FEDERAL COURT OF AUSTRALIA Hii v Commissioner of Taxation [2015] FCA 375 Citation: Hii v Commissioner of Taxation [2015] FCA 375 Parties: YII ANN HII v THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA YII ANN HII v THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA File numbers: QUD 57 of 2014 QUD 622 of 2014 Judge: COLLIER J Date of judgment: 23 April 2015 Catchwords: QUD 57 of 2014 INCOME TAX – application for summary judgment – substantive proceedings appeal against decision of Commissioner pursuant to s 14ZZ Taxation Administration Act 1953 (Cth) – applicant claimed to be a non-resident for taxation purposes – Commissioner formed opinion following audit that applicant's conduct in avoiding tax constituted evasion – Commissioner issued first amended assessments and applicant filed objection – Commissioner allowed objection in part and issued second amended assessments – whether in determining objection Commissioner required to re-form opinion of whether conduct was fraud or evasion – whether errors of law in the reasoning of the Commissioner's decision on the formation of the opinion – whether Commissioner erred in respect of whether there had been evasion – whether irrationality in the decision-making process of Commissioner – whether second amended assessment can be set aside as excessive – complexity of issues such that "reasonable prospects of success" cannot be easily determined QUD 622 of 2014 INCOME TAX – administrative Law – s 39B Judiciary Act 1903 (Cth) – amended originating application for relief seeking declarations and writs of certiorari, prohibition and mandamus – substantive issues listed for hearing at same time as application for summary judgment – interpretation and application of ss 170, 175 and 177 Income Tax Assessment Act 1936 (Cth) – whether the Commissioner, as part of determining an objection to an assessment, required to re-form the opinion that there has been an avoidance of tax due to fraud or evasion – whether the Commissioner engaged in acts constituting "conscious maladministration" as that phrase is explained by High Court in Commissioner of Taxation v Futuris Corp Ltd (2008) 237 CLR 146 – significant movement in case by applicant up until first day of the trial – summary judgment application dismissed based on complexity of substantive matter – common ground that Commissioner did not form an opinion that there had been fraud or evasion after the objection decision – whether insufficient for Commissioner to rely upon opinion formed at earlier stage – whether the failure to form an opinion after the objection decision a jurisdictional fact upon which the power to amend depends – whether a failure of the Commissioner to form an opinion at the objection stage is sufficient to render the purported second amended assessments liable to be set aside – combined effect of s 175 and s 177 ITAA 36 – failure by the Commissioner to comply with a provision of legislation when issuing assessments does not render the assessment invalid – whether principles in Futuris are closed or are illustrative of general principles to be developed by future case law – s 175 and s 177 ITAA 36 make clear that the basis for review under s 39B Judiciary Act is limited to where the assessment is tentative or provisional and where conscious maladministration has occurred – no allegation of bad faith in this case Legislation: Customs Act 1901 (Cth) Federal Court of Australia Act 1976 (Cth) ss 31A, 31A(2), 31A(3) Income Tax Assessment Act 1936 (Cth) ss 166, 169A, 169A(3), 170, 170(1), 170(2), 173, 175, 175A, 175A(1), 177, 177(1), 177F, 177F(1), 177F(1)(b), 177F(3), 177F(3)(a) Judiciary Act 1903 (Cth) s 39B Tax Laws Amendment (Improvements to Self Assessment) Act (No 2) 2005 (Cth) s 15, Sch 1 item 1 Taxation Administration Act 1953 (Cth) Pt IVC, ss 14ZY, 14ZY(1), 14ZZ, 14ZZ(1), 14ZZO Cases cited: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 Blues Pty Ltd v Deputy Commissioner of Taxation [2012] FCA 320 BHP Billiton Finance Limited v Federal Commissioner of Taxation (2009) 72 ATR 746 Commissioner of Taxation v Administrative Appeals Tribunal (2011) 191 FCR 400 Commissioner of Taxation v Hii [2014] FCAFC 147 Commissioner of Taxation v Stokes (1996) 72 FCR 160 Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135 Denlay v Commissioner of Taxation [2011] 193 FCR 412 Donoghue v Federal Commissioner of Taxation [2015] FCA 235 Federal Commissioner of Taxation v BHP Billiton Finance Limited (2010) 182 FCR 526 Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 Federal Commissioner of Taxation v Munro (1926) 38 CLR 153 Federal Commissioner of Taxation v S Hoffnung & Co Ltd (1928) 42 CLR 39 FJ Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 Fletcher v Commissioner of Taxation (1998) 19 FCR 442 Gashi v Commissioner of Taxation (2013) 209 FCR 301 Hii v Commissioner of Taxation [2014] FCA 967 Kajewski v Federal Commissioner of Taxation [2003] FCA 258 Kolotex Hosiery (Australia) Pty Ltd v Federal Commissioner of Taxation (1975) 132 CLR 535 Lighthouse Philatelics Pty Ltd v Commissioner of Taxation (1991) 32 FCR 148 McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 Mount Pritchard & District Community Club Limited v Federal Commissioner of Taxation (2011) 196 FCR 549 Oshlack v Richmond River Council (1998) 193 CLR 72 Plaintiff M70/2011 v Minister for Immigration and Citizenship (Malaysian Declaration Case) (2011) 244 CLR 144 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Re Refugee Review Tribunal ex parte Aala (2000) 204 CLR 82 Roberts v Deputy Commissioner of Taxation [2015] FCA 238 Roberts v Federal Commissioner of Taxation [2013] FCA 1108 Spencer v Commonwealth of Australia [2010] HCA 28 SZOOR v Minister for Immigration and Citizenship (2012) 202 FCR 1 Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 Wilson v Chambers & Company Pty Ltd (1926) 38 CLR 131 Woods v Deputy Commissioner of Taxation [2011] TASSC 68 Aronson M and Groves M, Judicial Review of Administrative Action (5th ed, Lawbook Co Sydney, 2013) Date of hearing: 17, 18, 19 and 20 February 2015 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 141 Counsel for the Applicant: Ms R Seiden SC with Mr PG Bickford Solicitor for the Applicant: Irish Bentley Lawyers Counsel for the Respondent: Mr RM Derrington QC with Mr M Ballans Solicitor for the Respondent: Australian Government Solicitor IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 57 of 2014 BETWEEN: YII ANN HII Applicant AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: COLLIER J DATE OF ORDER: 23 APRIL 2015 WHERE MADE: BRISBANE THE COURT ORDERS THAT: The interlocutory application filed on 30 April 2014 be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 622 of 2014 BETWEEN: YII ANN HII Applicant AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: COLLIER J DATE OF ORDER: 23 April 2015 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The amended originating application filed on 19 February 2015 be dismissed with costs. 2. The interlocutory application filed on 20 January 2015 be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 57 of 2014 BETWEEN: YII ANN HII Applicant AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: COLLIER J DATE: 23 APRIL 2015 PLACE: BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 622 of 2014 BETWEEN: YII ANN HII Applicant AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent JUDGE: COLLIER J DATE OF ORDER: 23 APRIL 2015 WHERE MADE: BRISBANE REASONS FOR JUDGMENT 1 Before the Court are three applications in two related matters. These applications were heard together, and the parties have asked the Court to determine them together. Specifically, the Court is required to consider and determine: An amended originating application filed in QUD 622 of 2014 on 19 February 2015 by the applicant in both substantive proceedings, Mr Hii. An interlocutory application brought by the Commissioner (the respondent in both substantive proceedings) in QUD 622 of 2014 for summary judgment in that proceeding. Somewhat confusingly, this interlocutory application was dated 18 December 2014, was not accepted for filing by the Registry until 20 January 2015, and was filed in response to the originating application filed on 26 November 2014 by Mr Hii in QUD 622 of 2014. I understand however that it is common ground that this interlocutory application for summary judgment can be determined by reference to the amended originating application filed on 19 February 2015. An interlocutory application brought by Mr Hii in QUD 57 of 2014 for summary judgment in that proceeding. This interlocutory application was filed on 30 April 2014. 2 The parties primarily agitated the applications filed in QUD 622 of 2014. At the end of the hearing of the applications in QUD 622 of 2014, both parties also made submissions concerning Mr Hii's application for summary judgment in QUD 57 of 2014. Helpfully, the parties have provided me with separate lists of issues they submit are required for decision in these combined proceedings. In particular, they agree that there is a threshold question before the Court, formulated by Mr Hii's legal representatives as follows: 1. In circumstances where the Respondent has amended assessments for each of the years 2001 to 2004 and 2007 to 2009: (a) pursuant to the power in s 170(2) [for the years 2001 to 2004] and Item 5 of s 170(1) [for the years 2007 and 2009]; and where an authorised delegate formed the opinion that there had been an avoidance of tax due to fraud or evasion prior to issuing the first notices of amended assessment (in 2012); (b) the taxpayer objected to the assessments as amended inter alia on the grounds that the Respondent ought not to have formed the opinion that there had been an avoidance of tax due to fraud or evasion; and (c) the taxpayer provided submissions and materials in support of the objection is the Respondent, as part of determining the objection, required to form the opinion that there has been an avoidance of tax due to fraud or evasion? 3 It is also common ground that the Commissioner (or his delegate) formed no opinion that Mr Hii had avoided tax due to fraud or evasion at the time of determining Mr Hii's objection to the Commissioner's first amended assessments. The parties have agreed that only if the answer to the threshold issue ("Question 1") is in the affirmative is it necessary to go further and ask whether jurisdictional error invalidates the assessments as amended. This is particularly the case with the proceeding in QUD 622 of 2014. There are additional issues requiring the attention of the Court in QUD 57 of 2014. It is logical that I first consider matters at stake in QUD 622 of 2014 and then proceed to consider the interlocutory application pressed in QUD 57 of 2014. 4 Before turning to the matters which the Court has been asked to decide, and in particular Question 1, it is useful to first summarise the background which explains the current situation before the Court. In doing so, and because there are applications before the Court filed by both parties, it is convenient to refer to the parties respectively as "Mr Hii" and "the Commissioner" rather than identify them by reference to the various applications before me. In the interests of convenience I will also generically refer to the decisions of authorised officers of the Australian Taxation Office at various stages, as those of "the Commissioner". While technically decisions were made by authorised officers or delegates of the Commissioner – and at various times it may be appropriate to identify those officers – as a matter of law, the relevant decisions are those of the Commissioner. BACKGROUND FACTS – GENERALLY 5 Mr Hii claims that at all material times he has been a resident of Malaysia for taxation (and other) purposes. However he acknowledges that he has family and business interests in Australia, and lodged tax returns as a non-resident from 1995 to 2000, nominating therein as his home address a property at Stretton in Queensland. In subsequent years when lodging his tax returns as a non-resident, Mr Hii nominated an address in Hamilton in Queensland at which his wife, Dr Beh (from whom he eventually separated), and six children resided. For the years ended 30 June 2005 and 30 June 2006 Mr Hii did not lodge Australian income tax returns. Rather, Mr Hii lodged a notification with the Commissioner that he had no Australian-sourced income in those years. 6 In 2010 the Commissioner commenced an audit of Mr Hii from assessment years ending 30 June 2001 until 30 June 2009. 7 On or about 27 June 2012 Mr Cameron Unwin, an Executive Level 2.1 officer employed by the Australian Taxation Office, positively formed the opinion that Mr Hii had avoided tax by engaging in acts during those years which constituted evasion. Relevantly to these proceedings, on 30 July 2012, 1 August 2012, 2 August 2012 and 3 August 2012 the Commissioner issued notices of amended assessment ("first amended assessments") and shortfall penalty assessments ("first shortfall penalty assessments") for the amended assessment years: ending 30 June 2001, 30 June 2002, 30 June 2003 and 30 June 2004 – pursuant to s 170(2) of the Income Tax Assessment Act 1936 (Cth) ("ITAA 36"); and ending 30 June 2007, 30 June 2008 and 30 June 2009 – pursuant to s 170(1) of the ITAA 36. (I note that s 170 ITAA 36 was amended in 2005 by the Tax Laws Amendment (Improvements to Self Assessment) Act (No 2) 2005 (Cth) Sch 1 item 1.) 8 On or about 17 September 2012 Mr Hii lodged an objection to the first amended assessments and the first shortfall penalty assessments. Mr Hii's grounds of objection included that: the statutory time limit for so doing had lapsed and none of the exceptions under s 170(1) of the ITAA 36 apply, including that the taxpayer's actions did not amount to fraud or evasion for the purposes of Item 5 of s 170(1) of the ITAA 36; Mr Hii was not a resident of Australia for those years; and if Mr Hii was a resident of Australia for those years, the amount of taxation assessed was excessive. 9 On 20 December 2013 the Commissioner issued a Notice of objection decision ("the objection decision"), and reasons for that decision, which allowed Mr Hii's objection in part and concluded that: the Commissioner had correctly determined that Mr Hii was an Australian resident for income tax purposes, in relation to the relevant years; the opinion formed by the audit officer that Mr Hii had avoided tax due to evasion had been authorised by an Executive Level 2 officer; significant amounts of taxable income should be reduced; and the administrative penalties for a shortfall amount for failing to take reasonable care and failing to lodge a document were correct, but the amount of the penalty was to be reduced to reflect the reduction in taxable income for the relevant years. 10 Subsequently, notices of amended assessment ("the second amended assessments") in respect of the assessment years ending 30 June 2001, 2002, 2003, 2004, 2007, 2008 and 2009 ("relevant years") were issued by the Commissioner on 16 and 17 January 2014. 11 A further notice of amended assessment in respect of the assessment year ending 30 June 2004 ("the third amended assessment") was issued by the Commissioner on 25 February 2014. BACKGROUND FACTS – qud 57 of 2014 12 On 14 February 2014 Mr Hii commenced proceedings in this Court by filing an appeal against the objection decision of the Commissioner pursuant to s 14ZZ of the Taxation Administration Act 1953 (Cth) ("TAA 53"). These proceedings are in QUD 57 of 2014. In an amended notice of appeal filed 17 July 2014, Mr Hii sought relief in the following terms: A. 2012 Amended Assessments and 2014 Amended Assessments 1. For the seven income years ended 30 June 2001 to 30 June 2004 and 20 June 2007 to 30 June 2009 ("the amendment years") the applicant lodged Australian tax returns on the basis that he was a non-resident of Australia and Malaysian tax returns on the basis that he was a resident of Malaysia. 2. He included his Australian-sourced income in his Australian returns and the respondent issued him with assessments to tax in each of the amendment years. 3. On 14 April 2010 the respondent notified the applicant that he was under audit as to his income tax affairs. 4. During the audit the respondent determined that Mr Hii was a resident of Australia and liable to include his income from all sources in his assessable income, not merely his Australian-sourced income. 5. Between 30 July 2012 to 3 August 2012 the respondent issued Mr Hii amended assessments for the amendment years under s 170 of the Income Tax Assessment Act 1936 ("ITAA36") to increase his taxable income and the tax payable thereon ("the 2012 Assessments"). 