and a Notice of Assessment issued on the same date for the year ended 30 June 1997. 2. A Notice of Amended Assessment issued to Gates on 15 September 1998 and relating to the financial year ended 30 June 1992. 4 They also seek declaratory relief that "any Nil Tax Advices issued by the Commissioner to Gates on or about 15 September 1998 are void". Orders apparently by way of injunction are sought that the Commissioner "be permanently stopped from reviewing the Applicants on any issue that has been reviewed in the past again" and "from reviewing the Applicants' taxation affairs from the year ended 30 June 1997 and backwards". 5 A declaration is sought that a Notice of Assessment issued by the Commissioner on or about 6 November 1996 was a proper assessment in accordance with the ITAAand is proof that reviews of the applicants' taxation affairs commenced by the Commissioner on or about 7 April 1995 were concluded prior to 6 November 1996 in accordance with the ITAA. Other orders are sought that the Commissioner, if reviewing the applicants in the future, must adhere to the principles outlined in the Taxpayers' Charter and in the law and that from the date of the filing of the application the applicants and any other business or entity in which they become involved should be classed as restricted access taxpayers. A claim is also made for unspecified "losses and damages and costs". 6 Interlocutory relief was sought by way of an injunction restraining the Administrative Appeals Tribunal ("AAT") and the Commissioner from taking any further action in proceedings before that Tribunal which had been instituted by the applicants in respect of various of the contested assessments. Alternatively, an order was sought staying the matter until twenty-eight days after this Court had made a judgment on the application or the application had been withdrawn. 7 The claim for interlocutory relief was heard on 29 June and was dismissed on that day. The directions hearing was then adjourned to 7 September with liberty to apply. 8 On 7 September, orders were made amending the application in accordance with a minute filed on 6 September. The amendment was without prejudice to the right of the Commissioner to strike the application out. The directions hearing was then relisted to 2 April 2002. This was on the basis that the application should stand over until the hearing of proceedings relating to the assessments in the AAT. 9 On 14 November 2001, the Commissioner of Taxation filed a motion seeking an order that the amended application or part thereof be struck out pursuant to O 20 r 2 or, alternatively, pursuant to s 23 of the Federal Court of Australia Act 1976. On 6 December, directions were made requiring the applicants to file and serve points of claim. The respondent was to file and serve written submissions in relation to its strike out motion with reply submissions to be filed by the applicants. The strike out motion was set down for hearing on 7 February. 10 On 21 December 2001, the applicants filed points of claim. It was a document of some thirty-eight pages with some 204 paragraphs. On 23 January 2002, the applicants filed their own motion seeking to strike out the respondent's motion. They also sought an order that their applications for review in the AAT be transferred to the Federal Court and form part of the present proceedings. Alternatively, they sought an order staying the AAT from further hearing the matters before it. However at a directions hearing on 29 January they were informed that the matter would proceed on the basis previously directed. At that point the AAT hearing had been set down for 11-13 March. Formal orders simply adjourned the applicants' motion to 7 February. 11 The strike out motion was heard on 7 February and judgment reserved. In the meantime a chronology was prepared by the respondent with supporting documentation and lodged on 1 March 2002. A competing chronology was prepared by the applicants and lodged on 1 March together with some additional documents which were lodged on 5 March 2002. In so far as the chronologies may reflect conflicts about the facts they will not be relied upon. They are relied upon to the extent that they provide a common chronological framework for the matters which have led to these proceedings. The Amended Application 12 The amended application begins with three paragraphs asserting that the Commissioner has engaged in breaches of the ITAA, the Taxation Administration Act 1953, the Public Service Act 1922, the Australian Constitution, the Commonwealth Crimes Act 1900, the Privacy Act 1988, the Judiciary Act 1903 "…and any other relevant Act under this Honourable Court's associated jurisdiction". The breaches are said to have occurred in relation to an audit of the applicants' taxation affairs since about 1995. Under the heading "Details of Claim" the following paragraphs appear: "On the grounds stated in the accompanying affidavits, the applicants claim: 1. That the Respondent commenced an audit of the First Applicant's taxation affairs under although not restricted to section 8, 263 and/or 264 of the Income Tax Assessment Act 1936 (ITAA) and or section 3A of the Taxation Administration Act 1953 (TAA) on or about 7 April 1995 which was commenced for a proper purpose of the ITAA and the Respondent was estopped from including into that audit any taxation years other than the financial years ending 30 June 1992 to 30 June 1994 or earlier as outlined on or about 7 April 1995. Additionally, the Respondent is also estopped from denying section 170 of the ITAA applied to that audit and that the audit required an assessment be made in accordance with section 170 of the ITAA. 2. Additionally, that between about 7 April 1995 and about 24 September 1998 the proper purpose established from 1 above changed to an improper purpose and/or a collateral improper purpose which rendered the proper purpose void. 3. That between about 7 April 1995 and about 14 July 1995 or as late as about 26 July 1995 the Respondent breached the laws of natural justice and/or laws of equity and/or the law generally and therefore is and/or was estopped from auditing the First Applicant's 1995 and/or 1996 and/or 1997 returns due to the Respondent's non compliance to the principles and/or rules of law. Additionally, the Respondent by adding the 1995 return to the audit voided the First Applicant's