The Full Federal Court has upheld a decision giving judgment to a Deputy Commissioner for unpaid income tax, together with the shortfall interest charge and general interest charge, totalling over $28m. [The matter relates to ongoing litigation arising under Project Wickenby in relation to transactions involving the Hua Wang Bank and others.]
These proceedings (the 2012 proceedings) concerned amended notices of assessment for a number of income tax years between 2001 and 2007. In earlier proceedings (the 2010 proceedings), a Deputy Commissioner had obtained judgment for just over $4.8m in relation to the same income tax years except for 2001. The taxpayer argued that the Deputy Commissioner’s rights in respect of those income years merged in the 2010 judgment and therefore the res judicata principle prevented the Deputy Commissioner recovering additional amounts of tax for the relevant years. Alternatively, the taxpayer relied on claims of estoppel and abuse of process.
In upholding the first instance decision – DCT v Chemical Trustee Limited (No 8) & Ors [2013] FCA 494 – the Full Court first dismissed the res judicata argument on the basis that the 2010 proceedings did not determine the tax liability of the taxpayer and the 2010 assessments were not the same as the 2012 assessments.
A claim of issue estoppel failed as the Court said there was no inconsistency between the judgment given in the 2010 proceedings and the judgment sought in the 2012 proceedings because the rights they vindicated were generated by different notices of assessment.
A claim of Anshun estoppel was rejected as there was no factual basis for the contention that any additional tax recovered in the 2012 proceedings should have formed part of the 2010 proceedings.
The abuse of process claim was also dismissed by the Court as no inconsistency would arise from there being 2 judgments in favour of the Deputy Commissioner. In addition, the 2012 amended notices of assessment were not ambiguous or “inconsistent”, the Court said.
(Chemical Trustee Limited v DCT [2014] FCAFC 27, Full Federal Court, Edmonds, Jagot and Pagone JJ, 19 March 2014.)
[LTN 53, 19/3/14]