6. Immediately before the issue of those assessments the jurisdictional facts necessary for the respondent's power to amend in s 170 to be enlivened were (i) that there was an avoidance of tax by Mr Hii and (ii) that avoidance was in the respondent's lawful opinion due to fraud or evasion. Otherwise the time limits for amending had expired. 7. The audit officer purported to form an opinion within s 170 that Mr Hii avoided tax in each amendment year "due to evasion". He gave written reasons dated 26 June 2012 ("the 2012 Reasons for Decision"). They were, as summarised by the respondent: a. Listing a Singapore business address on his Australian tax return as his residential address b. Providing different reasons as to why various addresses are used in each country [during the course of the audit] c. Not providing details of his offshore income and assets when requested [during the course of the audit] d. Failing to provide full and complete details of foreign entities he controls [during the course of the audit] e. Omitting foreign source income from his Australian tax returns; and f. Failing to pay appropriate tax in Australia. 8. Mr Hii was dissatisfied with the 2012 Assessments under s 175A ITAA36 and in September 2013 objected against the amendments made in the manner set out in Part IVC Taxation Administration Act 1953 ("TAA") on the grounds that: a. The respondent had no power under s 170 to make the amendments to increase his taxable income and tax payable (because he should not have formed the opinion that there was an avoidance of tax that was due to evasion) b. Mr Hii was not a resident of Australia in any of the relevant years under Australian tax law, which includes the terms of double tax treaties, including the treaty with Malaysia c. Mr Hii's taxable income was not as assessed by the respondent. 9. Mr Hii provided the objections officer with written details of his grounds of objection and supporting evidence, including a detailed rebuttal of the 2012 Reasons for Decision as they concerned evasion, in September 2012 and also in August 2013. 10. On 20 December 2013 Mr Hii received notice that the objections officer had decided under s 14ZY TAA to allow his objection "in part" for each amendment year. The objections officer provided written reasons for his decision ("the 2013 Objection Decision Reasons"), being: a. Mr Hii was an Australian resident; b. every year's amendment made by the auditor under the 2012 Assessments was incorrect in amounts totalling over $40 million; but c. amendments to Mr Hii's original taxable income and tax payable thereon were necessary to be made by fresh assessment under s 167 ITAA36 for six of the seven years; and d. the auditor had clearly articulated the ATO's position on evasion under s 170 before issuing the 2012 Assessments (as summarised at paragraph 7 above), and the auditor, being an Executive Level 2 officer, was duly authorised in line with internal ATO Guidelines to form the opinion. That is the "reviewable objection decision" within s 14ZZ TAA. 11. The respondent formally notified Mr Hii in January 2014 of his new taxable income and tax payable thereon for each amendment year ("the 2014 Assessments"). B. No Amended Assessments for 2005 and 2006 12. For the 2005 and 2006 years Mr Hii notified the respondent that he was a non-resident of Australia and had no Australian-sourced income. On that basis he was not required to lodge Australian returns and did not receive any assessments for those years. He lodged Malaysian tax returns on the basis that he was a resident of Malaysia. 13. Following the audit referred to above, in 2012 the respondent issued original assessments for those years on the basis that Mr Hii was a resident of Australia and liable to include his income from all sources in his assessable income. C. Penalty Assessments 14. Mr Hii was also issued with assessments to administrative penalties under Division 298 in schedule 1 TAA for each of the relevant years. These are the subject of a separate application for review to the AAT. For the purposes of this appeal, the relevant facts are that the respondent formed the opinion when assessing administrative penalties that Mr Hii's avoidance of tax was not due to any intentional disregard of the law (but due merely to a failure to take reasonable care) and that Mr Hii had not taken any action to obstruct or interfere with the audit. Application for decision to be varied 15. By: a. Allowing the applicant's objection in full; b. Setting aside the 2014 Assessments and other assessments and the actions taken as a result of the objection decision; and c. Making all consequential adjustments. Grounds relied on 16. The 2014 Assessments (for the amendment years) and the assessments (for the 2005 and 2006 years) are excessive on one or more of the following grounds. I. A jurisdictional fact necessary to enliven the s 170 ITAA36 power to make the amendments the objections officer decided to make for the amendment years did not exist 17. Mr Hii objected on the ground that the Commissioner had no power under s170 to amend his original assessments for the amendment years. Accordingly the objections officer's reconsideration was " subject to s 170": Fletcher v FCT (1988) 19 FCR 442 and, as set out below, s 170 "operated to deny to the Commissioner, at the time he made his decision on the objection, the power he would have had if the prescribed period of [2] years had not elapsed of increasing the liability of the applicant on his consideration of the objection": Stevenson v FCT (1991) 29 FCR 282, at [22]. 18. The objections officer, in order to enliven the s 170 power to make the amendments set out in the 2013 Objection Reasons for Decision and embodied in the 2014 Assessments, was required in the exercise of his reconsideration powers a. to form his own personal opinion that some of the tax to be reassessed was avoided due to evasion, having regard to the material placed before him by Mr Hii that rebutted the auditor's earlier opinion and b. to form an opinion that was sufficient in law, not one that was "based on a misconception of the meaning of the word evasion" or arrived at "capriciously, or fancifully, or upon irrelevant or inadmissible grounds": Australasian Jam Co Pty Ltd v Federal Commissioner of Taxation [1953] HCA 52; (1953) 88 CLR 23, at 37. 19. The objections officer did not form the opinion necessary to enliven the respondent's power to make the 2014 Assessments. 20. The objection officer's satisfaction that the auditor had formed an opinion in 2012 and was authorised to do so was not his personal opinion for the purposes of s 170. 21. The auditor's earlier opinion became irrelevant as a fact once it was objected to as incorrect by Mr Hii under Part IVC TAA. Only a fresh opinion formed by the objections officer for the purposes of s 170 could authorise the 2014 Assessments. 22. Alternatively, the auditor's earlier opinion was not a legally sufficient opinion for the following reasons: a. In relation to his ground referred to at paragraph 7(a) above, i. The auditor misapplied the test for "evasion" in the context of s 170, which is "more than a mere withholding of information or the mere furnishing of misleading information": Denver Chemical Manufacturing Co. v. Commissioner of Taxation (N.S.W.) [1949] HCA 25; (1949) 79 CLR 296 ii. no rational decision-maker could conclude that in tax returns where Mr Hii was claiming to be a non-resident that listing a non-residential address was blameworthy conduct or in any way causative of an avoidance of tax. b. In relation to his grounds referred to at paragraphs 7(b),(c) and (d) above, they are irrelevant and inadmissible because the auditor misconstrued s 170. "Evasion" within the context of s 170 is conduct that occurs no later than the usual time that the respondent has to amend the assessment, "thus misleading the Commissioner during any part of the period open to him to assess unconditionally": Clarke v FCT (1927) 40 CLR 246, at 276. Conduct occurring after that time may be blameworthy (and lead to prosecution for an offence under the TAA), but the avoidance of tax is not "due to" that conduct. c. In relation to his grounds referred to at paragraph 7(e) and (f), the auditor misconstrued, or misapplied, the test of what is "evasion". Evasion "within the context of [s 170] means more than avoid": Denver Chemical Manufacturing Co. v. Commissioner of Taxation (N.S.W.) [1949] HCA 25; (1949) 79 CLR 296. These grounds are also circular and thus capricious. d. None of the reasons given were directed at the relevant consideration, which was whether Mr Hii had, during the relevant periods within which amendment were otherwise within time allowed by s 170, intentionally engaged in some blameworthy act or omission to interfere with the Commissioner's ability to assess the correct amount of tax. e. Rather, the auditor had formed the opinion that Mr Hii's avoidance of tax was not due to any intentional disregard of the law, but only a failure to take reasonable care. 23. If the Court finds that the applicant has made out this first ground, then the 2014 Assessments are excessive within s 14ZZO, and should be set aside. The Court's jurisdiction is at an end and the appeal should be allowed against the objection decision, which should be varied under s14ZZP TAA to allow Mr Hii's objection in full for the amendment years. 24. The Court has no power in these Proceedings under s 14ZZP TAA to form its own opinion about evasion under s 170 and decide what new amendments should be made thereafter. II. There was no avoidance of tax 25. Mr Hii was not a resident of Australia in the relevant years for Australian taxation purposes. Accordingly, the 2014 Assessments are excessive because there not being an avoidance of tax there was no power to amend under s 170. III. The respondent did not otherwise assess the amount of taxable income and tax payable thereon correctly 26. Mr Hii was not a resident of Australia in any of relevant years for Australian taxation purposes. Accordingly, the 2014 Assessments and the assessments are excessive because the correct amount to be included in assessable income was only Mr Hii's Australian-sourced income. That was the amount that Mr Hii had originally told the respondent in each year. 27. Alternatively, if Mr Hii was an Australian resident in any of the relevant years, then as a matter of fact the respondent has erred in his calculation of Mr Hii's worldwide income and expenses to be included in calculating taxable income and in calculating the tax payable thereon. Mr Hii will demonstrate his taxable income each year in this event. 13 On 17 February 2014 Mr Hii filed an application for review of the second amended assessments with the Administrative Appeals Tribunal. I understand that that application has been stayed, pending the resolution of the proceedings in this Court. 14 On 30 April 2014 Mr Hii filed an interlocutory application seeking summary judgment in QUD 57 of 2014. The relief sought by Mr Hii was as follows: 1. Pursuant to s 31A (1) of the Federal Court of Australia Act 1976 (Cth), the Court give judgment for the Applicant against the Respondent in relation to part of the proceeding, because the Respondent has no reasonable prospect of successfully defending part of the proceeding. Specifically, in respect of the notices of amended assessment for the seven financial years ending 30 June 2001, 30 June 2002, 30 June 2003, 30 June 2004, 30 June 2007, 30 June 2008 and 30 June 2009, the Applicant seeks orders that (a) the Appeal be allowed; (b) the objection decision be varied to be a decision that: i. the objection be allowed for each year ii. the notices of amended assessment be set aside iii. any actions relating the incorrect objection decision, including the issue of penalty assessments in respect of each year, be withdrawn or set aside; 2. The Respondent pay the Applicant's costs of and incidental to this application and of and incidental to the Appeal in respect of the notices of amended assessment referred to in Order 1 hereof. 3. Any other order the Court considers appropriate. 15 Separately, Mr Hii also applied for an order that there be a separate trial of issues in QUD 57 of 2014. On 11 July 2014 Rangiah J ordered that Mr Hii's application for the separate trial of issues be listed for hearing on 25 July 2014, and that the hearing of Mr Hii's application for summary judgment be listed for 1 August 2014. 16 Subsequently on 1 August 2014 Rangiah J ordered that eight questions in QUD 57 of 2014 be heard separately from other questions in the proceeding (Hii v Commissioner of Taxation [2014] FCA 967). An appeal against this decision was allowed in Commissioner of Taxation v Hii [2014] FCAFC 147. Mr Hii's application for summary judgment listed for 1 August 2014 was not heard at that time. Rather, it is currently before me. BACKGROUND FACTS – QUD 622 OF 2014 17 On 26 November 2014 Mr Hii commenced fresh proceedings by filing an originating application pursuant to s 39B of the Judiciary Act 1903 (Cth) ("Judiciary Act"). These proceedings are QUD 622 of 2014. (I note that the application originally filed by Mr Hii has been superseded by an amended originating application filed with leave by Mr Hii during the hearing.) It is the amended originating application in QUD 622 of 2014 which I am considering in the course of this judgment. 18 On 18 December 2014 the Commissioner brought an interlocutory application in QUD 622 of 2014, seeking orders for summary judgment against Mr Hii in relation to the whole of that proceeding pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act"), as well as costs. I note that this interlocutory application was not actually accepted for filing by the Registry until 20 January 2015. 19 The grant of leave to Mr Hii to file an amended originating application during the hearing of QUD 622 of 2014 was not opposed by the Commissioner. In the amended originating application Mr Hii sought the following relief under s 39B of the Judiciary Act on the grounds stated in the affidavit of David Hughes dated 26 November 2014 and the further and better particulars filed 13 January 2015: 1. A declaration that, in the events which have occurred, the following purported notice of amended assessment issued to the Applicant as a result of audit are not notices of assessment and are void and of no effect and further that in respect of those years the purported amended assessments are not assessments for the purposes of the Income Tax Assessment Act 1936 (the "ITAA36"): Year Ended Date of Issue 30 June 2001 30 July 2012 30 June 2002 30 July 2012 30 June 2003 30 July 2012 30 June 2004 1 August 2012 30 June 2007 1 August 2012 30 June 2008 3 August 2012 30 June 2009 1 August 2012 ("the first amended assessments"). 2. A declaration that, in the events which have occurred, the following the following purported notice of amended assessment issued to the Applicant as a result of determination of objections to assessments lodged by the Applicant pursuant to Part IVC of the Taxation Administration Act 1953 (the "TAA53") ("the objections") are not notices of assessment and are void and of no effect and further that in respect of those years the purported amended assessments are not assessments for the purposes of the ITAA36: Year Ended Date of Issue 30 June 2001 16 January 2014 30 June 2002 16 January 2014 30 June 2003 16 January 2014 30 June 2004 16 January 2014 30 June 2007 17 January 2014 30 June 2008 17 January 2014 30 June 2009 17 January 2014 ("the second amended assessments"). 2A. A declaration that, in the events which have occurred, the following purported notice of amended assessment issued to the Applicant as a result of the determination of the objection is not a notice of assessment and is void and of no effect and further that in respect of the 2004 year the purported amended assessment is not an assessment for the purposes of the ITAA36: Year Ended Date of Issue 30 June 2004 25 February 2014 ("the third amended assessment"). 3. A declaration that on the proper construction of subsection 170(2) of the ITAA36 for each years ended 30 June 2001 to 30 June 2004 ("the pre-amendment ITAA 36"), the Respondent had no power to make the first, second or third amended assessments for those years unless and until the Commissioner of Taxation or his delegate had formed a valid opinion pursuant to sub-paragraph 170(2)(a) of the ITAA36, prior to the time of issuing the first amended assessments (in respect of the first amended assessments) and at the time of determining the objection to the first amended assessments (in respect of the first, second and third amended assessments), that there had been an avoidance of tax due to fraud or evasion. 