Amended Notices of Assessment issued on 24 September 1998 and the Notice of Assessment issued on 24 September 1998, as the adding of the 1995 year constituted an improper purpose due to the Respondent seeking to take advantage of the First Applicant who had acted to her detriment due to the Respondent's actions in not complying with the rules of natural justice and/or other legal principles and/or the law. 4. That the Respondent commenced an audit of the Second Applicant's taxation affairs in conjunction with the First Applicant's audit under sections 8, 263 and/or 264 of the ITAA and section 3A of the TAA in or about November 1995 which was not commenced for a proper purpose and the Respondent was estopped from including any taxation years other than the financial years ending 30 June 1992 to 30 June 1994 or earlier as outlined on or about 7 April 1995 to the First Applicant. Additionally, the Respondent is also estopped from denying section 170 of the ITAA applied to that audit and that the audit required an assessment by (sic) made in accordance with section 170. 5. That between about November 1995 and about 11 January 1996 the Respondent breached the laws of natural justice and/or laws of equity and/or the law generally and therefore is and/or was estopped from auditing the Second Applicant's 1995 and or 1996 and or 1997 returns. 6. That the Respondent was estopped under section 170(4) of the ITAA from continuing the audit of the First and Second Applicant since about 10 October 1996. Additionally, since about 10 September 1996 the legal principle of res judicarta (sic) applied to further prevent the Respondent from auditing or continuing to audit the First and or Second Applicants concerning and (sic) financial years 1995 and or 1996 and or earlier years (sic). Additionally, the Respondent was estopped from continuing those audits due to the Respondent's non compliance with section 170 of the ITAA and or as the continuation of the audit past that time constituted an error of law and or an improper purpose of the ITAA. 7. That the Respondent issued a Notice of Assessment on 6 November 1996 to the First Applicant pertaining to the year ended 30 June 1996 and/or earlier years and/or the audit, and res judicarta (sic) prohibits the Respondent from revisiting the same matters twice. 8. That the Respondent is estopped from relying upon the Amended Notices of Assessment for the years ended 30 June 1992, 1993, 1994, 1995 and 1996 issued on 24 September 1998 by the Respondent to the First Applicant as they are void in law. 9. That the Amended Notices of Assessment for the years ended 30 June 1992, 1993, 1994, 1995 and 1996 issued on 24 September 1998 by the Respondent to the First Applicant were not issued for a proper purpose of the ITAA, therefore cannot be protected by section 175. 10. That the Respondent is estopped from relying upon the Notice of Assessment for the year ended 30 June 1997 issued on 24 September 1998 to the First Applicant as in law the Notice of Assessment is void. 11. That the Notice of Assessment for the year ended 30 June 1997 issued on 24 September 1998 by the Respondent to the First Applicant was not issued for a proper purpose of the ITAA, therefore cannot be protected by section 175 of the ITAA. 12. That the Respondent is estopped from relying upon the Notice of Assessment for the year ended 30 June 1992 issued on 15 September 1998 to the Second Applicant. 13. That the Amended Notice of Assessment for the year ended 30 June 1992 issued on 15 September 1998 by the Respondent to the Second Applicant was not issued for a proper purpose of the ITAA, therefore cannot be protected by section 175 of the ITAA. 14. That the Respondent is estopped from denying that Notices of Assessments issued on about 12 December 1996 concerning the Second Applicant's 1995 and or 1996 financial years are Notices of Assessment and/or that they also relate to the audit commenced by the Respondent on about mid to late 1995 or since about 11 January 1996. 15. That Amended Notices of Assessment and Notice of Assessment for the First Applicant issued on 24 September 1998 and the Amended Notice of Assessment for the Second Applicant issued on 15 September 1998 were issued other than as a result of a bona fide exercise of the powers vested in the Respondent, therefore the Notices cannot be protected by section 177(1) of the ITAA, as conclusive evidence of the due making of an assessment. 16. That Amended Notices of Assessment and Notice of Assessment for the First Applicant issued on 24 September 1998 and for the Second Applicant on 15 September 1998 were void and have no legal effect in law as the Respondent did not fulfill the conditions precedent set down by section 170 of the ITAA. 17. That the Respondent was negligent or careless or grossly negligent in the discharge of its duties related to all events surrounding the issuing of the Amended Notices of Assessment to the First and Second Applicants on 24 September 1998 and 15 September 1998 respectively, and the Notice of Assessment issued to the First Applicant on 24 September 1998, thereby voiding the said Notices. 18. That the Amended Notices of Assessment issued to the Applicants and the Notice of Assessment issued to the First Applicant are void for want of natural justice. 19. That the audit of the First and or Second Applicants taxation affairs commenced by the Respondent on about 7 April 1995 is void for want of natural justice. 20. That as a result of the matters stated in 1 to 19 above the Applicants claim losses and damages and costs for the tort of misfeasance in public office, and/or malice and/or negligence and/or gross negligence. 