Re Western Australian Capital Investments Co Ltd and Grant Heaton Johnston v the Commissioner of Taxation [1988] FCA 439 (16 December 1988)

FEDERAL COURT OF AUSTRALIA

Re: WESTERN AUSTRALIAN CAPITAL INVESTMENTS CO. LTD. and GRANT HEATON JOHNSTON
And: THE COMMISSIONER OF TAXATION
Nos. WAG 2049, 2050, 2052, 2054 and 2055 0f 1987
Taxation - Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Taxation - unpaid company tax - TUCTA Act - deemed service on company by service on vendor shareholders - requirement for Commissioner to address matters under s.18(1)(b) and form relevant opinion - assertion matters not addressed and opinion not formed - denial by Commissioner - whether positive case - applicant discloses no ground for suspicion of a good case - fishing - whether Commissioner should be ordered to give particulars of opinion and facts on which it is based - policy and other considerations - particulars not ordered.

Practice and Procedure - pleading - particulars - negative plea - denial - implied positive case - when particulars should be ordered - policy considerations re fishing.

Taxation (Unpaid Company Tax) Assessment Act 1982

Income Tax Assessment Act 1936

Income Tax Assessment Act 1936

Jurisdiction of Courts (Miscellaneous Amendements) Act 1987

Administrative Appeals Tribunal Act 1975 s.28

Administrative Decisions (Judicial Review) Act 1977 s.13

Administrative Appeals Tribunal Act 1975 s.28

Federal Commissioner of Taxation v Cripps and Jones Holdings Pty Ltd (1987) 76 ALR 619

Spedding v Fitzpatrick (1888) 38 ChD 410

Philliponi v Leithead (1959) 76 WN(NSW) 150

Pilato v Metropolitan Water Sewerage and Drainage Board (1959) 76 WN(NSW) 364

Zanardo v Ford Motor Co. of Australia Ltd (1964) VR 769

Warner v Sampson (1959) 1 QB 297

Weinberger v Inglis (1918) 1 Ch 133

Chapple v Electrical Trades Union (1961) 1 WLR 1290

Howard v Borneman (1972) 1 WLR 863

MacLulich v MacLulich (1920) P 439

Dwyer v The National Trustees Executor and Agency Co. of Australasia Ltd (1939) VLR 96

Pinson v Lloyds and National Provincial Foreign Bank, Ltd. (1941) 2 KB 72

W.A. Pines Pty Ltd v Bannerman [1980] FCA 79; (1980) 30 ALR 559

Nestle Australia Limited v Deputy Federal Commissioner of Taxation 86 ATC 4130

Federal Commissioner of Taxation v McLelland [1969] HCA 72; (1969) 118 CLR 353

Giris Pty. Limited v The Commissioner of Taxation [1969] HCA 5; (1969) 119 CLR 365

Federal Commissioner of Taxation v Brian Hatch Timber Co. (Sales) Pty. Ltd. (1972) 128 CLR 28

Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214

Murchison v Keating [1984] FCA 125; (1984) 54 ALR 380

Kolotex Hosiery (Australia) Pty Ltd v Federal Commissioner of Taxation [1975] HCA 5; (1975) 132 CLR 535

George v Federal Commissioner of Taxation [1952] HCA 21; (1952) 86 CLR 183

Tomlinson v Federal Commissioner of Taxation (1974) 2 NSWLR 186

Federal Commissioner of Taxation v Hydrocarbon Products Pty Ltd (1987) 72 ALR 391

HEARING

PERTH
16:12:1988

Counsel for the Applicants: Mr D. Bloom QC and Mr S. Paterniti

Solicitors for the Applicants: Parker & Parker

Counsel for the Respondent: Mr C Pullin

Solicitors ofr the Respondent: Australian Government Solicitor

ORDER

THE COURT ORDERS THAT IN EACH CASE:

1. The applicant's motion for particulars is dismissed.
2. The applicant is to pay the respondent's costs of the
motion.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