4. A declaration that, in the events which have occurred, the Commissioner formed no or no valid opinion pursuant to sub-paragraph 170(2)(a) of the pre-amendment ITAA 36, prior to issuing the first, second or third amended assessment notices to the Applicant for each of the years ended 30 June 2001 to 30 June 2004. 5. A declaration that on proper construction of subsection 170(1) ITAA36 for each of the years ended 30 June 2007 to 30 June 2009 ("the post-amendment ITAA 36") the Respondent had no power to make the first or second amended assessments for those years unless and until the Commissioner had formed a valid opinion pursuant to sub-paragraph 170(1) Item 5 of the ITAA36, prior to the time of issuing the first amended assessments (in respect of the first amended assessments) and at the time of determining the objection to the first amended assessments (in respect of the first and second amended assessments), that there had been an avoidance of tax due to fraud or evasion. 6. A declaration that, in the events which have occurred, the Commissioner formed no or no valid opinion pursuant to subsection 170(1) Item 5 of the post-amendment ITAA 36, prior to issuing the first or second amended assessments to the Applicant for each of the years ended 30 June 2007, 2008 and 2009. 7. A declaration that if the first, second and third amended notices of amended assessment are void and of no effect and, or in the alternative, if the purported first, second and third amended assessments are not assessments, that the following shortfall penalty assessments are void and of no effect: Year Ended Date of Issue 30 June 2001 30 July 2012 30 June 2002 30 July 2012 30 June 2003 30 July 2012 30 June 2004 1 August 2012 30 June 2007 1 August 2012 30 June 2008 2 August 2012 30 June 2009 1 August 2012 ("the shortfall penalty assessments") 8. A declaration that s 298-30(3) in Schedule 1 of the TAA53 does not apply to make the shortfall penalty assessments conclusive evidence of the Applicant's liability to pay the penalties referred to therein. 9. A writ of certiorari be issued quashing the first, second and third amended assessments. 10. A writ of certiorari be issued quashing the shortfall penalty assessments. 11. A writ of mandamus be issued requiring the Respondent to withdraw the first, second and third amended assessments. 12. A writ of mandamus requiring the Respondent to withdraw the shortfall penalty assessments. 13. A writ of prohibition be issued restraining the Respondent from relying upon the first and/or second and/or third amended assessments and the shortfall penalty assessments in Supreme Court proceedings styled "Deputy Commissioner of Taxation v Yii Ann Hii" Matter No. 5941/13. 14. A writ of prohibition restraining the Respondent, by himself and his delegates and any other authorised officer employed by the Commonwealth of Australia in the office of the Respondent, from purporting further to issue amended assessments to the Applicant for any of the years ended 30 June 2001 to 30 June 2004 and 30 June 2007 to 30 June 2009. 15. In the alternative to the relief sought in the previous paragraph hereof, an injunction issues retraining the Respondent, by himself and his delegates and any other authorised officer employed by the Commonwealth of Australia in the office of the Respondent, from purporting further to issue amended assessments to the Applicant for any of the years ended 30 June 2001 to 30 June 2004 and 30 June 2007 to 30 June 2009. 16. Such further or other orders as to this Honourable Court may seem appropriate. 17. An order that the Respondent pay the Applicant's costs of and incidental to the within application, to be taxed if not agreed. ISSUES REQUIRED FOR DECISION 20 During the hearing I directed the parties to file a list of issues for decision. The parties could not agree on a list, however there is overlap in the issues nominated individually by the parties. 21 Counsel for Mr Hii submits that the key issues for decision by the Court are: 1. In circumstances where the Respondent has amended assessments for each of the years 2001 to 2004 and 2007 to 2009: (a) pursuant to the power in s 170(2) [for the years 2001 to 2004] and Item 5 of s 170(1) [for the years 2007 and 2009]; and where an authorised delegate formed the opinion that there had been an avoidance of tax due to fraud or evasion prior to issuing the first notices of amended assessment (in 2012); (b) the taxpayer objected to the assessments as amended inter alia on the grounds that the Respondent ought not to have formed the opinion that there had been an avoidance of tax due to fraud or evasion; and (c) the taxpayer provided submissions and materials in support of the objection is the Respondent, as part of determining the objection, required to form the opinion that there has been an avoidance of tax due to fraud or evasion? 2. It is common ground that no opinion was formed as part of determining the objection. 3. Only if the answer to 1 is "yes" is it necessary to go further and ask, is this a jurisdictional error that invalidates the assessments as amended? In answering this question, the following sub-issues arise: (a) are the categories of jurisdictional error in the tax context closed to solely cases where there is: (i) no assessment because there is no definitive ascertainment of the taxable income and tax payable thereon; (ii) no assessment for the reason that there has been conscious maladministration; (b) if the categories are not closed, is the error here alleged one that the legislature intended would vitiate the assessment as amended (the Project Blue Sky question); (c) if the answer to (a) is "yes", is the error (failure to form the opinion at the objection stage) one that falls into either of the two categories referred to herein. 4. Only if it is established that there is jurisdictional error that vitiates the assessments as amended, is it necessary to ask whether the Court, exercising its discretion, ought to grant relief. 5. In relation to the Respondent's issue at (2)(b), the Applicant rejects the proposition that the validity of the assessments amended first in 2012 is no longer an issue to be decided by this Court. The Applicant contends that the assessments (for each relevant year) first amended in 2012 (and later the subject of further amendment after the objection) are not valid and, accordingly, this is a live issue between the parties. 6. A discrete issue arises with respect to the 2009 year and that is whether, prior to service of the notice of first amended assessment (in 2012) for that year, there had been an assessment for the 2009 income tax year. 7. A discrete issue arises with respect to whether the Applicant is entitled to a declaration to the effect that, in all proceedings other than Part IVC, the notices of penalty assessment are not conclusive evidence of the liability of the Applicant to pay the penalty. 22 I have already identified the first issue in Mr Hii's list as Question 1. 23 Helpfully, during the hearing Counsel for the Commissioner provided a skeleton of argument of relevant matters under QUD 622 of 2014. This was as follows: (1) The Applicant's changing case and the case now agitated. (2) The core issues which are fundamental to the 39B Application (a) The relief sought is discretionary and unlikely to be granted even if the Applicant were able to make out the alleged grounds. (b) For the purposes of the s. 39B application there is no longer any direct or indirect attack on the amended assessments issued in 2012 (the "first amended assessments") and it follows that the taxpayer must accept that they are valid. Setting aside the second or third amended assessments will only increase the Applicant's liability. (c) The making of the objection to the assessments permitted the Commissioner to amend the assessments at any time – 170 (item 6). (d) There is no requirement for the Commissioner to re-formulate the fraud and evasion opinion every time he amends an assessment. (3) Even if either of the above issues were determined against the Commissioner: (a) Section 175 ensures that any non-compliance with the ITAA36 (such as that alleged by the taxpayer) does not invalidate the assessment made by the Commissioner. (b) The scope of "conscious maladministration" as alleged by the taxpayer is well beyond that which is identified in Futuris v Commissioner of Taxation and accepted in any of the authorities. (c) Even if an error in administration were shown it would not amount to conscious maladministration as there is no assertion of any wrongdoing. (4) The document relied upon by Mr Hii as an assessment in relation to the 2009 year was not an assessment. Section 128C of the ITAA36 forecloses any argument that the document relied upon was an assessment. (5) The penalty provisions are not unconstitutional because they are imposed by statute and are not imposed by the Commissioner. THE FIRST AMENDED ASSESSMENTs 24 In the events leading up to the first amended assessments, the decision that actions of Mr Hii in avoiding tax constituted evasion was made by Mr Cameron Unwin, an Executive Level 2.1 officer in the Australian Taxation Office. In his affidavit affirmed 5 February 2015 Mr Unwin deposes that in his classification level he is authorised to make decisions, including the formation of an opinion that a taxpayer has engaged in acts that constitute evasion for the purposes of s 170 of the ITAA 36. Mr Unwin also gave evidence of the process by which the draft reasons for decision developed, and that the reasons for decision in final form were published on 27 June 2012. Those reasons for decision were formally entitled: Reasons for decisions This document explains the reasons for the decisions made by the Commissioner of Taxation (the Commissioner) on whether Mr Yii An Hii is an Australian resident for income tax purposes and if so, the taxation consequences that would arise. 25 It is also described as being a "Comprehensive Audit" in case type, referable to the income years ending 30 June 2001 to 30 June 2009. 26 In this proceeding it is common ground that Mr Unwin was authorised by the Commissioner to make the decision which formed the first amended assessments. 27 The Executive Summary of the decision constituting the first amended assessments summarises issues decided by the Commissioner. They were as follows: Issue 1 5. For the income years ended 30 June 2001 to 30 June 2009, the Commissioner considers you were a 'resident' or 'resident of Australia' for the purposes of subs 6(1) of the ITAA 1936. Accordingly, under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997), your assessable income for those income years includes all ordinary income derived from all sources, whether in or out of Australia, during the relevant income year. In addition, under subsection 6-10(4) of the ITAA 1997, your assessable income includes your statutory income from all sources, whether in or out of Australia. Issue 2 6. The Commissioner can amend your assessment for the income years ended 30 June 2001 to 30 June 2004 and the income years ended 30 June 2007 to 30 June 2009 under section 170 of the ITAA 1936 as your actions have amounted to evasion under item 5 of the table in subsection 170(1) of the ITAA 1936. Issue 3 7. As you did not lodge an income tax return for the income years ended 30 June 2005 and 30 June 2006, the Commissioner has, in accordance with section 167 of the ITAA 1936, made an assessment of the amount upon which in his judgment income tax ought to be levied, and that amount is your taxable income for those income years for the purposes of section 166 of the ITAA 1936. 8. As you are a 'resident' or 'resident of Australia' under subsection 6(1) of the ITAA 1936, the Commissioner has calculated the total amount of tax shortfall for the income tax years ended 30 June 2001 to 30 June 2009 to be $46,697,900.37. Issue 4 9. The Commissioner has decided that the tax shortfalls that relate to assessable income for the years ended 30 June 2001 to 30 June 2009 (apart from the income years ended 30 June 2005 and 30 June 2006) has resulted from a lack of reasonable care. It is also considered that, for those particular income years, you have treated the income tax laws as applying in a way that is not reasonably arguable. As such, your administrative penalty will be calculated at 25% of your tax shortfall for each of the relevant income years. 10. In relation to the income years ended 30 June 2005 and 30 June 2006, you failed to lodge your income tax return by the date it was required to be given, which was necessary to determine your tax related liability. The commissioner has determined your tax-related liability for those income years without the assistance of your tax return. The resultant penalty is 75% of the tax related liability for those two years. 11. Your total penalty is $14,019,265.10. Issue 5 12. The Commissioner will impose general interest charge on the tax shortfall amounts for the income years ended 30 June 2001 to 30 June 2004. 13. As the Commissioner has determined you have a tax-related liability for the income years ended 30 June 2005 and 30 June 2006, you will be liable to pay GIC for each day in the period that started at the beginning of the day by which the returns were required to be furnished and finishing on the day before the Commissioner makes the assessments. 14. The Commissioner will impose shortfall interest charge on the tax shortfall amounts for the income years ended 30 June 2007 to 30 June 2009. 28 Relevantly the Conclusion at paragraphs 358-360 of the decision is as follows: 358. From the case law detailed above, before the Commissioner can form an opinion that there has been an avoidance of tax due to evasion, there needs to be: (iii) an avoidance of tax (an identified shortfall); and (iv) blameworthy behaviour that has the requisite nexus to that avoidance of tax. 359. We believe the following factors are all relevant in determining you have avoided tax and engaged in blameworthy behaviour with the intention of keeping the Commissioner from making an accurate assessment of your income tax: • listing a Singaporean business address on your Australian tax returns as your residential address; • providing different reasons as to why various addresses are used in each country; • not providing details of your offshore income and assets when requested; • omitting foreign source income from your Australian tax returns; • failing to provide full and complete details of foreign entities you control during the course of the audit; and • failing to pay appropriate income tax in Australia. 360. Given the reasons outlined above, there is sufficient basis for the Commissioner to form the opinion that there has been an avoidance of tax and that the avoidance is due to evasion. Item 5 of the table in section 170(1) of the ITAA 1936 provides that the Commissioner may amend a taxpayer's assessment at any time if the Commissioner is of the opinion that the avoidance of tax is due to evasion. Therefore, the Commissioner will amend your assessments to include any unreported income for the income years ended 30 June 2001 to 30 June 2004 and the income years ended 30 June 2007 to 30 June 2009. THE OBJECTION DECISION AND FURTHER AMENDED ASSESSMENTS 29 The objection decision dated 20 December 2013 was sent to Mr Hii under cover of letter from Mr Michael Cranston, Deputy Commissioner of Taxation. As I noted earlier, the decision allowed in part the objection of Mr Hii dated 17 September 2012. The following table summarises Mr Hii's original taxable income, amounts treated as taxable income following the Commissioner's audit, and Mr Hii's taxable income following the Commissioner's objection decision of 20 December 2013: FINANCIAL YEAR ORIGINAL TAXABLE INCOME AUDIT ADJUSTMENTS AMENDED TAXABLE INCOME INCOME ADJUSTMENTS TAXABLE INCOME POST OBJECTION DECISION 2000-01 $540.00 $53,000.00 $53,540.00 -$53,000.00 $540.00 2001-02 $149.00 $4,160,710.00 $4,160,859.00 -$1,116,311.00 $3,044,548.00 2002-03 $2,461.00 $1,987,773.00 $1,990,234.00 -$694,033.00 $1,296,201.00 2003-04 $9,148.00 $2,758,300.00 $2,767,448.00 -$1,667,525.00 $1,099,923.00 2004-05 $0.00 $4,144,265.00 $4,144,265.00 -$1,154,807.00 $2,989,458.00 2005-06 $0.00 $5,588,350.00 $5,588,350.00 -$505,075.00 $5,083,275.00 2006-07 $743.00 $32,236,579.00 $32,237,322.00 -$29,679,221.00 $2,588,101.00 2007-08 $701.00 $30,377,913.00 $30,378,614.00 -$2,197,821.00 $28,180,793.00 2008-09 $52.00 $18,618,188.00 $18,619,240.00 -$5,405,637.00 $13,213,603.00 30 I note that a third amended assessment was subsequently issued by the Commissioner on 25 February 2014 in respect of the year ended 30 June 2004. In that third amended assessment Mr Hii's taxable income of $1,099,923 for that year was amended to $849,923. 