21. Any other Order this Honourable Court thinks just." 13 It is sufficient simply to set out these paragraphs to demonstrate that the application cannot stand in its present form. It makes generalised assertions in language which indicates fundamental misunderstandings of the law. The repeated use of the term "estoppel" in the context in which it is used is misconceived. So too is the reference in par 7 of the points of claim invoking the doctrine of res judicata which is applicable to judicial but not administrative decision-making. It is necessary to go beyond the application to find out the essential nature of the applicants' case. Statutory Framework 14 Central to the applicants' case are the provisions of the ITAA relating to the making of assessments and amended assessments and the conduct of audits of taxpayer's affairs. The duty of every person to lodge a return for a year of income is imposed by s 161(1) of the Act. It must be in a form approved in writing by the Commissioner for the purpose and must contain the prescribed information (s 161A(1)). The duty of the Commissioner to make an assessment of taxable income and of tax payable thereon is imposed by s 166: "166 From the returns, and from any other information in his possession, or from any one or more of these sources, the Commissioner shall make an assessment of the amount of the taxable income of any taxpayer, and of the tax payable thereon." Where a person is liable to pay tax under the Act, the Commissioner is required to make an assessment of the amount of that tax (s 169). For the purposes of making an assessment the Commissioner may accept, either in whole or in part, a statement in the return of the assessable income derived by the taxpayer and of any allowable deductions or rebates to which it is claimed that the taxpayer is entitled and any other statement in the return or otherwise made by or on behalf of the taxpayer (s 169A(1)). Section 170 concerns the amendment of assessments and, at the relevant time, provided: "170(1) The Commissioner may, subject to this section, at any time amend any assessment by making such alterations therein or additions thereto as he thinks necessary, notwithstanding that tax may have been paid in respect of the assessment. . . . 170(2) Subject to this section, where there has been an avoidance of tax, the Commissioner may: (a) if the Commissioner is of the opinion that the avoidance of tax is due to fraud or evasion - at any time; and (b) in any other case: (i) where the taxpayer is a relevant entity within the meaning of Division 1B of Part VI and the assessment is deemed by section 166A to have been made - within 4 years from the date upon which the assessment is so deemed to have been made; or (ii) otherwise - within 4 years from the date upon which the tax became due and payable under the assessment; amend the assessment by making such alterations in it or additions to it as the Commissioner thinks necessary to correct the assessment. . . . 170(4) Where: (a) the Commissioner has begun an examination of the affairs of a taxpayer; and (b) the examination was not completed within the period within which the Commissioner may amend an assessment to which the examination relates under subsection (2) or, if that period has been extended by any previous order or orders of the Federal Court of Australia made under subsection (4A), or by any previous consent or consents of the taxpayer given under subsection (4B), within that period as so extended; the Commissioner may, before the end of the period referred to in paragraph (b) of this subsection, apply to the Federal Court for an order extending, or request the taxpayer to consent to the extension of the period within which the Commissioner may amend the assessment under paragraph (2)(b). 170(4A) If, on application made to the Federal Court of Australia in accordance with subsection (4), the Court is satisfied that it was not reasonably practicable, or it was inappropriate, for the Commissioner to complete the examination within the period referred to in paragraph (4)(b) because of any action taken by the taxpayer or any failure of the taxpayer to take action that it would have been reasonable for the taxpayer to take, the Court may make an order extending the period within which the Commissioner may amend the assessment under paragraph (2)(b) for such period as the Court considers appropriate." 15 Also relevant are the provisions of ss 173, 175 and 177. Relevantly they are: "173 Except as otherwise provided every amended assessment shall be an assessment for all the purposes of this Act. . . . 175 The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with. 175A A taxpayer who is dissatisfied with an assessment made in relation to the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. . . . 177(1) The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct." The Applicants' Case - Points of Claim 16 The applicants' points of claim seem to bury their case in a mass of sometimes irrelevant detail. Generally the case is concerned with the propriety and validity of the Commissioner's actions in the conduct of an audit into the taxation affairs of the applicants and in issuing certain amended assessments to them under the ITAA. The points of claim repeatedly refer, in various contexts, to the "legitimate and reasonable expectations of the applicants". This is a term relevant to the requirements of procedural fairness in administrative law. It is repeatedly misapplied in the points of claim as is the term "estopped". 17 The points of claim allege that Mr Gates was employed as an officer of the ATO from April 1989 until February 1992 when he resigned. On 1 July 1991, while he was still so employed, he and Ms Engler commenced a partnership under the name "Combined-Builders" which name was changed in the 1994 financial year to "Gates and Associates". Mr Gates says he was told by someone from the ATO, when he resigned, that within three years he would be audited and given "…a good going over". 18 In June 1992, according to the points of claim, Engler and Gates commenced certain business activities which they "reasonably assumed were in the area of primary production". The nature of the activities is not specified. They lodged their first partnership return for Combined Builders on or about 10 August 1992. On the same date, Ms Engler lodged her personal 1992 return. On or about 10 September 1992 she was issued with a Notice of Assessment and received a refund of $4,634.77. Mr Gates lodged his 1992 return on or about 2 October 1992. He claims to have had to lodge a replacement return because the original was lost by the ATO. In the event, on or about 16 October 1992, he was issued with a Notice of Assessment and received a refund of $2,037.60. They sought from the ATO a private ruling under s 169A of the Act that their business activities fell within the area of primary production. After being requested to provide further information on 20 October 1992, which they provided on 22 October 1992, a ruling was provided on 28 October 1992. This ruling, it was said, confirmed that their partnership business activities constituted carrying on a business activity of primary production for the purposes of the Act. Their primary production activity ceased in late November 1992. 