DECISION

These appeals concern companies said to have been involved in schemes whereby they were stripped of pre-tax profits and thus evaded company and undistributed profits taxes. According to its Explanatory Memorandum, the Taxation (Unpaid Company Tax) Assessment Act 1982 ("TUCTA Act") was enacted to recover from vendor shareholders of such companies and from promoters of such schemes the tax so evaded. The liability of vendor shareholders created by that Act is necessarily founded upon the existence of a liability in the company. However liability to company tax and undistributed profits tax under the Income Tax Assessment Act 1936 ("ITAA") depends upon service of a notice of assessment. For under s.204 of that Act tax is due and payable on the date specified in the notice, being not less than 30 days after service or, if no date is specified, on the thirtieth day after service. Service of notices is provided for by s.174 of the ITAA. Where a company having been stripped and sold is de facto, if not de jure, defunct with no current address, service may not be possible or practicable pursuant to s.174. The TUCTA Act provides a mechanism for effecting deemed service on a company by service on the vendor shareholders. That mechanism is created by s.18 of the Act which, in sub-s.(1) provides:

"Where -
(a) under the Assessment Act, the Commissioner is
required or permitted to serve a notice of
assessment on a company in relation to the
liability of the company to pay ordinary
company tax or undistributed profits tax in
relation to a year of income; and
(b) vendors recoupment tax is payable, or the
Commissioner is of the opinion that vendors
recoupment tax is likely to become payable, by
a person or persons in relation to ordinary
company tax or undistributed profits tax, as
the case may be, that is payable or may become
payable by the company in relation to that
year of income,
the notice shall, notwithstanding section 174 of
the Assessment Act, be served on the company by
being served on -
(c) where the vendors recoupment tax is payable,
or in the opinion of the Commissioner, is
likely to become payable, by only one person -
that person; and
(d) in any other case - any of the persons
referred to in paragraph (b),
and, where the notice is served in accordance with
paragraph (d), the Commissioner shall serve a copy
of the notice on each person (other than the person
on whom the notice was served) who is included in
the representative class in relation to the vendors
recoupment tax."

2. By sub-s.18(3) the person served with a notice of assessment under sub-s.18(1) has the same rights under Div. 2 of Pt. V of the ITAA in relation to the company's liability for tax as the company has and for the purpose of the exercise of those rights the provisions of Div.2 apply in like manner as they would apply in relation to the exercise of the rights by the company. That is to say the vendor shareholders have the same rights of appeal in relation to the assessment of the company's tax liability as the company itself would have. And it is in these appeals, instituted under sub-s.18(3) by persons said to be vendor shareholders and to have been served with notices of assessment of company and undistributed profits tax, that an important question of their entitlement to particulars from the Commissioner of Taxation has arisen.
History of the Appeals

3. The various appeals were instituted by the applicants on 12 October 1983 when they requested that the Commissioner refer to the Supreme Court of Western Australia their objections to the assessments. The objections were so referred on 31 January 1986, but as a result of the Jurisdiction of Courts (Miscellaneous Amendements) Act 1987 were transferred to this Court on 1 September 1987.

4. Points of claim filed on 2 November 1987, pursuant to directions given in this Court, were uninformative as to the applicants' cases and incorporated by reference the matters set out in the notices of objection. Those notices each contained well over 100 grounds of objection, including attacks on the constitutional validity of the TUCTA Act. Amended points of claim filed on 21 January 1988 were more expressive, but contained a catch all paragraph whereby the applicants purported to reserve the right to rely upon any one or more of the grounds set out in the notice of objection. That paragraph was, in due course, struck out. Re-amended points of claim were filed on 7 July 1988. The relevant parts of the re-amended points of claim in 2049, 2050, 2052, 2054 and 2055 of 1987 are the same although there are some additional contentions raised by the amendment in 2050, 2054 and 2055.

5. The applicant in each case contended in the amended points of claim that the conditions upon which service on the shareholder would be good service on the company, have not been fulfilled. That contention was pleaded as follows:

"(1) At no time prior the issue of the TUCTA
assessment was vendors recoupment tax payable
by the applicant.
(2) At no time prior to the issue of the TUCTA
assessment did the respondent address his mind
to the matters set out in sub-paragraph (b) of
s.18(1)of TUCTA ("the section 18(1)(b)
matters") and the respondent was therefore not
in a position to and did not in fact form the
opinion that vendors recoupment tax was likely
to be payable by any person or persons."

For these reasons it was contended that the "issue and service of the TUCTA assessment is ultra vires and of no force and effect." The Commissioner in moving for summary dismissal of the appeals argued that the grounds of objection pleaded could not be taken as they went to the issue of the liability of the vendor shareholder for vendors recoupment tax. That liability, it was said, might be contested in proceedings under the TUCTA legislation, but not as part of an objection to the assessment of the company's liability. The Commissioner's proposition seemed opposed to what was said by the Full Court in Federal Commissioner of Taxation v Cripps and Jones Holdings Pty Ltd (1987) 76 ALR 619 and I did not consider that the grounds taken in the amended points of claim were untenable and might not properly be raised on an objection to the assessment and on appeal to the Court against the disallowance of that objection.