31 A primary argument of Mr Hii in his objection to the original decision of the Commissioner was that he was not a resident of Australia at any time during the relevant years. In summary, Mr Hii had submitted to the Commissioner that: At all material times he was a resident of Malaysia. He continued to own three residences in Malaysia after his now former wife, Dr Beh, moved to Australia in 1993 through to 2002. Between 2002 and 2005 he made changes to his living arrangements in Malaysia but not for the purposes of moving to Australia with Dr Beh. He maintained a close relationship with Malaysia throughout the audit period, as well as with Papua New Guinea, the Philippines, Hong Kong and Singapore. He maintains residences for his personal use in each of these countries where he has business interests. Dr Beh and the couple's six children lived in Australia for safety reasons, and it was only for the purpose of visiting his children that he travelled to Australia during the relevant years. He had not visited Australia since 2009, as his children were now old enough to visit him overseas. All of his close friends live in Malaysia, although he has an extensive network of friends, business associates and acquaintances in other countries, in particular Papua New Guinea, Hong Kong and Singapore. Mr Hii had always had more assets in Malaysia and other countries than in Australia. The assets Mr Hii owned in Australia were only held for a practical commercial reason, as well as for the benefit of Dr Beh. 32 The objection decision referred to issues including the meaning of "reside" and "resident" in Australian income tax law. Paragraph 134 stated: Based on the available information and applying the four behavioural factors as well as considering your physical presence in Australia in determining residency according to ordinary concepts, the Commissioner has formed the opinion that you were a resident or resident of Australia under subsection 6(1) of the ITAA 1936 for 2000-01 to 2008-09 financial years. This decision applies the ATO View in TR 98/17 and it is considered that this decision is supported by case law including Shand, Gunawan, Iyengar, Case 8, Nordern and Joachim. 33 Importantly for the purposes of this judgment the Commissioner in the objection decision stated as follows: Question 2 – (a) amended assessments for the 2001-01 to 2003-04 and 2006-07-2008-09 financial years 236. The periods in which the Commissioner may amend an assessment under the ITAA 1936 are specified in section 170 of the ITAA 1936. 237. However, under item 5 of the table there is no restriction on the time period within which the Commissioner can amend an assessment where the Commissioner is of the opinion that there has been fraud or evasion. To make an amended assessment under this provision the Commissioner must form an opinion to this effect and form it validly. 238. In your case the Commissioner issued amended assessment for the 2000-01, 2001-02, 2002-03, 2003-04, 2007-08 and 2008-09 year on the basis of evasion. 239. Law Administration Practice Statement PS LA 2008/6 Fraud or Evasion (PS LA 2008/6) considers the unlimited time limit that may be allowed for the Commissioner to amend returns where fraud or evasion has been or is suspected of being committed. 240. Paragraph 17 explains evasion by reference to the judgment of Dixon J in Denver Chemical Manufacturing v Commissioner of Taxation 79 CLR 296 (Denver case), in which evasion was described as a 'blameworthy act or omission on the part of the taxpayer'. Further, circumstances may arise where a taxpayer's behaviour is not considered to constitute fraud but is nevertheless sufficiently blameworthy to constitute evasion. 241. For the Commissioner to form an opinion that there has been an avoidance of tax due to evasion, the following factors need to exist: • there needs to be an avoidance of tax (an identified shortfall), and • the Commissioner needs to identify blameworthy behaviour that has the requisite nexus to that avoidance of tax. … 251. In your case the Reasons for Decision that were sent to you advised that the amended assessments for the 2001-01, 2001-02, 2003-04, 2006-07 and 2008-09 financial years were amended as it was considered that the avoidance was due to evasion for the following reasons: • Listing a Singaporean business address on your Australian tax return as your residential address; • Providing different reasons as to why various addresses are used in each country; • Not providing details of your offshore income and assets when requested; • Omitting foreign source income from your Australian income tax returns; • Failing to provide full and complete details of foreign entities you control during the course of the audit; and • Failing to pay appropriate income tax in Australia. 252. The Commissioner is required to form an opinion that fraud or evasion has occurred. The opinion must be formed and it must be formed validly. The ATO's Taxation Authorisation Guidelines authorise an Executive Level 2 officer to form an opinion, in the name of the Deputy Commissioner, that fraud or evasion has occurred. The ATO's position on evasion in this case was clearly articulated in the Reasons for Decision that has been issued supporting the assessments and amended assessments. In addition, the opinion has been duly authorised, in line with the Taxation Authorisation Guidelines. All decisions in the audit case, including the opinion on fraud or evasion, were duly authorised by an EL2 officer. QUD 622 OF 2014 – AMENDED ORIGINATING APPLICATION FILED BY MR HII ON 19 FEBRUARY 2015 AND INTERLOCUTORY APPLICATION FILED BY THE COMMISSIONER ON 20 JANUARY 2015 Submissions of the parties 34 Several iterations of written submissions relevant to issues in contention in QUD 622 of 2014 were provided by the legal representatives of the parties during the course of these proceedings. This is particularly so in respect of Mr Hii's claims. The evolution of argument reflects the significant changes to the substance of Mr Hii's case in QUD 622 of 2014. This includes the amendment to Mr Hii's claim in respect of whether the Commissioner had engaged in acts constituting "conscious maladministration" as that phrase is explained by the High Court in Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146. 35 Materially, Mr Hii submitted (in summary) as follows: In light of factors including that the substantive issues in QUD 622 of 2014 were listed for hearing at the same time as the Commissioner's application for summary judgment, and also at the same time as Mr Hii's application for summary judgment in the Part IVC proceedings in QUD 57 of 2014, it is inappropriate that Mr Hii's application in QUD 622 of 2014 be determined on a summary basis. It is common ground that at or about the time of the objection decision communicated under cover of letter dated 20 December 2013 to Mr Hii's lawyers, neither the Commissioner nor any authorised delegate formed an opinion that there had been any avoidance of tax due to fraud or evasion by Mr Hii for any of the years ended 30 June 2001 to 2004 and 30 June 2007 to 2009. The formation of an opinion pursuant to s 170 of the ITAA 36 that there had been an avoidance of tax due to fraud or evasion by Mr Hii or his agent in each of the relevant years was a necessary precondition to enlivening the Commissioner's power to amend the assessments for each of the relevant years. It follows that such an opinion ought to have been formed at or about the time of making the objection decision. The formation of the opinion is a jurisdictional fact upon which the power to amend depends. Whilst the failure to form the opinion is a matter upon which the amended assessment may be held to be excessive in the Part IVC proceedings in QUD 57 of 2014, this conclusion does not preclude another conclusion that the formation of the opinion is a mandatory aspect of the making of the assessment and is amendable to judicial review. Mr Hii acknowledges that he faces three "hurdles" in prosecuting his application in QUD 622 of 2014, namely: 1. The Court must be satisfied that it was necessary for the Commissioner to form the opinion at the objection stage that there had been an avoidance of tax due to fraud or evasion, and that it was insufficient for the Commissioner to rely upon his opinion in this respect formed at an earlier stage. 2. If the Court is so satisfied, the next question is whether a failure of the Commissioner to form an opinion at the objection stage is sufficient to render the purported second amended assessments liable to be set aside. Mr Hii submits that, in line with the principles articulated in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390, the Court would be satisfied that a failure by the Commissioner to form this opinion at the objection stage means that the amended assessments were not assessments. 3. The third hurdle is whether the Court is prepared to exercise its discretion to set aside the second amended assessments. Notwithstanding that Mr Hii may pursue his rights in the Part IVC proceedings in QUD 57 of 2014, those proceedings are likely to be lengthy and inconvenient to Mr Hii to the extent that he is based overseas and would seek to give his evidence by video link. Should Mr Hii be successful in his amended originating application in QUD 622 of 2014, it would not be appropriate to remit the objection decision to the Commissioner for reconsideration. It is an open point whether the categories discussed by the majority of the High Court in Futuris are now closed or are illustrative of general principles to be developed by future case law (contrast Roberts v Federal Commissioner of Taxation [2013] FCA 1108 at [42] with observations of Kirby J in Futuris at [132]-[136] and Woods v Deputy Commissioner of Taxation [2011] TASSC 68 at [53]-[57]). 36 In turn the Commissioner submitted, in summary, as follows: The primary basis of Mr Hii's amended originating application, being that the relevant officer at the objection stage is required to reform an opinion pursuant to s 170 of the ITAA 36 that Mr Hii had avoided tax due to evasion, ignores both the operation of s 175 and s 177 of the ITAA 36 and the decision of the High Court in Futuris. Item 6 of the table to s 170(1) of the ITAA 36 enables an objection officer to issue amended assessments as a consequence of an objection decision at any time. It followed that the objection officer was not required to reform the opinion in order for the time limited for amending the assessments to be extended. The process outlined by the Full Court in Fletcher v Commissioner of Taxation (1998) 19 FCR 442 does not mandate such an outcome. McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 is authority for the proposition that s 177 of the ITAA 36 applies in respect of the originally formed opinion that Mr Hii had engaged in acts which constituted evasion. In any event it is apparent that the officer who made the objection decision did not consider foreclosed the correctness of the opinion concerning Mr Hii's evasion of tax. In light of the High Court's decision in Futuris it is clear that by reason of s 175 and s 177 of the ITAA 36 the basis for review under s 39B Judiciary Act is limited to where the assessment is tentative or provisional and where conscious maladministration has occurred. Section 175 of the ITAA 36 maintains the validity of an assessment notwithstanding that any provision of the ITAA 36 has not been complied with. This includes s 170 of the ITAA 36. Summary judgment application in QUD 622 of 2014 37 The Commissioner has sought summary judgment against Mr Hii in respect of QUD 622 of 2014 pursuant to s 31A(2) of the Federal Court Act. Section 31A(2) provides: The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. 38 A proceeding need not be hopeless or bound to fail for it to have no reasonable prospect of success: s 31A(3). 39 Section 31A(2) was examined in detail by the High Court in Spencer v Commonwealth of Australia [2010] HCA 28. In that case French CJ and Gummow J said: 25. Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a "fanciful" prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success. 26. Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant. The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact. (Footnotes omitted.) 40 The reference to Lord Hope of Craighead in their Honours' judgment was to the following observations in Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 at 260 [94]-[95] concerning an equivalent rule in the Civil Procedure Rules 1998 of England and Wales. In that case Lord Hope said inter alia: … For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, ... that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all. (Footnotes omitted.) 41 In Spencer, Hayne, Crennan, Kiefel and Bell JJ explained the concept of "no reasonable prospect" in the following terms: 58. How then should the expression "no reasonable prospect" be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is "no reasonable prospect". … 59. In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim. 60. Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes. 42 In the case before me in QUD 622 of 2014 Mr Hii has sought declarations as well as writs of certiorari, prohibition and mandamus. All of these remedies require the Court to exercise its discretion in favour of the party seeking the order. In this respect I note, for example, the decisions of the High Court in Re Refugee Review Tribunal ex parte Aala (2000) 204 CLR 82 (particularly in relation to the constitutional writs certiorari, prohibition and mandamus) and Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 (in relation to declaratory relief), as well as the helpful discussion in Aronson M and Groves M, Judicial Review of Administrative Action (5th ed, Lawbook Co Sydney, 2013) at 12.250, 13.200 and 15.90. 43 Mr Hii's case for discretionary relief relates to the interpretation and application of provisions of the ITAA 36 including ss 170 (both prior to and following amendments to that section introduced in 2005), 175 and 177, as well as the application of cases including Futuris. It is clear that the parties themselves agreed that the appropriate approach was for the full hearing of QUD 622 of 2014 to proceed. The full hearing of QUD 622 of 2014 required three days of submissions (out of the four days set down for the combined hearing), including frequent reference to evidence, relevant legislation and authorities. Both parties were represented by experienced Counsel, including Senior Counsel. I reserved my decision in light of the amount of detail to which I had been taken over those three days. 44 As has been repeatedly observed in cases dealing with summary judgment, the Court ought not lightly make an order for summary judgment. In determining whether Mr Hii has reasonable prospects of success in QUD 622 of 2014 I note that: there has been significant movement by Mr Hii in the framing of his case in the period leading up to the hearing (and even at the hearing in the sense that leave was sought by Mr Hii on the first day of the hearing to file an amended originating application); Mr Hii also accepts that if the primary ground he nominates for determination by the Court is determined adversely to him then it is not necessary for the Court to proceed with other issues raised during the four days of the hearing; and even if Mr Hii is successful in persuading the Court that his case has merit he must still persuade the Court to exercise its discretion in his favour. 45 However militating against an order for summary judgment is that: the case required three days of hearing, which is suggestive of complexity of issues requiring resolution; and while the principles in Futuris are of particular relevance in considering Mr Hii's amended originating application, nonetheless Mr Hii has also advanced detailed arguments as to why Futuris does not apply in this case. 46 On balance, and given the extensive and complex nature of the arguments put to me at the hearing, I consider that it could be said that Mr Hii had at least a reasonable prospect of success in relation to his claims for discretionary relief in QUD 622 of 2014. 