19 On 16 July 1993, Ms Engler lodged her income tax return for the year ended 30 June 1993. On 2 August 1993, she was issued with an assessment for the year ended 30 June 1993 and received her refund of $5,168.70. On 27 July 1994, she attended the Belconnen offices of the ATO seeking an appointment for an urgent return to be processed and issued for the year ended 30 June 1994. She lodged her paper return at the office and the officer with whom she had made an appointment completed an electronic return based on it. It is asserted that he incorrectly incorporated the partnership loss under a heading in the electronic return relating to primary production activities. He is also said to have brought a claim for motor vehicle expenses into the partnership distribution increasing the partnership loss to $12,314 from $9,679. There is no specific pleading that this was incorrect. Nevertheless it is said that "the words and actions and representations of the officer were incorrect". Ms Engler says that in reliance upon his expertise she signed the electronic return which he had prepared. It is not clear where this allegation leads in terms of relief claimed. 20 On or about 10 August 1994, Ms Engler was issued with a Notice of Assessment for the year ended 30 June 1994 and a refund made of $5,906.30. 21 Mr Gates lodged his 1993 return on or about 29 July 1994. This included a distribution from activities attributed to primary production. He was issued with a notice of refund for the year ended 30 June 1993 and a refund of $148.40. His 1994 return was also lodged on or about 29 July 1994 and on 26 September 1994 he was issued with a notice of nil tax for the year ended 30 June 1994. The 1994 partnership return was also lodged on 29 July 1994. It did not contain anything pertaining to primary production activities and showed a partnership distribution of fifty per cent to each of the applicants. It is asserted that at all material times the Commissioner has claimed that this return was not lodged by them. The points of claim contend that at all material times the applicants had an established record of lodging partnership returns with either one of their personal returns. Moreover they had a history of retaining copies of all returns lodged. Again, these allegations do not seem connected to any particular relief claimed. 22 On 7 April 1995, a Deputy Commissioner of Taxation is said to have notified Ms Engler of his intention to review, that is to say audit, her taxation affairs for the financial years ended 30 June 1992 to 30 June 1994 inclusive. In reliance on and because of the letter of notification both applicants held "the legitimate and reasonable expectation" that the audit would result in the auditing of the partnership and/or of Mr Gates. As appears from the chronology, however, the letter said simply: "Dear Ms Engler, For the purposes of the Income Tax Assessment Act 1936, it will be necessary for you to be interviewed so that a review of your Primary Production activities and Record Keeping Practices can be made. Would you please make available all records retained during the normal course of your Primary Production activity for accounting purposes, and the records retained to comply with the taxation laws administered by the Australian Taxation Office. You are requested to contact Luke Geutjes… or Ms Luangrath… within seven days of the date of this letter in order to arrange an interview at a mutually convenient time and place. In this instance it is required that the records for the years ended 30 June 1992, 30 June 1993 and 30 June 1994 be made available for the interview. Please also find enclosed a schedule of the relevant documents that will be required by this office for the purposes of the audit. You are requested to produce these documents at the interview." 23 It is alleged in the points of claim that between 9 April 1995 and the end of April Ms Engler attempted to contact the nominated officers on numerous occasions both orally and in writing. Both applicants subsequently discovered that the audit had been transferred to the Doubtful Primary Producers Project within the ATO on or about 16 May 1995. Ms Engler was not notified of this transfer. The nominated officers never again contacted Ms Engler other than the original letter of 7 April 1995. It is said in the points of claim: "As a result of no further contact from the nominated officers or the Respondent concerning any matter for about three months, the First Applicant/Applicants had the legitimate and reasonable expectation the Respondent realising the partnership had received the ruling, did not need to contact her, as no further action was required." Ms Engler alleges in the points of claim that she left details of the private ruling in the messages she left for the nominated officers. So it is said that on the basis of their "reasonable and legitimate expectation" that the audit had been concluded and their past taxation affairs determined to be in accordance with the Act, Ms Engler prepared and lodged her 1995 return and both she and Mr Gates completed all the necessary work concerning the partnership return and Mr Gates' return. On 26 July 1995, she was issued with a Notice of Assessment for the year ended 30 June 1995 and a refund of $5,937.10. It is asserted in the points of claim that all notices issued and returns processed up to this point by the ATO were done bona fide. This is an allegation which is unnecessary and again leads nowhere. 24 On or about 28 November 1995, Mr Peter Sullivan, an officer of the ATO is said to have contacted Ms Engler and told her, inter alia, that the audit was ongoing and that he and Mr Peter Dwyer had taken over as the auditors from the officers nominated in the original letter. The Commissioner, it is said, intended to extend the audit previously notified in April 1995 to cover both Ms Engler and Mr Gates and their partnership and that they would receive letters in due course to confirm this. The reason given for extending the audit is said to be that Ms Engler had not contacted the nominated officers in April 1995 as requested. Moreover, it seemed Mr Sullivan was unaware of the private ruling. The applicants say that Ms Engler informed Mr Sullivan that his assertion that she had not contacted the nominated officers in April 1995 was incorrect. 