6. In his reply to the amended points of claim, the respondent admitted that at no time prior to the issue of the assessments was vendors recoupment tax payable by the applicants, but denied that he had failed to address his mind to the matters set out in sub-para.18(1)(b) of the Act or that he had failed to form the opinion that vendors recoupment tax was likely to be payable by any person or persons. He also denied the pleaded legal effect of not serving the company directly.

7. Particulars of the Commissioner's response were sought by the applicants including particulars of the date, place and manner in which the respondent considered the "section 18(1)(b) matters", when he formed the opinion that vendors recoupment tax was likely to become payable and the grounds relied upon him in forming such opinion. On 12 May 1988 the following order was made in 2049, 2050, 2052, 2054 and 2055:

"The respondent is to file and deliver on or before
19 May 1988 particulars of the date on which he
considered the s.18(1)(b) matter and when he formed
the opinion that vendors recoupment tax was likely
to become payable."

The particulars were provided on 25 May indicating that the s.18(1)(b) matters were considered during the months of January and February 1983 and the relevant opinion formed on or shortly before 2 March 1983.

8. In the meantime, on 8 March 1988 (4 May 1988 in 2049), the applicants had given particulars of the allegation that the respondent failed to address his mind to the s.18(1)(b) matters in the following terms:

The best particulars that the applicant can provide
at this stage prior to discovery are as follows:
(a) The letter dated 30 March 1983 under cover of
which the notice of assessment was signed by
R.A. Gill, Deputy Commissioner of Taxation and
not by the Commissioner of Taxation;
(b) Nowhere in the said letter is it stated that
the Commissioner has addressed his mind to the
provisions of section 18(1)(b) nor that he has
formed the requisite opinion under the said
Section.

9. On 7 July 1988 the applicants were granted leave to re-amend the amended points of claim. The substance of the pleadings remained largely unchanged. At the same time the applicants sought leave to interrogate the respondent in terms of a draft embodying some 22 questions, each of which was concerned with the formation of the opinion that vendors recoupment tax was likely to become payable by a person or persons in relation to ordinary company tax or undistributed profits tax payable or to become payable by the company. The interrogatories were regarded as fishing and leave was declined. In so doing I made reference to the absence of any support in the applicants' particulars for the contention that the relevant opinion was not formed. A motion returnable before the Full Court for leave to appeal against the decision refusing leave to interrogate was filed, but later withdrawn by consent.

10. On 5 August 1988 the respondent filed responses to the applicants' re-amended points of claim which were in substantially the same terms as its responses to the amended points of claim save for some variations which are not material for present purposes.
The Request for Particulars of the Response to the Re-amended Points of Claim

11. On 5 September 1988 the applicants filed in each of the appeals the subject of these motions a "Further Request for Further and Better Particulars of the Response to the Re-amended Points of Claim." The request in each case dealt only with that part of the response whereby the Commissioner had denied the allegation that he was not in a position to and did not in fact form the opinion that vendors recoupment tax was likely to be payable by any person or persons.

12. The request was in the following terms:

"Of the allegation that prior to the issue of the
initial assessment the respondent formed the
opinion that vendors recoupment tax was likely to
be payable by any person or persons:-
(1) What precisely was the opinion which was
formed?
(2) What is the name of the person who formed that
opinion?
(3) What precisely were the facts taken into
account by that person in forming the opinion?
(4) Were those facts and/or the opinion recorded
in writing?
(5) If so:-
(a) when were they recorded;
(b) where and when may the writing be
inspected?
(6) Is it alleged that the person who formed the
opinion was a delegate of the Commissioner?
(7) If the answer to question (6) is in the
affirmative:-
(a) was the instrument of delegation in
writing?
(b) if the answer to question 7(a) is in the
affirmative, when and where may a copy of
the writing be inspected?
(8) What Section or Sections of the Income Tax
Assessment Act and/or the Taxation
Administration Act are relied upon as
supporting the allegation that the opinion was
the opinion of the Commissioner?"