47 In my view the proper approach in these circumstances is to consider Mr Hii's substantive application in QUD 622 of 2014. Clearly, both parties recognised that Mr Hii's case could not be easily – or even appropriately – dealt with on a summary judgment application. In this respect it follows that the proper order is to dismiss the Commissioner's interlocutory application for summary judgment filed 20 January 2015. Relevant legislation 48 Although the terms of s 166 of the ITAA 36 have been amended during the period in which the assessments of Mr Hii's income were made by the Commissioner, it was common ground before me that the current form of s 166 of the ITAA 36 applies to the present proceedings. Relevantly s 166 of the ITAA 36 provides: 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). 49 Section 169A sets out material upon which the Commissioner can rely in making assessments. In particular s 169A(3) provides: In determining whether an assessment is correct, any determination, opinion or judgment of the Commissioner made, held or formed in connection with the consideration of an objection against the assessment shall be deemed to have been made, held or formed when the assessment was made. 50 As I noted earlier in this judgment, s 170 of the ITAA 36 was amended in 2005 by the Tax Laws Amendment (Improvements to Self Assessment) Act (No 2) 2005 (Cth) which commenced on 19 December 2005. Section 15 of that statute provided that amendments to s 170(1) of the ITAA 36 applied in relation to assessments for the 2004-05 year of income and later years of income. 51 Section 170 both prior to and following amendment deals with amendment of assessments. Prior to the 2004-05 years of income s 170 read relevantly as follows: 170 Amendment of assessments (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. (1A) … (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; or (b) … (c) … (d) … amend the assessment by making such alterations in it or additions to it as the Commissioner thinks necessary to correct the assessment. ... (7) Nothing contained in this section shall prevent the amendment of any assessment in order to give effect to the decision upon any appeal or review, or its amendment by way of reduction in any particular in pursuance of an objection made by the taxpayer or pending any appeal or review. ... 52 Following amendment, s 170 provides relevantly as follows: (1) The Commissioner may amend an assessment as follows: Amendment of assessment Time of amendment Qualifications 1 The Commissioner may amend an assessment of an individual for a year of income within 2 years after the day on which the Commissioner gives notice of the assessment to the individual. … This item is subject to items 5 and 6. 2 … 3 … 4 … 5 The Commissioner may amend an assessment at any time if he or she is of the opinion there has been fraud or evasion. None. 6 The Commissioner may amend an assessment at any time: None. (a) to give effect to a decision on a review or appeal; or (b) as a result of an objection made by the taxpayer or pending a review or appeal. (2) The Commissioner cannot amend an amended assessment under item 1, 2, 3 or 4 of the table in subsection (1) if the limited amendment period for the original assessment concerned has ended. Note: The Commissioner can amend amended assessments at any time under item 5 or 6 of the table in subsection (1). (3) … 53 Section 175 of the ITAA 36 provides: The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with. 54 Section 175A(1) of the ITAA 36 provides: 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. 55 Further, s 177(1) of the ITAA 36 provides: (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. 56 In light of these provisions I now turn to consideration of Question 1. Consideration of Question 1 57 It is convenient at this point to restate the first question for decision in QUD 622 of 2014 as articulated by Mr Hii, namely: 1. In circumstances where the Respondent has amended assessments for each of the years 2001 to 2004 and 2007 to 2009: (a) pursuant to the power in s 170(2) [for the years 2001 to 2004] and Item 5 of s 170(1) [for the years 2007 and 2009]; and where an authorised delegate formed the opinion that there had been an avoidance of tax due to fraud or evasion prior to issuing the first notices of amended assessment (in 2012); (b) the taxpayer objected to the assessments as amended inter alia on the grounds that the Respondent ought not to have formed the opinion that there had been an avoidance of tax due to fraud or evasion; and (c) the taxpayer provided submissions and materials in support of the objection is the Respondent, as part of determining the objection, required to form the opinion that there has been an avoidance of tax due to fraud or evasion? 58 I note that there is no reference to the third amended assessment concerning the year of income ending 30 June 2004 in Question 1. 59 In his written submissions, Mr Hii has characterised this issue as a jurisdictional fact question. As explained by Professors Aronson and Groves (Judicial Review of Administrative Action, 5th ed) at 4.470: Parliament is free to make the validity of any reviewable decision conditional upon the existence of a particular fact, regardless of whether the decision-maker is an administrator, a tribunal, or an inferior court. To be more precise, Parliament can provide that a reviewable decision is to be treated as invalid if a fact does not exist. Explicit provisions of that kind are extraordinarily rare … 60 Notwithstanding the rarity of explicit provisions, as the learned authors themselves note, the High Court has demonstrated a preparedness to imply the existence of a jurisdictional fact or facts into legislation: two examples have been in Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135 and Plaintiff M70/2011 v Minister for Immigration and Citizenship (Malaysian Declaration Case) (2011) 244 CLR 144. 61 As I have already observed, it is not in dispute in this case that no opinion was formed by the Commissioner at the time of the objection decision. 62 In my view Question 1 can be divided conveniently into two sub-questions, namely: (a) In light of the decision of the High Court in Futuris, as a matter of law, can Mr Hii seek orders pursuant to s 39B of the Judiciary Act if there was non-compliance by the Commissioner with s 170 of the ITAA 36 in respect of the objection decision and second amended assessments, by reason of a failure by the Commissioner to form an opinion as to whether Mr Hii's conduct in avoiding tax had constituted evasion? (b) In any event, was there non-compliance by the Commissioner with s 170 of the ITAA 36 in respect of the objection decision and second amended assessments by reason of the failure of the Commissioner to form an opinion at the objection decision stage as to whether Mr Hii's conduct in avoiding tax had constituted evasion? 63 I shall deal with each of these sub-questions in turn. (1)(a) Can Mr Hii seek orders pursuant to s 39B of the Judiciary Act if the Commissioner failed to comply with s 170 of the ITAA 36? Federal Commissioner of Taxation v Futuris Corporation Ltd 64 In addressing this matter it is helpful to first examine the decision of the High Court in Futuris. 65 In that case, Futuris Corporation Ltd ("Futuris") was a publicly listed company with two wholly-owned subsidiary companies, one of which in turn held shares in its own wholly-owned subsidiary company. In the course of publicly floating one of the subsidiaries, shares were transferred within the corporate structure. This transaction resulted in the reduction of the cost base of Futuris in one of the subsidiaries and of certain moneys owed to it by that subsidiary. Another result however was an increase in the cost base of Futuris' shares in the subsidiary whose shares were the subject of the transfer. During the public float, Futuris disposed of all of its shares in that particular subsidiary company. It became necessary for taxation purposes to determine the amount of capital gain (if any) made from that disposal. Futuris lodged an income tax return for the year ended 30 June 1998 which, among other things, included calculations of its cost base in its shares in the transferred subsidiary company. Futuris specified a taxable income of $86,099,045 and tax payable of $30,991,696.20. 66 In November 2002 the Commissioner issued a notice of amended assessment to Futuris for the year ended 30 June 1998, which identified an amount of $19,950,088 to be added to Futuris' taxable income. The Commissioner attributed that amount to an increase in capital gain made on the disposal by Futuris of its shares in the subsidiary. 67 On 23 December 2002 Futuris objected to the assessment, however the objection was disallowed on 22 May 2003. Futuris appealed to the Federal Court under Part IVC of the TAA 53. 68 Subsequently on 9 November 2004 the Commissioner notified Futuris that it had determined under s 177F(1) of the ITAA 36 that the amount of $82,950,090, being a tax benefit that was referable to an amount not included in Futuris' assessable income, was also to be included in Futuris' assessable income. Futuris was served with a second amended notice of assessment of income tax on 12 November 2004. Futuris objected to that amended assessment, and again appealed to the Federal Court under Part IVC of the TAA 53. 69 Following these events, Futuris commenced further proceedings in the Federal Court pursuant to s 39B of the Judiciary Act for a declaration that the amended assessment was invalid, on the ground that the Commissioner had deliberately engaged in the double counting of Futuris' tax liability. It was these proceedings which were appealed to the High Court of Australia. 70 At first instance the Federal Court dismissed Futuris' application for declaratory relief. The primary judge accepted the contention of the Commissioner that he had assumed he was entitled to compensate the taxpayer for any double counting by later determination under s 177F(3)(a) and in any event Futuris' complaints could be addressed in the Part IVC proceedings before the Federal Court. The Full Court of the Federal Court allowed an appeal by Futuris, on the ground that (in summary) the making of the second amended assessments of income tax by the Commissioner was not a bona fide exercise of the power to assess. The Commissioner appealed to the High Court of Australia. 71 Futuris submitted that, in producing the second amended assessment, the process of the Commissioner was flawed because there had been "double counting" by the Commissioner of the amount of $19,950,088, and further that the double counting had been done deliberately by the Commissioner. The Commissioner relied upon s 177F(3) of the ITAA 36 to overcome any risk of double counting, as that provision permitted appropriate adjustments. The Commissioner also relied upon the finding of the primary judge that even if the Commissioner had erred as to the applicability of s 177F(3), the effect of that mistake could be addressed in Part IVC proceedings. 72 The High Court unanimously allowed the Commissioner's appeal. 73 The majority decision was delivered by Gummow, Hayne, Heydon and Crennan JJ. At 154 [15] their Honours said: … the Commissioner did not apply the Act to facts which were known to be untrue, there was no absence of bona fides attending the second amended assessment, there was no jurisdictional error vitiating that amended assessment, and the appeal to this Court should be allowed and the order of the primary judge reinstated. 74 After setting out key provisions of the legislation relating to assessment of tax, reviews and appeals, their Honours said: 22. The operation of the Pt IVC system is triggered by s 175A of the Act which states: 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 Administration Act]. Section 175 is a short but important provision. It provides: "The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with." Section 177(1) states: 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 Administration Act] on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct. 23. The significance of s 175 for the operation of the Act and for the scope of judicial review outside Pt IVC is to be assessed in the manner indicated in Project Blue Sky Inc v Australian Broadcasting Authority. That case decided that the description of provisions as either mandatory or directory provides no test by which the consequences of non-compliance with a statutory criterion can be determined. Rather, consistently with the reasons in Project Blue Sky of McHugh, Gummow, Kirby and Hayne JJ, the question for the present case is whether it is a purpose of the Act that a failure by the Commissioner in the process of assessment to comply with provisions of the Act renders the assessment invalid; in determining that question of legislative purpose regard must be had to the language of the relevant provisions and the scope and purpose of the statute. 24. Section 175 must be read with ss 175A and 177(1). If that be done, the result is that the validity of an assessment is not affected by failure to comply with any provision of the Act, but a dissatisfied taxpayer may object to the assessment in the manner set out in Pt IVC of the Administration Act. … Where s 175 applies, errors in the process of assessment do not go to jurisdiction and so do not attract the remedy of a constitutional writ under s 75(v) of the Constitution or under s 39B of the Judiciary Act. 25. But what are the limits beyond which s 175 does not reach? The section operates only where there has been what answers the statutory description of an "assessment". Reference is made later in these reasons to so-called tentative or provisional assessments which for that reason do not answer the statutory description in s 175 and which may attract a remedy for jurisdictional error. Further, conscious maladministration of the assessment process may be said also not to produce an "assessment" to which s 175 applies. Whether this be so is an important issue for the present appeal. (Emphasis added, footnotes omitted.) 75 The majority considered that, in the process of making the second amended assessment, any errors of the Commissioner fell within the scope of s 175 of the ITAA 36. Those errors (if any) could not found a complaint for jurisdictional error and would be for consideration in the Part IVC proceedings (at 161-162 [45]). They further found that the imminence of the hearing of the Part IVC proceedings instituted by Futuris should have led the Court below to refuse declaratory relief (at 162 [48]). 76 Futuris had sought relief on the basis that the relevant assessment was "tentative" or "provisional". The Full Court referred to a letter written by the Deputy Commissioner to the public officer of Futuris on 20 September 2004 in which was stated: We also advise that we will not seek payment of any of the primary tax, tax shortfall penalty and interest and general interest charges payable under subsection 170AA(1) in respect of $19,950,088 of the Part IVA adjustment until the litigation relating to the Division 19A issue is finalised. 77 The Full Court had found that there was nothing in that letter nor in the second amended assessment from which it could be inferred that the assessment was tentative or provisional, in the sense that it was not definitive of Futuris' liability (at 163-164 [51]). This conclusion was not disturbed on appeal. 78 The majority of the High Court then considered the question whether, if the Commissioner had deliberately "double counted" a significant proportion of Futuris' income, such conduct would enliven principles respecting jurisdictional error. The majority observed that the issue was whether, upon its proper construction, s 175 of the ITAA 36 brought within the jurisdiction of the Commissioner when making assessments a deliberate failure to comply with the provisions of the ITAA 36 (at 164 [55]). Their Honours continued at 164-165: 55. … A public officer who knowingly acts in excess of that officer's power may commit the tort of misfeasance in public office in accordance with the principles outlined earlier in these reasons. Members of the Australian Public Service are enjoined by the Public Service Act (s 13) to act with care and diligence and to behave with honesty and integrity. This is indicative of what throughout the whole period of the public administration of the laws of the Commonwealth has been the ethos of an apolitical public service which is skilled and efficient in serving the national interest. These considerations point decisively against a construction of s 175 which would encompass deliberate failures to administer the law according to its terms. 56. Such failures manifest jurisdictional error and attract the jurisdiction to issue the constitutional writs. To the extent that there is any indication to the contrary in what was said by Mason and Wilson JJ in F J Bloemen Pty Ltd v Federal Commissioner of Taxation that should not be followed. (Footnotes omitted.) 