25 Letters dated 11 January 1996 were sent to Ms Engler and Mr Gates, each of which was in the following terms: "For the purpose of the Income Tax Assessment Act 1936, and in particular in connection with your taxation affairs for the years ended 30 June 1992, 30 June 1993, 30 June 1994 and 30 June 1995 it will be necessary for you to be interviewed by Peter Sullivan and Peter Dwyer. You are requested to contact Mr Sullivan on … within seven days of the date of this letter in order to arrange an interview at a mutually convenient time and place. In this regard, please find enclosed a "pre-interview questionnaire" that you are requested to complete. This questionnaire has been forwarded to you so as to minimise the duration of the interview. Please bring the completed copy to the interview. Please also find enclosed a schedule of the relevant documents that will be required by this office for the purposes of the audit. You are requested to produce these documents at the interview." 26 The applicants say that they regarded the audit notifications in the letters of 11 January 1996 as, in effect, the same as the notification of 7 April 1995. They assert that at all material times the Commissioner was aware or ought reasonably to have been aware, due to the letter of 7 April 1995, that "the contents of the letters [of 11 January 1996] were materially inconsistent with the Act and the representations and law and the respondent's duty". It is not apparent at all why this should be so. At all material times it is said the Commissioner was aware or ought reasonably to have been aware that having notified a taxpayer of the decision to audit it was his duty to expedite the audit in accordance with or for the purposes of the Act. Because of these matters the applicants, in reliance upon what are said to have been the representations made in November 1995 that, inter alia, the audit was ongoing, allege that they were induced to act or may have acted to their detriment. This is said to be because they were not aware and did not know that the letters of 11 January 1996 were not for a purpose of or in accordance with the Act and the law and the respondent's duty. By reason of the foregoing, it is said, the Commissioner is estopped from relying upon the decision to issue the letters of 11 January 1996 or relying upon them. Nor, it is said, can he deny that these letters "constituted an improper purpose or were not in accordance with the Act". He cannot deny that the applicants acted to their detriment in relying on the letters. These and a number of other matters pleaded in par 93 of the points of claim do not appear to have any foundation in law. 27 The applicants make allegations relating to the conduct of Mr Sullivan and Mr Dwyer asserting that they failed to act according to the Act and the law. In particular it is said that they failed to commence an audit file according to their duty. There is no statutory duty to open a file for any particular purpose. That does not support a contention that there has been any actionable breach of duty. 28 The points of claim assert that between late November 1995 and January 1996 Mr Sullivan represented to Mr Gates matters previously represented about the ongoing nature of the audit. Reference is made, in the points of claim, to a fax dated 18 January 1996 from Ms Engler to Mr Sullivan confirming a telephone conversation during which it was said that she was selected for audit under the Primary Production Scanning Project (apparently an internal ATO reference) but that as she was a partner in a business the audit was to be extended to cover the business. Moreover she said that the circumstances of her alleged failure to contact in April 1995 had been explained and the fault did not rest with her. The Commissioner would stand by the private ruling but had not found the private ruling to that date. Neither of the applicants had declined to be interviewed and the period of seven days in which to provide all information was insufficient given Mr Sullivan's alleged admission that he still did not have all relevant documents he required for the interview. On 13 February 1996, Ms Engler, with Mr Gates present, was interviewed by Mr Sullivan and a Ms Maria Silva. The interview was tape recorded. A similar interview was conducted with Mr Gates in Ms Engler's presence on 26 February 1996. In this case the interviewers were Mr Sullivan and Mr Endall. Again the interview was taped. On neither occasion were the applicants asked to sign any documents. Also on 26 February, the applicants were interviewed by Mr Sullivan and Mr Endall concerning the partnership. They provided, it is said, all original records requested and informed the officers where missing documents could be obtained. They were given a receipt of all documents taken. 29 On 12 March 1996, Mr Gates notified Mr Sullivan by fax that he was unable to locate certain of the documents and they would have to be obtained by the Commissioner as discussed and if there were any problems Mr Gates should be contacted. The applicants say that at all material times they fully co-operated with the Commissioner and gave full and true disclosure of all matters raised with them between November 1995 and March 1996. It is said they continually inquired throughout this time whether any further information was required. 30 A plea of estoppel is raised in par 116 of the points of claim asserting that the Commissioner is estopped from denying that the applicants made full and true disclosure, that the tapes in their possession were true copies of those supplied by the Commissioner, that they had fully co-operated with the Commissioner in relation to the audit and that the Commissioner's procedures required taxpayers to sign audit notes or other related documents as being a true record of the audit interview. It is said that subsequently the applicants have ascertained that the Commissioner made numerous third party inquiries from mid-March 1996 to about May 1998. However they claim that since about July 1996 their reasonable and legitimate expectation was that the audit had been concluded and that their past taxation affairs were found to be in accordance with the Act. Moreover, since about July 1996 the Commissioner or his officers, it is said, knew or ought reasonably to have known that the applicants would have had a legitimate and reasonable expectation that the audit into their taxation affairs had been completed. He was aware or ought reasonably to have been aware that the audit into their taxation affairs and their partnership had to be concluded by the latest in October/November 1996 under the Act and the law and according to his duty. 31 It is then said that in or about October 1996 Mr Gates contacted the ATO to make inquiries about losses carried forward from previous years and that he relied upon information given to him to complete subsequent taxation returns. 