The Federal Court has dismissed a proceeding where a taxpayer sought relief under the Judiciary Act 1903 concerning the Commissioner’s disallowance of credits for PAYG tax.
The taxpayer sought relief under s 39B of the Judiciary Act, claiming that a declaration that the Commissioner’s decision to refuse to allow him a credit in respect of amounts said to be deducted by his employer, was invalid. The taxpayer also claimed an order in the nature of mandamus requiring the Commissioner to allow a credit against assessments issued to him. The assessments related to the years ended 30 June 1999, 2000, 2001, 2002 and 2003.
The Commissioner, by interlocutory application, sought summary dismissal of the taxpayer’s proceeding on the basis that he could not succeed by reason of an estoppel or, alternatively, that the proceeding was an abuse of process. The basis for the Commissioner’s contention was that the question had been resolved against the taxpayer by a proceeding in the District Court of New South Wales.
On 10 November 2008, the Commissioner commenced a proceeding in the NSW District Court claiming moneys owing by the taxpayer under assessments issued by the Commissioner in respect of the above years. The taxpayer effectively contended that the amount claimed was not owing to the Commissioner, because the Commissioner had wrongly failed or refused to allow a credit to him in respect of PAYG tax alleged to have been deducted from his earnings. The taxpayer contended that tax was deducted from his salary or wages by his employer and that although the tax was not paid to the Commissioner by the employer, he was entitled to credit by reason of the deduction.
Various subsequent District Court proceedings sought evidence from both parties, but the taxpayer provided incomplete evidence and illegible annexures to an unsworn affidavit. Ultimately, summary judgment was entered in favour of the Commissioner in July 2010. On 10 April 2012, a bankruptcy notice based on the judgment of the District Court was served on the taxpayer. The creditor’s petition filed on behalf of the Commissioner is now before the Federal Court, having been transferred to the Federal Court by the Federal Magistrates Court.
The Federal Court said there had been no explanation given as to why the taxpayer did not comply with the orders of the District Court requiring production of original documents, or at least legible documents, which were said to establish his defence by way of set-off. The Court considered that, in all of the circumstances, the commencement of the proceeding constituted an abuse of the Court’s process. Accordingly, it acceded to the Commissioner’s application for summary dismissal of the proceeding.
(Kahn v FCT [2012] FCA 1150, Federal Court, Emmett J, 14 September 2012 (but released on 31 October 2012).)
[LTN 215, 6/11]