13. As noted above, the applicants had previously sought particulars relating to the formation of the Commissioner's opinion. On that occasion only particulars as to the date on which he considered the s.18(1)(b) matters and formed his opinion were ordered. The request as now framed is more precisely expressed and the full argument which was addressed to it, raises an important question of principle. It also seems probable that whether the particulars are supplied or are not may have a critical bearing on the outcome of this case. It is, I think, desirable therefore that I deal with the substance of the argument and not dispose of the motions on the basis that the applicants have exhausted their opportunities to obtain particulars.
The Applicants' Submissions

14. In support of the motions the applicants argued, in summary, that the formation of the relevant opinion is an essential pre-condition to the service and therefore the making of the assessments. The Commissioner, it was submitted, is under a duty to form that opinion and the taxpayer is entitled to know the facts the Commissioner has taken into account in reaching his conclusion. Particulars, it was said, are appropriate in a matter such as this where the facts taken into account by the Commissioner in forming his opinion are peculiarly within his knowledge.
The Role of Particulars - Logic and Policy

15. The function of particulars in litigation is to define the issues to be tried. Where there are pleadings, they limit their generality so that identification of issues in dispute and necessary evidence is facilitated - Spedding v Fitzpatrick (1888) 38 Ch.D. 410, 413 (Cotton LJ); Philliponi v Leithead (1959) 76 WN(NSW) 150, 151; Pilato v Metropolitan Water Sewerage and Drainage Board (1959) 76 WN(NSW) 364, 365 (McClemens J.). It is no more than a corollary of the above to say that they enable the parties to know what case they have to meet at trial, to avoid unnecessary expense and surprise. - Zanardo v Ford Motor Co. of Australia Ltd (1964) VR 769 (Hudson J.). Whether in the form of an elaboration of pleaded facts or facts upon which some plea (such as condition of mind) is based, they are generally expressive of affirmative statements. Where a plea in defence amounts to no more than a challenge to the plaintiff to prove its case, there is no affirmative statement and particulars of the defence have no function. And that is the effect of a general traverse in a defence which, save for matters expressly admitted, denies or does not admit the allegations in the statement of claim - Warner v Sampson ((1959) 1 QB 297, 311 (Lord Denning), 319 (Hodson LJ), 324 (Ormerod LJ). But the case law has taken the matter a step further. Where a plaintiff pleads a negative allegation particulars will not be ordered of a defence denying it merely because that defence as a matter of logic may be said to imply an affirmative - Weinberger v Inglis (1918) 1 Ch 133, 137 (Astbury J.) Where, however, the defence imports some affirmative allegation beyond that which is to be implied from the mere denial of a negative, then particulars of that allegation may be ordered - Chapple v Electrical Trades Union (1961) 1 WLR 1290, 1293 (Pennycuick J.); cited and approved in Howard v Borneman (1972) 1 WLR 863, 868 (Goff J.). In MacLulich v MacLulich (1920) P 439, the Court of Appeal ordered particulars in a suit by a wife for restitution of conjugal rights where the husband denied that he had withdrawn from cohabitation without just cause. The wife had not alleged any lack of just cause. And in Dwyer v The National Trustees Executor and Agency Co. of Australasia Ltd (1939) VLR 96, the defendants pleaded in answer to an allegation of breach of duty as executors, that they had acted reasonably and in good faith. They were held by Martin J. to be setting up a positive case requiring particulars of the facts and circumstances on which they acted. According to the analysis of Stable J. (with whom Goddard LJ agreed) in Pinson v Lloyds and National Provincial Foreign Bank, Ltd. (1941) 2 KB 72 at 84, a denial of a negative allegation may amount to:

(i) A mere denial involving no affirmative allegatio n;
(ii) A negative pregnant containing within the double
negative an affirmative allegation;
(iii)A plea which leaves in doubt the true nature of the
defendant's case.

If the real nature of the traverse is in doubt, then, according to Stable J., it would be embarrassing (at 88). If it is a mere traverse, that is putting the plaintiff to proof, then it would not be open to the defendant to set up a positive case in defence. If the defence in truth involved a positive case then, it was said, particulars ought to be given (84). Counsel for the defendant had there admitted on the hearing of the appeal, that on the pleadings as they stood, it was intended at trial to set up an affirmative case. The Court of Appeal ordered that particulars be given accordingly.