32 On or about 8 October 1996, Ms Engler prepared and lodged her 1996 returns. On 6 November 1996 she was issued with a Notice of Assessment for the year ended 30 June 1996. This indicated a refund of $3,124.98. Mr Gates lodged a 1995 partnership return in or about February 1996 in accordance with information provided to the Commissioner in February 1996. This was processed on or about 7 March 1997. A Notice of Assessment was issued showing a nil liability for the year ended 30 June 1995. A similar notice was issued in respect of his 1996 return which was also lodged on 29 October 1996. 33 The applicants claim that the respondent was "estopped from relying upon the decision to continue the audit after November/December 1996 for want of natural justice". There is then reference in the points of claim to internal administrative steps within the ATO including the placement of what is called a "stopper" on the applicants' tax file numbers by the audit section. None of this would seem to have any or much bearing on any issue which is justiciable by this Court, nor does it disclose any basis for relief. 34 Without canvassing the rather difficult wording of some of the points of claim that follow, it is said in par 141 of the points of claim that the Commissioner is estopped from denying that his alleged decision to continue the audit passed about 6 November and/or 12 December 1996 is "…void for want of natural justice". 35 The applicants go on to claim that the audit was expanded between November/December 1996 and March 1997 to encompass their 1996 partnership and personal returns. They moved to Western Australia. They assert that prior to their move the Commissioner became aware of their intentions. It is said that officers of the ATO entered into or formulated or engaged in an agreement or understanding or related conduct by dishonest means to the detriment of either or both the applicants and/or their partnership which agreement "was or ought reasonably have been seen could cause loss, corporeal or incorporeal and or damage". The fractured quasi-legal English used in the points of claim makes it difficult at times to understand precisely what it is that the applicants are complaining of. 36 The points of claim allege (par 146) that on or about 7 March 1996 the ATO officer, Mr Endall, prepared a report stating that the applicants should be advised of a change of auditor and that the audit was still in progress. It also stated that no original documents were sighted with regard to the partnership activities and that partnership and individual lodgment records were up to date. Neither Mr Endall nor the Commissioner contacted the applicants until about 8 May 1998. The points of claim impute to Mr Endall improper motives in preparing the report which it is said was done, inter alia, "in an attempt to overcome breaches of duty, the act and the law". No factual base for the allegation is disclosed. 37 On 8 April 1998, Ms Engler lodged her return for the financial year ended 30 June 1997. On the same day Mr Endall is said to have contacted Mr Gates with regard to the audit. There are generalised allegations against the respondent about collusive and malicious conduct and conduct in contravention of the Act or the law in continuing with "the aforesaid conduct". This appears to be a reference to the continuation of the audit. No proper foundation is laid for these allegations. 38 Then it is alleged that between 8 May 1998 and September 1998 Mr Endall and the Commissioner orally and/or by written communication made a large number of representations which are set out in par 156 of the points of claim. These included a representation that Mr Endall had taken over the uncompleted audit from Mr Sullivan and Mr Dwyer and was seeking an agreement to extend the audit completion date. It is not necessary to set out all the alleged representations here. In response to these matters it is said the applicants told Mr Endall that the inclusion of the 1996 year in the audit was unlawful as the audit had been notified as commenced in 1995 and again by letter dated January 1996. The Commissioner, it was said, had never raised many of the issues now being specifically claimed other than generally in 1995 or 1996 and statements claimed by the Commissioner to have previously been made by the applicants in 1996 were inconsistent with their recollections. The conduct of the Commissioner was said to be causing loss and damage to the applicants and their business if not stopped. The applicants said they could refuse to continue dealing with Mr Endall due to his conduct and would request his removal. They claimed he had breached the Privacy Act 1988. They also asserted that the ITAA was retrospective "and not into the future". Then they assert that they have since found out from documents and representations provided by the Commissioner a number of things including matters related to the inability of Mr Endall to obtain an extension of time for the audit under the provisions of the Act. They contended that in 1998 Mr Endall had to find fraud or evasion against them, presumably in order to support an amended assessment outside the four year period for which s 170 provides. 39 On 31 August 1998, a letter was sent to Ms Engler referring to the results of the audit into her affairs covering the years ended 30 June 1992 to 30 June 1997. A schedule of amendments/adjustments was attached to the letter and sheets showing additional tax by way of penalty for incorrect returns in each of the years were also attached. A similar letter was sent to Mr Gates on 8 September 1998. 