79 The High Court in Futuris noted that there was no such failure of due administration by the Commissioner in relation to the second amended assessment. Although the Full Court had considered that the Commissioner's conduct was deliberate, albeit subject to the assumption that an adjustment could be made pursuant to s 177F(3), the view taken by the Commissioner of his powers under s 177F(3) was supported by case law. Further, as their Honours noted at [60]: Allegations that statutory powers have been exercised corruptly or with deliberate disregard to the scope of those powers are not lightly to be made or upheld. 80 In a separate judgment Kirby J concurred with the orders of the majority. However at [133] his Honour opined that the taxation decisions involving tentative or provisional assessment, or lack of good faith, should not be treated as covering the entire field of disqualifying legal (or "jurisdictional") error for s 39B purposes. Application of Futuris in this Court 81 Decisions of this Court have interpreted Futuris to have narrowed the class of case where the Court has power to intervene in challenges to assessments under ITAA 36 pursuant to s 39B of the Judiciary Act, to cases involving tentative or provisional assessment or conscious maladministration. In particular, in Roberts Besanko J observed: 36. I think that the joint reasons in Futuris do limit the grounds of challenge to the two categories identified. I take that view for the following reasons. 37. First, their Honours state (at 157 [25]): But what are the limits beyond which s 175 does not reach? The section operates only where there has been what answers the statutory description of an "assessment". Reference is made later in these reasons to so-called tentative or provisional assessments which for that reason do not answer the statutory description in s 175 and which may attract a remedy for jurisdictional error. Further, conscious maladministration of the assessment process may be said also not to produce an "assessment" to which s 175 applies. Whether this be so is an important issue for the present appeal. 38. Secondly, when considering how s 177(1) of the ITAA 1936 operated in the context of the evidence which may be received on an application for judicial review, their Honours said (at 167 [66]): ... What will be an issue here, as explained earlier in these reasons, are allegations of corruption and other deliberate maladministration. The attribution "correct" given by the concluding word of s 177(1) is inapt to describe this situation which would arise were such allegations (properly pleaded) made good in the judicial review proceeding. Considerations applied above in the construction of s 175 apply here also. The result is that, on its proper construction and its application to the present s 39B case, s 177(1) did not conclude against Futuris curial consideration of alleged deliberate maladministration of the Act with respect to the second amended assessment. 39. As I read this passage their Honours were saying that s 177(1) will not limit the evidence which may be received on a judicial review application because the terms of s 177(1) are not apt to protect the type of allegations, that is, corruption and other deliberate maladministration made in such proceedings. 40. Thirdly, their Honours made it clear that there was no scope for the operation of the so-called Hickman principle in considering the relationship between ss 175 and 177(1) of the ITAA 1936. 41. I note also that the conclusion I have reached is consistent with the observations of the Full Courts in Marijancevic and Denlay and with the observations of Kenny J in Deputy Commissioner of Taxation v Hua Wang Bank Berhad (No 2) (2010) 81 ATR 40 at [48]. 42. In my opinion there are only two categories of error which are not protected by s 175 of the ITAA 1936. The other forms of what constitutes jurisdictional error in other areas of administrative law are not sufficient, nor is recklessness in an expanded sense or carelessness in the administrative process. I accept as arguable for the purposes of this application that that form of recklessness which bears a close affinity with deliberate conduct (and which I have described above) may be sufficient and I will proceed on that basis. For reasons I will now give, the applicant's case falls well short of establishing an arguable case of conscious maladministration or reckless maladministration in the sense I have described. Hereinafter, references to conscious maladministration includes reckless maladministration in the sense I have described. 82 I note that leave to appeal from the decision of Besanko J in Roberts was refused: Roberts v Deputy Commissioner of Taxation [2015] FCA 238. 83 To the list of cases to which Besanko J referred at [41] in Roberts, I would add the decisions of the Full Court of the Federal Court in Commissioner of Taxation v Administrative Appeals Tribunal (2011) 191 FCR 400 and Gashi v Commissioner of Taxation (2013) 209 FCR 301. In Commissioner of Taxation v Administrative Appeals Tribunal the Full Court observed at [23]: … First, by reason of the operation of ss 175 and 177 of the 1936 Act, production of a notice of assessment precludes judicial review of the assessment in proceedings under s 39B of the Judiciary Act unless the purported assessment is tentative or provisional or was made in bad faith: Futuris at [24] and [47]. (emphasis added.) 84 In Gashi the Full Court said at [43]: If the decision to issue the assessments was infected with jurisdictional error, those questions (and orders seeking to address those questions) may not be pursued under Pt IVC of the TAA. They may not be pursued under Pt IVC because the subject matter of an appeal under Pt IVC is absent – an assessment. A purported assessment that is "tentative", "provisional" or made in bad faith or conscious maladministration is not an assessment: Federal Commissioner of Taxation v Hoffnung & Co Ltd (1928) 42 CLR 39 at 54 and Richard Walter at 237. The appropriate challenge to a purported assessment is by way of constitutional writs or associated relief under s 39B of the Judiciary Act: Mount Pritchard & District Community Club Ltd v Federal Commissioner of Taxation (2011) 196 FCR 549 at [2]; Kennedy v Administrative Appeals Tribunal (2008) 168 FCR 566 at [11]- [13] and [22]-[26]. (Emphasis added.) 85 For these purposes it is irrelevant that Mr Hii is challenging amended assessments by the Commissioner. Section 173 of the ITAA 36 provides: Except as otherwise provided every amended assessment shall be an assessment for all the purposes of this Act. McAndrew v Federal Commissioner of Taxation 86 In the context of this discussion concerning the applicability of s 175 and s 177 of the ITAA 36 and the principles articulated in Futuris to the case before me, it is also useful to have regard to the decision of the High Court in McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263. In that case the issue before the Court was whether, when the Commissioner has amended an assessment in purported pursuance of the authority conferred upon him and the taxpayer appeals, it rested upon the Commissioner on the hearing of the appeal to prove to the reasonable satisfaction of the Court that the taxpayer had not made to the Commissioner a full and true disclosure of all the material facts necessary for his assessment and that there had been an avoidance of tax. In examining this question at pages 269-270 Dixon CJ and McTiernan and Webb JJ said: In the first place s. 173 places the notice of an amended assessment, that is to say of an assessment as amended, in the same position for the purpose of s. 177 as notice of an original assessment. Then in our opinion the meaning and effect of s. 177 (1) is to give evidentiary effect to such an assessment over the whole ground which by law it is the function of an assessment to cover. Over part of that ground its evidentiary effect is absolutely conclusive, over the rest of the ground it is conclusive except in proceedings on appeal against the assessment. It is given such evidentiary effect by the production of a notice of the assessment or of a copy under the hand of the commissioner, second commissioner or a deputy commissioner. The ground over which s. 177 (1) gives conclusiveness to the assessment is described as the due-making of the assessment and the correctness of the amount and all the particulars of the assessment. But that appears to us to comprise the whole ground. It is the manifest policy, one may now almost say the historical policy, of the legislation on the one hand to give to the taxpayer full opportunity on objecting to his assessment of contesting his liability in every respect before a court or before a board of review but on the other hand to require that in proceedings for the recovery of the tax the taxpayer will be concluded by the assessment and will not be entitled to go behind it for any purpose. (emphasis added.) 87 Later at page 271 their Honours observed: In George v. Federal Commissioner of Taxation (1) [(1952) 86 C.L.R. 183] the Court said: "The clear policy of s. 177 is to distinguish between the procedure or mechanism by which the taxable income and tax is ascertained or assessed on the one hand and on the other hand the substantive liability of the taxpayer. The former involves the due making of the assessment" [(1952) 86 C.L.R., at pp. 206, 207]. Section 177 (2) and (3) impose certain conditional time bars which in this dichotomy seem evidently to belong to substantive liability. From this it follows that fulfilment of the conditions which bring a case within s. 170 (2) is part of the matter governed by the words of exception in s. 177 (1), viz. "except in proceedings on appeal against the assessment". An appeal, however, is a proceeding given by statute to a taxpayer for the purpose of impugning an assessment otherwise conclusively imposing liability upon him. If there were no more than that, it would be enough to cast upon the taxpayer the burden of establishing his objections. On ordinary principles he must establish the facts which give him a prima facie title to the relief he seeks from the Court. 88 I note that at the time of the decision in McAndrew, s 177(1) of the ITAA 36 read: 177(1) The production of a notice of assessment, or of a document under the hand of the Commissioner, 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 on appeal against the assessment) that the amount and all the particulars of the assessment are correct. (2) The production of a Gazette containing a notice purporting to be issued by the Commissioner shall be conclusive evidence that the notice was so issued. (3) The production of a document under the hand of the Commissioner, Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a document issued by either the Commissioner, Second Commissioner, or a Deputy Commissioner, shall be conclusive evidence that the document was so issued. (4) The production of a document under the hand of the Commissioner, Second Commissioner, or a Deputy Commissioner, purporting to be a copy of or extract from any return or notice of assessment shall be evidence of the matter therein set forth to the same extent as the original would be if it were produced. 89 It is clear that while the language of s 177(1) of the ITAA 36 has altered slightly since the decision in McAndrew, the underlying substance of the section has not. To that extent, I consider that the observations of the plurality in McAndrew in relation to s 177(1) of the ITAA 36 are applicable to the case before me. Assessment not invalid 90 In summary, and even assuming that the Commissioner has failed to comply with other provisions of the ITAA 36 (in this case, s 170 ITAA 36 both prior to and following the 2005 amendment) in respect of the second amended assessments, the combined effect of s 175 and s 177 of the ITAA 36 is that any failure by the Commissioner to comply with a provision of the tax legislation when issuing an assessment does not thereby render the assessment invalid. The decision of the High Court in Futuris, in particular as subsequently applied in this Court, is authority for the proposition that unless an assessment is tentative or provisional, or is produced as a result of conscious maladministration, it is not susceptible to challenge pursuant to s 39B of the Judiciary Act. Other than in these very limited circumstances, the appropriate challenge by a taxpayer is pursuant to Part IVC of the TAA 53 (cf also Mount Pritchard & District Community Club Limited v Federal Commissioner of Taxation (2011) 196 FCR 549 at [52], [53], [63]). Tentative or provisional assessment 91 The second amended assessments the subject of Mr Hii's claim pursuant to s 39B of the Judiciary Act in QUD 622 of 2014 were not "tentative or provisional" assessments as discussed in Futuris. For completeness I also note that the concept of "tentative or provisional" assessments was recognised as early as the decision of the High Court in Federal Commissioner of Taxation v S Hoffnung & Co Ltd (1928) 42 CLR 39 where the notice of assessment itself described the assessment as "tentative". While Mr Hii challenges the manner in which the Commissioner made the second amendment assessments – in particular, the failure of the Commissioner at the objection stage to form an opinion concerning whether Mr Hii's conduct constituted evasion within the meaning of s 170 of the ITAA 36 – there is no doubt that notices of assessment under the hand of the Commissioner have been produced. As observed by the Full Court in Commissioner of Taxation v Stokes (1996) 72 FCR 160 at 170-171, at that point s 177 of the ITAA 36: … did its work in putting that making of the assessment beyond challenge. The notice in proper form of the assessment necessarily compelled the conclusion that there was an assessment made in fact. (cf F J Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 at 378). Conscious maladministration 92 I note further that Mr Hii does not claim that the conduct of the Commissioner in respect of the second amended assessments was characterised by fraud, conscious improper purpose or corruption. He does, however, submit that the failure of the Commissioner to form an opinion at the objection stage referable to avoidance of tax by Mr Hii due to fraud or evasion, when that was a necessary precondition to affirming the objection decision, constituted conscious maladministration. Mr Hii elaborates this submission by contending that it was reckless on the part of the Commissioner to fail to form the opinion. In particular he submits: Recklessness may amount to conscious maladministration. Where an officer proceeds with a course of conduct well knowing that it is likely not in accordance with the law and prescribed administrative processes, but is careless or indifferent to that fact such behaviour bears a close affinity with deliberate misconduct. 93 For this proposition Mr Hii relies on comments of Besanko J in Roberts, in particular at [28] and [42]. 94 In my view Mr Hii's articulation of "conscious maladministration" by reference to a failure to comply with an aspect of a process, is contrary to authority. 95 In Futuris in discussing the concept of "conscious maladministration", Gummow, Hayne, Heydon and Crennan JJ observed 55. The issue here is whether, upon its proper construction, s 175 of the Act brings within the jurisdiction of the Commissioner when making assessments a deliberate failure to comply with the provisions of the Act. A public officer who knowingly acts in excess of that officer's power may commit the tort of misfeasance in public office in accordance with the principles outlined earlier in these reasons. Members of the Australian Public Service are enjoined by the Public Service Act (s 13) to act with care and diligence and to behave with honesty and integrity. This is indicative of what throughout the whole period of the public administration of the laws of the Commonwealth has been the ethos of an apolitical public service which is skilled and efficient in serving the national interest. These considerations point decisively against a construction of s 175 which would encompass deliberate failures to administer the law according to its terms. 56. Such failures manifest jurisdictional error and attract the jurisdiction to issue the constitutional writs. To the extent that there is any indication to the contrary in what was said by Mason and Wilson JJ in F J Bloemen Pty Ltd v Federal Commissioner of Taxation that should not be followed. 