16. Accepting the general principles outlined in the authorities mentioned, policy considerations may nevertheless favour a cautious approach to the provision of particulars where a defendant denies the plaintiff's negative allegations. Curial processes are not to be used to find out if there is a case - W.A. Pines Pty Ltd v Bannerman [1980] FCA 79; (1980) 30 ALR 559, 567 (Brennan J.), 575 (Lockhart J.). Rather, they assist in the definition and proof of a case for which there is already some basis - e.g. Nestle Australia Limited v Deputy Federal Commissioner of Taxation 86 ATC 4130 at 4134 (Wilcox J.). A plaintiff should not, in the ordinary course, be permitted to assert that "D did not do X" and on nothing more than D's denial demand that D provide particulars of an implied assertion that it did X. The court affording such a facility may become inquisitor at the behest of the plaintiff.

17. For certain classes of official administrative decisions the Commonwealth Parliament has provided extra-curial means of obtaining from the relevant official a statement of reasons for the decision, the facts upon which the reasons are based and the evidence upon which the facts were found - see s. 28 Administrative Appeals Tribunal Act 1975 and s.13 Administrative Decisions (Judicial Review) Act 1977. While such provisions may be judicially enforced and establish a basis for litigation, their function is different from that of particulars, discovery, or interrogatories, which are processes incidental to and serving the purposes of existing proceedings. It has not been suggested that any question of the application of s.13 of the Judicial Review Act arises in this case. Indeed that Act expressly excludes from review under its provisions decisions making or forming part of the process of making or leaving up to the making of assessments or calculations of tax under the ITAA and the TUCTA Act. The Full Court in Federal Commissioner of Taxation v Nestle Australia Ltd [1986] FCA 368; (1986) 69 ALR 445, distinguished the purpose of s.13 from the purposes of discovery and interrogatories in a way that expressly points up the functions to be served by those processes, and by implication the function of particulars. The Court said at 453:

"The purpose of s.13 statements is, however, to
ensure that a person who is entitled to apply to
the court under s.5 for an order of review may be
furnished with a statement of the findings and
reasons for the decision so that he may be in a
position to consider his challenge or perhaps
prospective challenge to the decision. The section
provides machinery to inform citizens of matters
fundamental to decisions of an administrative
character which affect them so that they may be
better informed and therefore better equipped to
determine their future course of action.
Discovery and inspection are essentially different.
They are processes of the courts by which a party
may obtain from the opposite party documents
relating to issues between them for the purpose of
preparing for the trial of the action. A s.13
statement and the court's power in relation to
discovery and inspection are of a basically
different nature and different time scales apply to
them. Courts may take into account in the exericse
of the discretion, on an application for discovery
or inspection, whether a s 13 statement has been
sought or provided, whether it is sufficient and
whether it is appropriate to leave the parties to
their rights under s 13, including the right to
obtain further and better particulars under
s 13(7). But to the extent that those matters are
relevant they lie solely within the discretion of
the court. There is no necessary relation between
the two quite separate processes of statements of
reasons under s.13 of the Judicial Review Act and
the court's powers of discovery and inspection
which are procedural machinery of courts to assist
in the resolution of conflicts between litigants."

Disclosure of Basis of Assessment

18. There are dicta to the effect that, at least in certain classes of case, including those in which the Commissioner is required to form some opinion in connection with an assessment, he should inform the taxpayer of the facts he has taken into account in reaching his conclusion - Federal Commissioner of Taxation v McLelland [1969] HCA 72; (1969) 118 CLR 353, 361-362 (Windeyer J.); Giris Pty. Limited v The Commissioner of Taxation [1969] HCA 5; (1969) 119 CLR 365, 373 (Barwick CJ), 384 (Windeyer J.); Federal Commissioner of Taxation v Brian Hatch Timber Co. (Sales) Pty. Ltd. (1972) 128 CLR 28, 52 (Menzies J.), 60 (Owen J., Windeyer J. agreeing at 56). But it does not appear from these judgments that any legal duty was propounded or that such duty as was adverted to arose intra-curially as an incident of pending litigation or the invocation of the Pt. V appeal process. Indeed in Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214,to which further reference will be made later, Mason J. at 221 observed that while fairness to the taxpayer demanded that the Commissioner should be compelled to give particulars of his assessment when it issued, that was a matter for the legislature. It went, he said, quite beyond the scope of that case which was concerned with the giving of particulars in litigation after an appeal had been instituted. And independently of statute it seems, the Court has no power to direct that a person seeking review of an official decision be furnished with reasons for that decision - Murchison v Keating [1984] FCA 125; (1984) 54 ALR 380, 384 (Toohey J.). In that case his Honour observed:

:...it seems to me that if an applicant could simply
formulate an application by incorporating the
language of one or more of the paragraphs in s 5(1)
and then invite the court to direct the
decision-maker to furnish a statement in terms of s
13(1), the intention of the legislature would be
thwarted. Furthermore, it would inevitably result
in fishing expeditions. An applicant would in
truth need to do no more than assert the existence
of one of the grounds in s 5(1) and proceed to
build up a case from that position."