40 On or about 15 September 1998 a Notice of Amended Assessment was sent to Mr Gates for the year ended 30 June 1992. This showed a net refund of $369.60. No amended assessments were issued to Mr Gates for the financial years 1993 to 1996 inclusive. In the points of claim Mr Gates alleges that the Commissioner is "estopped" from relying on a decision to issue the Notice of Amended Assessment as the decision is "void for want of natural justice". This contention appears to lack any basis in law. 41 On or about 24 September 1998, Notices of Amended Assessment were issued to Ms Engler for the years ended 30 June 1992 to 1997 inclusive. Each of these amended assessments raised a debit, the accumulated effect of which, reflected in the assessment for 1997, was $34,517. 42 Ms Engler alleges the Commissioner is "estopped" from claiming the amount stated and from relying upon the decisions to issue the amended notices. It is alleged that he knew or ought reasonably to have known that the purported amended notices and the notice of assessment were not a bona fide attempt to exercise the powers of assessment conferred on him by the Act or the law. It is further alleged that various officers of the ATO since May 1998 were contrary to their duty: "(a) acting in a manner to frustrate the Applicants; (b) were having pressure placed upon them not to do what they were legally required to do; (c) wilfully with dishonest intent acted in a manner to appear confused or negligent or not capable of performing their duty properly or competently; (d) were part of a collusive agreement to cause the Applicants to suffer loss and/or damage by dishonest means; (e) acting dishonestly; (f) stating one thing verbally and deliberately avoiding placing same in writing; (g) acting in concert with others or for the benefit of other officers; (h) aware the Applicants had suffered losses and damages due to the Respondent; (i) aware the Applicants would continue to suffer loss and damage due to the Respondent and/or others; (j) wilfully undertaking acts related to the Applicants; (k) knowingly but unwillingly undertaking acts related to the Applicants. There are various allegations then made against the officers and the Commissioner in what is said to be in pursuance and in furtherance of the alleged conduct since May 1998. These allegations do not, in my opinion, disclose the factual basis for any cause of action. It is alleged in par 175(p) that these officers and the Commissioner: "Used the Act to audit the Applicants into the future when it was or ought reasonably have been known such action was not capable of being made according to the Act and or the law." (sic) It is a repeated theme of the applicants' contentions that the Commissioner lacked power to extend an audit into the applicants' affairs beyond the years with which that audit was initially concerned. As is later observed there is no basis for that contention. 43 On 23 May 1999 and 5 July 1999, Ms Engler lodged objections with the Commissioner in relation to the Amended Notices of Assessment and the Notice of Assessment issued for the 1997 year. Mr Gates lodged his objections in respect to the Amended Assessment between July 1999 and December 1999. The partnership also lodged objections with the Commissioner. Objections for the years ended 30 June 1992 to 30 June 1997 lodged by Ms Engler were allowed in part on 9 September 1999. Further Amended Assessments issued reflecting the allowance of those objections. The net position after the Amended Assessments were issued seems to reflect a substantially reduced liability down to $9,746.03. 44 On 11 November 1999, Ms Engler appealed against the objection decisions to the AAT in matters WT1999/108-113. Since then she has undergone a series of medical procedures that have resulted in her being unable to work at all or only on a limited basis. The Commissioner and his officers are said to have been aware of the affects upon her health and her limited capacity since that time. She alleges that the Commissioner used undue influence and/or unconscionable conduct against her for an improper and malicious purpose or with wilful content of her "natural justice rights" and those of Mr Gates. Both applicants allege that the Commissioner wilfully used their knowledge of her medical condition against Mr Gates contrary to their duty and/or maliciously and/or with improper intent. 45 The Commissioner is said to have notified Mr Gates on or about 10 March 2000 of decisions in relation to his objections. In a letter bearing that date it was pointed out that the only assessment that had issued to Mr Gates was in respect of the year ended 30 June 1992. Assessments did not issue for the other years. His objection against his 1992 amended assessment was allowed. It was agreed that the issue of the amendment was not authorised under s 170 of the ITAA. It was acknowledged that under that section amendments affecting a reduction in liability could only be made within four years of the date upon which the tax became due and payable. In Mr Gates case the date upon which tax was due and payable under his original assessment was 16 November 1992. The amended assessment which showed an issue date of 15 September 1998 was outside the time limit and not authorised by law. Even though objections taken in respect to the other years were not valid, the matters raised by him had been reviewed in line with the information he had provided together with information provided by Ms Engler. There was reference then to a reduction in the partnership income in 1994 to allow a deduction for expenses of $648 which were accepted as expenses incurred in gaining assessable income. A further amount of $9,500 was not regarded as an allowable deduction. For 1995, the partnership income was to be reduced by $1,651 to excise the amount previously included as a recoupment of depreciation. An amended assessment to correct the previous 1992 amended assessment would issue in due course. 