57. It should be added that, with respect to the remedy of injunction, what was said in the joint reasons in Plaintiff S157/2002 v The Commonwealth indicates that injunctive relief clearly is "available for fraud, bribery, dishonesty or other improper purpose". (emphasis added, footnotes omitted.) 96 In Denlay v Commissioner of Taxation [2011] 193 FCR 412 at [78] the Full Court of the Federal Court explained: The observations of the majority in Futuris do not support the proposition that any breach of the law by officers of the Commissioner in the course of processes anterior to, or even in the course of, making an assessment, suffices to establish conscious maladministration which is apt to vitiate the assessment. Conscious maladministration, as explained in Futuris, involves actual bad faith on the part of the Commissioner or his officers. (emphasis added.) 97 I have referred earlier in this judgment to comments of the Full Court of this Court in Commissioner of Taxation v Administrative Appeals Tribunal (2011) 191 FCR 400 and Gashi v Commissioner of Taxation (2013) 209 FCR 301 where the Court equated conscious maladministration with the concept of bad faith. 98 The only instance of which I am aware of the Court finding conscious maladministration on the part of the Commissioner was in Donoghue v Federal Commissioner of Taxation [2015] FCA 235. In that case Logan J found that the Commissioner's process of assessment was affected by conscious maladministration where the Commissioner had acted in wilful disregard of a right to legal professional privilege over certain material asserted by the taxpayer. 99 Further, and in any event, I am not satisfied that the observations of Besanko J in Roberts are supportive of the submission of Mr Hii that carelessness or indifference to the law necessarily constitutes bad faith. In particular, at [28] his Honour was careful to observe that: … However, recklessness in this context requires further explication. It seems to me that recklessness is very close to conscious maladministration in that it is proceeding with a course of conduct well knowing that it is likely that it is not in accordance with the law and prescribed administrative processes, but careless or indifferent to that fact. It includes a serious departure from the law and prescribed administrative processes to the point that one can infer wilful blindness or a state of mind akin to that. It does not include negligence, although negligence might be part of the evidence put forward on the issue. Although it is not entirely clear, I took the applicant to be submitting that recklessness in a more expanded sense would be sufficient. (emphasis added.) 100 Mr Hii does not allege actual bad faith on the part of the Commissioner or his officers. His submission of conscious maladministration is referable only to Mr Hii's claim that the Commissioner "took an unreasonable view of the law" by failing to form an opinion in relation to avoidance by Mr Hii due to evasion at the objection stage. 101 There is nothing before me to support such a finding as urged by Mr Hii. Even if the Commissioner took such a view of the law, at most on the material before me the view taken by the Commissioner would simply be wrong at law. I am not persuaded that the conduct of the Commissioner in this case can be described as conscious maladministration, which clearly contemplates bad faith. 102 In circumstances where the second amended assessments following the objection decision were neither tentative or provisional assessments, nor attended by conscious maladministration, it is not open to Mr Hii to seek orders by way of declaratory relief, certiorari, mandamus or prohibition pursuant to s 39B of the Judiciary Act against the Commissioner. 103 Section 177 of the ITAA 36 provides that notices of assessments are conclusive evidence except in Part IVC of the TAA 53 proceedings. I note that Mr Hii has separate proceedings under Part IVC of the TAA 53 in QUD 57 of 2014 in relation to the relevant second amended assessments. This is the correct approach to challenging the second amended assessments. 104 The answer to this sub-question is: no. (1)(b) Was there non-compliance by the Commissioner with s 170 of the ITAA 36 by reason of the failure of the Commissioner to form an opinion at the objection decision stage? 105 Following my answer to question (1)(a) it is not strictly necessary for me to answer this question, as my answer to question (1)(a) disposes of Question 1. Because of the manner in which this case has been presented however, in particular in light of Mr Hii's submission that the failure of the Commissioner to form an opinion in this respect constituted a form of conscious maladministration, it is appropriate that I comment on the issue whether there was actual non-compliance by the Commissioner, in particular with s 170 of the ITAA 36. 106 In short, I consider that the Commissioner did not fail to comply with s 170 of the ITAA 36 in respect of the objection decision and second amended assessments, by reason of his conceded failure to form at that stage, again, an opinion as to whether Mr Hii's conduct was avoidance of tax due to evasion. I say "again" because it is not in dispute that at the time of the first amended assessments in 2012 the Commissioner did form the view that Mr Hii's conduct constituted evasion. 107 Item 6 of s 170(1) of the ITAA 36 permits the Commissioner to amend an assessment as a result of an objection made by the taxpayer. As the Commissioner has submitted, in my view correctly, the decision of the Full Court in Fletcher v Commissioner of Taxation (1988) 19 FCR 442 is relevant in this context. After referring to provisions of the legislation (now s 14ZY TAA 53) imposing a duty on the Commissioner to consider an objection, to disallow it or to allow it either wholly or in part, and to notify the taxpayer of his decision, the Full Court continued at 453: In considering the objection, the question for the Commissioner is the correctness of the original decision, that question being considered in the light of the terms of the objection but taking account of all the information then available to the Commissioner regarding the amount of the taxable income of the taxpayer and the amount of the tax payable thereon. (emphasis added.) 108 In reviewing the first amended assessments in light of a taxpayer's objection in order to determine if it was correct or should be allowed in whole or in part, it is not necessary for the Commissioner to redetermine, ab initio, all issues relevant to that decision. I accept the submission of the Commissioner that, in deciding the correctness of the original decision, it would be contrary to the concept of a "review" if every decision and consideration previously made by the Commissioner in relation to a taxpayer's assessable income in any particular year was required to be discarded and made afresh. This absurdity is highlighted in the circumstance where an assessment is affirmed by the Commissioner, either wholly or in part. Certainly, the ITAA 36 does not specify that this procedure must be followed. 109 This approach does not exclude the possibility that between the date of the first amended assessments and the date of determination of an objection, new material comes before the Commissioner or that there is some change in the relevant law which may result in new findings or a revision of an existing view. In such case an objection decision may be allowed in part or in whole. Indeed this is contemplated by item 6 of s 170(1) of the ITAA 36. It was also noted by the Full Court in Fletcher at 453, and further in Lighthouse Philatelics Pty Ltd v Commissioner of Taxation (1991) 32 FCR 148 at 155. 110 In this proceeding the Court is able to infer that while, in part, Mr Hii's objection was allowed, in the objection decision the Commissioner simply affirmed views already held by concerning whether Mr Hii's conduct constituted evasion of tax. That this is so is illustrated by reference to paragraph 252 of the objection decision which states: The ATO's position on evasion in this case was clearly articulated in the Reasons for Decision that has been issued supporting the assessments and amended assessments. In addition, the opinion has been duly authorised, in line with the Taxation Authorisation Guidelines. All decisions in the audit case, including the opinion on fraud or evasion, were duly authorised by an EL2 officer. 111 In affirming that part of the original decision which resulted in the first amended assessments, I do not accept that the Commissioner considered himself "foreclosed" from making a decision on the objection in relation to whether there had been an avoidance of tax due to fraud or evasion. 112 Finally, in this context Mr Hii also relies on the decision of Gordon J in BHP Billiton Finance Limited v Federal Commissioner of Taxation (2009) 72 ATR 746, affirmed on appeal by the Full Court in Federal Commissioner of Taxation v BHP Billiton Finance Limited (2010) 182 FCR 526. In that case the taxpayer had claimed bad debt deductions. Section 177F of the ITAA 36 provided for cancellation of tax benefits, including the power of the Commissioner to determine that a tax benefit referable to a deduction be disallowed where the tax benefit had been obtained in connection with a scheme (s 177F(1)(b)). An assessment to disallow the bad debt deductions was issued to the taxpayer by the Commissioner. The assessment did not give effect to a Part IVA determination. The taxpayer objected to the assessment. In the course of considering the taxpayer's objections the Commissioner made a determination under s 177F(1)(b) of the ITAA 36. The Commissioner did not issue an amended assessment, but rather relied on s 169A(3) of the ITAA 36, which provides: In determining whether an assessment is correct, any determination, opinion or judgment of the Commissioner made, held or formed in connection with the consideration of an objection against the assessment shall be deemed to have been made, held or formed when the assessment was made. 113 In the Full Court, Edmonds J (with whom Sundberg and Stone JJ agreed) said: 48. On its textual face, the import of s 169A(3) is to deem the s 177F determination made by the Commissioner at the time he considered Finance's objection to have been made when the assessment was made, approximately, one year earlier. Of course, the Commissioner could only rely on the anterior assessment as giving effect to the subsequent determination under s 169A(3) where the amount specified in the s 177F determination was the same as the amount in the assessment, an objection to which was under consideration, but they are the facts of this case; otherwise, it would be necessary, subject to the limitations of s 177G, to issue an amended assessment, to give effect to the determination. 49. I agree with the primary judge's reasoning at [168]-[182] of her Honour's reasons for rejecting Finance's contentions that the textual import of s 169A(3) should be read down and limited so as not to apply to determinations made by the Commissioner under s 177F at the time of considering objections to anterior assessments which have not invoked reliance on the provisions of Pt IVA. Neither by reference to considerations of legislative context and policy (see CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 in the joint judgment; HP Mercantile Pty Ltd v Federal Commissioner of Taxation (2005) 143 FCR 553 at [44]-[65] per Hill J), nor by recourse to any extrinsic material which the Court is authorised to take into account (see s 15AA of the Acts Interpretation Act 1901 (Cth)), is such a reading down and limitation to be imported into the proper construction of s 169A(3) of the ITAA 1936. 114 Placing to one side the very different facts of the two cases, I consider that the principles considered and decided in BHP Billiton are different from issues relevant to the case before me, such that BHP Billiton is of little assistance. First, in BHP Billiton no amended assessment was issued at the objection stage, unlike the case before me. Second, it appears that in that case an opinion was formed by the Commissioner at the objection stage, unlike in the case before me. Indeed this point of distinction is critical – the key point in this proceeding is whether it can be said that, having formed an opinion, issued the first amended assessments, and then following an objection affirmed those assessments in part, the Commissioner was required at the objection stage to revisit all opinions formed in the original decision. This was not in issue before the Courts in BHP Billiton and it is difficult to draw assistance from the findings in that case. 115 In summary, I do not accept that it was a necessary precondition of the exercise of the Commissioner's power to further amend the second amended assessments, that the Commissioner positively form a view concerning whether Mr Hii's conduct constituted avoidance of tax due to fraud or evasion within the meaning of item 5 of s 170(1) of the ITAA 36. In my view the failure of the Commissioner to form the relevant opinion at the time of the objection decision does not make that decision or the second amended assessments invalid, or other than "assessments" within the meaning of s 175 and s 177 of the ITAA 36. 116 The answer to sub-question 1(b) is: no. Conclusion 117 To recap, Question 1 is: 1. In circumstances where the Respondent has amended assessments for each of the years 2001 to 2004 and 2007 to 2009: (a) pursuant to the power in s 170(2) [for the years 2001 to 2004] and Item 5 of s 170(1) [for the years 2007 and 2009]; and where an authorised delegate formed the opinion that there had been an avoidance of tax due to fraud or evasion prior to issuing the first notices of amended assessment (in 2012); (b) the taxpayer objected to the assessments as amended inter alia on the grounds that the Respondent ought not to have formed the opinion that there had been an avoidance of tax due to fraud or evasion; and (c) the taxpayer provided submissions and materials in support of the objection is the Respondent, as part of determining the objection, required to form the opinion that there has been an avoidance of tax due to fraud or evasion? 118 As is clear from my answers to sub-question (1)(a) and sub-question (1)(b), the answer to Question 1 is: no. 119 It is common ground that the remaining issues for determination in QUD 622 of 2014 require consideration only out of an affirmative answer to Question 1. Accordingly, there is no call for me to further consider this matter. 120 The appropriate orders in respect of QUD 622 of 2014 are that the interlocutory application for summary judgment filed 20 January 2015 by the Commissioner be dismissed, and that Mr Hii's amended originating application filed 19 January 2015 be dismissed. Costs 121 As a general proposition costs follow the event: Oshlack v Richmond River Council (1998) 193 CLR 72. In this case I see no reason why this rule should not apply. QUD 57 OF 2014 – INTERLOCUTORY APPLICATION FOR SUMMARY JUDGMENT FILED BY MR HII ON 30 APRIL 2014 122 In his interlocutory application filed on 30 April 2014 Mr Hii claims that the Commissioner has no reasonable prospect of successfully defending part of the proceeding. 123 Earlier in this judgment I set out principles relevant to consideration by the Court of a summary judgment application pursuant to s 31A of the Federal Court Act. Key factors are: Primarily – whether the Court is satisfied that the respondent has no reasonable prospect of successfully defending the proceeding. An application for summary judgment in a more complex case will be unlikely to be capable of resolution without a mini-trial being conducted on the documents. This is not the object of the rule and such a case may not be able to be determined summarily. The power to dismiss an action summarily is not to be exercised lightly, but rather should be approached with caution. 124 In his interlocutory application Mr Hii does not set out the basis upon which he claims that an order for summary judgment is warranted. Rather, he seeks judgment in relation to part of the proceeding. Written submissions were filed by both parties almost twelve months ago in this proceeding. I note that these written submissions were filed prior to the commencement by Mr Hii of proceedings in QUD 622 of 2014. To a significant extent I consider Mr Hii's summary judgment application in QUD 57 of 2014 has been overtaken by his amended originating application filed in QUD 622 of 2014. A reason I draw this conclusion is that Mr Hii's written submissions filed 3 June 2014 in support of this summary judgment application ("written submissions") in QUD 57 of 2014, as well as the limited oral submissions made by the parties on the morning of the fourth day of trial in QUD 622 of 2014 and QUD 57 of 2014, emphasise and repeat Mr Hii's claim that the failure of the Commissioner in the objection decision to positively form an opinion meant that the second amended assessments in respect of relevant years were invalid. This particular contention is summarised in Mr Hii's written submissions that: 8. Mr Hii has the burden under s 14ZZO TAA of demonstrating that the amendment assessments issued on 16th and 17th January 2014 are excessive. 