46 Mr Gates appealed against the objection decisions to the AAT on 7 April 2000. The partnership separately appealed on the same day. The applicants assert that in order to defraud them and/or the AAT the Commissioner made representations and/or filed documents and/or implied facts and/or did other things which were not true and correct and caused the AAT to make orders in reliance upon them. On or about 16 May 2000, the AAT dismissed the appeals by Mr Gates and the partnership. These dismissal orders were said to have been made because of the fraud of the Commissioner. The fraud was not specified. Like allegations are repeated against the Commissioner and his officers in relation to dealings with the AAT. Claims are also made that the Commissioner and/or his officers were negligent, engaged in fraud, conspired to defraud the applicants, were malicious, and "committed the offence of misfeasance in public office". The applicants contend they suffered loss and damage. All of these matters, it is said, will be the subject of full particulars provided prior to the trial. The Viability of the Amended Application 47 The amended application purports to be in the form prescribed by the Federal Court Rules as required by O 4 r 1(2). The form requires that under the heading "Details of Claim" the application set out in numbered paragraphs the final relief sought. As can be seen from the text of the details of claim reproduced in these reasons, the application does not do that but contains a large number of assertions of mixed law and fact about the conduct of the Commissioner and his officers. The only relief claimed as such is that set out in pars 20 and 21. It may be that some declaratory relief is sought. That, however, is not apparent from the way in which the details of claim are set out in the application and pars 1 to 19 inclusive would not be acceptable as reflecting proper claims for declaratory relief. 48 On this basis alone the application should be struck out for failing to do what it is required by the Rules of Court to do. Such deficiencies can, of course, be rectified by suitable amendments. There are, however, more fundamental difficulties. 49 The application appears to proceed in part upon a mistaken view of the law as to the power of the Commissioner to extend to subsequent years the scope of an audit examination of a taxpayer's affairs commenced in relation to certain financial years. The Commissioner's submission in my opinion is correct that there is no such restriction imposed by law. Section 170, upon which the applicants rely, deals not with the conduct of audits but with the amendment of assessments. Section 170(4) is concerned with the power of the Commissioner to amend an assessment outside the period limited by s 170(2). It has nothing to say about the power of the Commissioner to conduct an examination or the limits of that power. To the extent that the applicants' claim is premised on an argument to the contrary, it is untenable. On this basis the contention implicit in par 1 of the application cannot be sustained. To the extent that the same point is made in subsequent paragraphs they too cannot be sustained. 50 Paragraph 2 of the application asserts that sometime between 7 April 1995 and 24 September 1998 the Commissioner pursued an improper purpose which rendered the proper purpose previously pursued void. This contention is legally meaningless. Paragraph 2 is unsustainable. 51 Paragraph 3 asserts against the Commissioner an estoppel said to be based upon his breaches of rules of natural justice and/or laws of equity and/or the law generally. There is no basis for an estoppel which would prevent the Commissioner from carrying out his statutory function of auditing the applicants' taxation affairs. For this reason and the reliance in par 3 on the untenable proposition that the audit could not be extended this paragraph also is unsustainable. Paragraphs 4, 5 and 6 of the application fall for the same reasons. 52 Paragraph 7 raises a contention of res judicata which, as already observed, is not applicable to the exercise of administrative functions. 53 Paragraph 8 asserts an estoppel which is not available in relation to these statutory processes. The same is true of pars 10, 12 and 14. 54 Contentions that certain of the assessments are void for having been issued for an improper purpose may enliven the jurisdiction of the Court under s 39B of the Judiciary Act 1903 (Cth). These contentions are to be found in pars 9, 11, 13 and 15 of the application. There is however, on my reading of the points of claim, little exposed in the way of facts which would support a case of improper purpose or want of bona fides. Paragraphs 18 and 19, as the Commissioner contends, do not specify the alleged breach of natural justice. As to pars 20 and 21, the broad brush assertions in the points of claim as to the various species of misconduct attributed to the Commissioner and his officers do not disclose facts sufficient to ground the tort of misfeasance in public office or negligence. That is not to say that on the facts apparent from the chronology and some of the matters raised in the points of claim the applicants may not have had cause to complain about the way in which and the efficiency with which their affairs have been handled in the ATO. But that of itself is not enough to establish a cause of action. 55 As a matter of form the application must be struck out. As a matter of substance, in my opinion, any case to be made by the applicants requires detailed reconsideration. 56 I will allow the applicants to amend their application and will require them, if they proceed to amend the application, to file, in lieu of the points of claim, a statement of claim which complies with the rules of pleading. I will however direct that any amended application and statement of claim not be filed until the conclusion of the hearing of the AAT appeals. Given the quantum of tax involved there is a risk that this matter which may be resolved in the AAT hearing will get quite out of hand in terms of scope and costs if pursued in this Court concurrently with the AAT proceedings. Indeed, as I observed at the hearing, it seems to me it might well be resolved by mediation. Conclusion 57 For the above reasons the application will be struck out. There will be leave to amend the application subject to the filing of a statement of claim and the applicants will be ordered to pay the respondent's costs of the motion. The applicants' motion will be dismissed. I certify that the preceding fifty seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French . Associate: Dated: 8 March 2002 Counsel for the Applicant: Solicitor for the Applicant: Ms Engler and Mr Gates appeared on their own behalf. Counsel for the Respondent: Mr A Jenshell Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 7 February 2002 Date of Judgment: 8 March 2002