9. If the respondent's power under s 170 to amend the assessments for those years was not enlivened by a valid opinion formed on 20 December 2013, then the amended assessments would be "excessive" within s 14ZZO TAA … 10. The jurisdictional facts necessary to enliven the amendment power in the exception to s 170 for each year are that a. there was an avoidance of tax; and b. the respondent is of the opinion that that avoidance was due to fraud or evasion. Moreover, that opinion must be formed in accordance with law. (emphasis added.) 125 To the extent that Mr Hii bases his interlocutory application on the contention that he is entitled to summary judgment in QUD 57 of 2014 because the Commissioner did not form an opinion at the objection decision stage concerning avoidance of tax due to evasion or fraud, the application cannot be sustained in light of my decision in QUD 622 of 2014. 126 It appears, however, that Mr Hii's case extends somewhat beyond this point. In particular, Ms Seiden SC for Mr Hii also submitted at the hearing: MS SEIDEN: Yes. And to the extent that my learned friends suggests that submissions that have already been made I would propose to address your Honour again, and that's why, really, there has been a list provided. There's really on two issues that have to be addressed, and your Honour has already heard the issue about the opinion being required to be formed at that stage. In the summary judgment proceedings in Part IVC the applicant does take issue with the rationality, if you like, or whether there's errors of law in the reasoning of the auditor's decision on the formation of opinion. So that's an extra point that is not taken in the 39B. The 39B stops at the point that there's no opinion, and then you will see the applicant contends that to the extent that there is some writing in the objection decision about the reason of the fraud evasion, it's certainly not enough to amount to an opinion. And the court, to the extent that that was enough, would in any event find that there was an error of law. So to that extent the applicant would take issue with the reasoning process of the decision-maker, and so that's something new, and that's really – that's the only additional point that the applicant would seek to address your Honour on. And then the final point is – which is, assuming your Honour is satisfied in the Part IVC proceedings that there is error of law either because there's no opinion or because the opinion is defeated by errors of law, what then happens, the applicant's submission is the assessments would be set aside as being excessive, and my learned friend, as I understand it, contends that your Honour is able to in a proper case form the opinion again. So there would be submissions about that issue. But they're the only two topics that I would seek to address your Honour on, and that was why we sought to highlight the relevant paragraphs of submissions that I've already made to your Honour so that I don't have to go over old ground, your Honour. (transcript 19 February 2015 p 213 ll 5-31.) 127 Referable to this submission are further submissions of Mr Hii, which can be summarised as follows: The Commissioner had a duty under s 14ZY TAA to consider all matters afresh concerning Mr Hii's tax liability for each year, by reference to Mr Hii's 2013 objection and the new material before the Commissioner. The Commissioner's sole task was to investigate, having regard to the facts and circumstances before and at the time of the omission of worldwide income, whether Mr Hii's claim to be a non-resident was a claim that amounted to fraud or evasion by Mr Hii. The Commissioner failed to consider the wealth of new material that was before him on 20 December 2013. This was not rational, and cannot stand against the opinions he did form favourably to Mr Hii. The irrationality of the Commissioner's decision is particularly evinced by reference to the 2001 year, when the objections officer found that the auditor's opinion that there was an avoidance of tax was wholly incorrect, but only allowed the objection in part. The objections officer clearly did not turn his mind at all to the proper statutory task required by s 170 of the ITAA 36. The Commissioner also misconceived his task in relation to the 2002-2004 and 2007-2009 income years. Alternatively, a detailed review of the auditor's inconsistent concurrent conclusions and of the six specific reasons upon which he acted reveal two separate mistakes of construction of the meaning of the expression "avoidance of tax due to fraud or evasion" within the meaning of s 170 of the ITAA 36. These mistakes can be summarised as being referable to: o the principle that avoidance is not evasion; o the principle that the avoidance of tax must be "due to evasion". The decision of the High Court in Kolotex Hosiery (Australia) Pty Ltd v Federal Commissioner of Taxation (1975) 132 CLR 535 upon which Drummond J relied in Kajewski v Federal Commissioner of Taxation [2003] FCA 258 is distinguishable on these facts. Further, Kolotex seems to suggest that if the Court considers that there is an error of law attendant on the decision of the Commissioner, the Court could make the decision afresh. Mr Hii concedes however that if I thought that there was an error of law and the question then arose as to whether I could decide Mr Hii's tax liability afresh, this is not a matter I should summarily determine. 128 In response the Commissioner contends, in summary: Mr Hii bears the onus of proof in taxation appeals arising from Pt IVC of the TAA 53, including showing that the Commissioner did not form a "valid" opinion that there was an avoidance of tax due to evasion. The review of the Commissioner's opinion is by way of administrative review and by reference to the principles in Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353. In relation to the question whether the Commissioner erred in relation to whether there had been evasion, it is not in contention that the Commissioner asked the correct question and stated the correct law. Specifically, the Commissioner is required to form an opinion that there is both an avoidance of tax and evasion, and the avoidance of tax must be due to that evasion. The Commissioner's full reasoning in relation to this issue can be seen at paragraphs 320 to 360 of the objection decision. In or about paragraphs 353-359 of the objection decision the Commissioner refers to Mr Hii's blameworthy conduct, and in particular his provision of a false residential address. There is no irrationality in relation to the decision-making process. The reasoning in relation to the imposition of the administrative penalty occurred in the context of different assessments involving different reasoning processes under different legislative regimes, and in circumstances where the penalty reasoning considered additional material not relevant to determining "evasion". In light of the breadth of acts or omissions that might constitute "evasion" the Court would be slow to conclude that the reasoning process of the objection decision was irrational. The Commissioner did not consider that Mr Hii had taken active steps to prevent or obstruct, but merely failed to respond to requests. Accordingly, the Commissioner's decision was rational as well as appropriate in not uplifting Mr Hii's shortfall base penalty by 20%. It is not appropriate to determine this matter summarily, because it was open to the Commissioner to reach the conclusions he did and the application requires consideration of serious and difficult issues of law. Even if the opinion of the Commissioner is vitiated by error, authorities including Kajewski v Federal Commissioner of Taxation [2003] FCA 258 and Blues Pty Ltd v Deputy Commissioner of Taxation [2012] FCA 320 stated that the Court could reconsider whether there was an avoidance of tax due to evasion, based on evidence before the Court. Such a conclusion requires a hearing. The Commissioner has more than a reasonable prospect of successfully defending the proceedings because: o Mr Hii's contentions concerning the failure of the Commissioner to form an opinion in respect of fraud or evasion constitutes a new contested issue of fact between the parties. This is an issue which should be resolved at trial; o Item 6 of Table 1 to s 170(1) of the ITAA 36 permits the Commissioner to issue amended assessments following objection at any time; o the full reasons of the objection decision must be considered in context; o there is no conflation of "avoidance" with "evasion". 129 An assessment by the Commissioner is an act of administration coming within the ambit of the executive power of the Commonwealth (Knox CJ in Federal Commissioner of Taxation v Munro (1926) 38 CLR 153). A taxpayer who wishes to challenge an assessment has a right to object to it in accordance with Pt IVC of the TAA 53 (s 175A ITAA 36). The Commissioner is required to decide whether to allow the objection in part or full, or disallow it (s 14ZY(1) TAA 53). The taxpayer may in turn challenge the objection decision pursuant to s 14ZZ(1) of the TAA 53. In proceedings in this Court the taxpayer has the burden of proving that the amended assessments are excessive or otherwise incorrect (s 14ZZO TAA 53). 130 It is clear that in the substantive proceedings in QUD 57 of 2014 Mr Hii bears the onus of proving that the second amended assessments under consideration were excessive. Rationality 131 So far as concerns the questions whether the Commissioner has properly considered all matters concerning Mr Hii's tax liability for each assessment year, or whether the Commissioner's objection decision was rational, I do not consider that these are questions which I can, or should, determine summarily. As Mr Derrington for the Commissioner submitted, this proceeding is fact intensive. The question whether Mr Hii was, at relevant times, an Australian citizen, has been estimated by his legal representatives to require several weeks of trial and many witnesses (transcript 17 February 2015 p 3 ll 38-46). There is a great deal of material which is relevant to this issue, to which I have not been taken. 132 I note that this is also a case where there are issues of law in dispute, including the concept of rationality and whether it is applicable on these facts, and the interpretation of "avoidance" and "evasion" in the context of this case. 133 The concept of rationality is one examined in detail by the High Court in Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611. In that case at [131] Crennan and Bell JJ observed: But, the test for illogicality or irrationality must be to ask whether logical or rational or reasonable minds might adopt different reasoning or might differ in any decision or finding to be made on evidence upon which the decision is based. If probative evidence can give rise to different processes of reasoning and if logical or rational or reasonable minds might differ in respect of the conclusions to be drawn from that evidence, a decision cannot be said by a reviewing court to be illogical or irrational or unreasonable, simply because one conclusion has been preferred to another possible conclusion. (emphasis added.) 134 Their Honours later said at [135]: Whilst there may be varieties of illogicality and irrationality, a decision will not be illogical or irrational if there is room for a logical or rational person to reach the same decision on the material before the decision maker. A decision might be said to be illogical or irrational if only one conclusion is open on the evidence, and the decision maker does not come to that conclusion, or if a decision to which the decision maker came was simply not open on the evidence or if there is no logical connection between the evidence and the inferences or conclusions drawn. 135 As Rares J subsequently explained in SZOOR v Minister for Immigration and Citizenship (2012) 202 FCR 1 at [15]: It is only if no decision-maker could have followed that path, and despite the reasons given by the actual decision-maker, that the decision will be found to have been made by reason of a jurisdictional error. 136 In this case there is evidence before the Court that at all material times Mr Hii's family lived at a residence in Hamilton Queensland, where several expensive cars owned by Mr Hii were also located. Further, Mr Hii also identified that house as his postal address. At an interlocutory level, in light of these facts it is difficult to identify irrationality within the meaning of that term discussed in SZMDS and SZOOR in the decision of the Commissioner that the Hamilton address was Mr Hii's residential address for tax purposes during the relevant years, even if there were flaws as submitted by Mr Hii in the reasoning process of the Commissioner. 137 Mr Hii claims that there was irrationality in the finding of the Commissioner that he had avoided tax by fraud or evasion when the Commissioner determined under the penalty regime that Mr Hii fell under the lowest of the penalty regimes. Submissions were made by the Commissioner at the hearing before me to rationalise this determination, including that the Commissioner determined that Mr Hii's conduct was at the higher end of the scale of carelessness rather than encroaching into recklessness, or simply that the Commissioner imposed the incorrect penalty. The Commissioner relied on the decision of the High Court in Wilson v Chambers & Company Pty Ltd (1926) 38 CLR 131, in particular comments of Starke J where at page 151 his Honour considered the meaning of "evade" in terms of certain offences under the Customs Act 1901 (Cth) as follows: Clearly, in my opinion, the word "evade" in the Act does not necessarily involve any device or underhand dealing for the purpose of escaping duty; but on the other hand it involves something more than a mere omission or neglect to pay the duty. It involves, in my opinion, the intentional avoidance of payment in circumstances indicating to the party that he is or may be under some obligation to pay duty. The circumstances may consist of knowledge, or neglect of available means of knowledge, that the omission to pay is or may be in contravention of the Customs law. 138 In my view there is substance to the stance taken by the Commissioner in respect of the penalties imposed on Mr Hii, as well as in relation to the Commissioner's interpretation of "evade". Mr Hii's submissions concerning irrationality and the relevant penalties imposed on him by the Commissioner do not support an order for summary judgment. Re-hearing of case 139 Further, and in any event, the parties are at odds over the outcome of the proceedings should the Commissioner's opinion be vitiated, and in particular whether this Court can substitute its own view for that of the Commissioner. I am satisfied that this case is not suitable for summary judgment. The Commissioner relies on the decision of the High Court in Kolotex which I consider supports the Commissioner's submission that he has reasonable prospects of defending Mr Hii's claim, at least in respect of this point. Certainly no material has been presented to the Court which would enable the Court to make its own determination of Mr Hii's tax liability. As I noted before, Mr Hii concedes that this issue is not suitable for summary determination (transcript 20 February 2015 p 229 ll 15-18). Conclusion 140 The complexity of this case is such that it is not one where the Court can easily reach the conclusion that the Commissioner lacks reasonable prospects of defending the appeal. I am not satisfied on the material before me that the Commissioner lacks reasonable prospects to defend Mr Hii's notice of appeal filed 14 February 2014 in QUD 57 of 2014. 141 In my view Mr Hii's interlocutory application for summary judgment filed 30 April 2014 should be dismissed, with costs following the event. I certify that the preceding one hundred and forty-one (141) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. Associate: Dated: 23 April 2015