19. On the other hand in Kolotex Hosiery (Australia) Pty. Ltd. v Federal Commissioner of Taxation [1975] HCA 5; (1975) 132 CLR 535, Barwick CJ observed that in connection with the formation by the Commissioner of a state of mind relevant for the purposes of ss.80A and 80C of the ITAA, he "must expose to the taxpayer, particularly if so requested, both his state of mind at the relevant time and its basis" (p 541).

20. This appears to be a formulation of an extra curial duty. It was not reflected in the judgments of the majority in that case (Gibbs and Stephen JJ).
Particulars in Tax Appeals

21. Turning specifically to the question of particulars in taxation appeals, it was less than 40 years ago that the attempt by a taxpayer appealing against an assessment to obtain orders requiring the Commissioner to furnish him with particulars was described by the High Court as "a novel experiment" - George v Federal Commissioner of Taxation [1952] HCA 21; (1952) 86 CLR 183, 198. The particulars sought related to an assessment made under s.167 of the ITAA which, inter alia, empowers the Commissioner, where he is not satisfied with a return, to make an assessment of the amount upon which, in his judgment, income tax ought to be levied. Even on the assumption that the onus lay on the Commissioner to show that he had formed a judgment of the amount of taxable income it was held that "it could not be part of his case to establish the facts upon which he acted in forming the judgment or the grounds on which he proceeded, the materials before him, or the reasoning actuating him. The need supposed of showing that he formed such a judgment could be no ground for requiring particulars of the source of the taxable income ascribed by the assessment to the appellant" (p 203). The assumption was rejected in any event, the formation of the judgment being part of the very process of assessment and not a condition precedent. The taxpayer having the burden on an appeal of showing the assessment to be excessive (s.190(b) ITAA), it was said to be no part of the duty of the Commissioner to prove what judgment he formed "much less the grounds of it and even less still the truth of the facts affording the grounds". Kitto J. whose judgment at first instance was upheld, considered the English cases on denials of a plaintiff's negative allegation in a statement of claim to be helpful analogies. As his Honour observed at 190:

"The principle laid down is that if it is clear to
the court, either from the nature of the case or
from the admission of counsel or otherwise, that
the defendant intends under his denial of the
negative, to set up an affirmative case,
particulars of the defendant's case may be ordered;
but not otherwise (Pinson v Lloyds and National
Provincial Foreign Bank Ltd. ((1941) 2 KB 72 at
p 80); Duke's Court Estates, Ltd. v Associated
British Engineering Ltd ((1948) Ch 458); cf
Weinberger v Inglis ((1918) 1 Ch 133)). So, if in
this matter the commissioner were to admit that he
intended to set up a case that the additional
income upon which he has assessed tax was derived
from a particular source, I should think that he
ought to give particulars to enable the appellant
to meet that case. But the commissioner has made
no admission and there is nothing which could
entitle me to infer that he has such an intention.
All that appears is, as I have said, that the
appellant is put to the proof of his negative case.
In my opinion it would not be consistent with the
authorities I have cited, or with the commonsense
of the situation, to order particulars. If the
commissioner's case at the hearing of the appeal
develops upon lines which the appellant cannot
fairly be expected to be ready to meet, the
presiding Judge will be in a position to ensure
that no injustice results."

22. A similar observation was made by Aickin J. who delivered the principal judgment in Bailey's case (supra). There the Commissioner had disclosed to the appellant taxpayer that the contested assessment was based upon the existence of an arrangement under s.260 of the ITAA. He declined to give particulars of the arrangement relied upon. The High Court ordered that he give such particulars. In the course of his judgment Aickin J. observed at 228:

"The fact that the Commissioner does not himself
have to prove any particular fact and that the onus
of proof rests upon the taxpayer by virtue of s.190
cannot determine this question. There are many
situations in which the party who gives a general
denial to the pleading of the party on whom the
onus rests, may none the less be required to give
particulars, if the general denial really involves
some positive allegation. This general principle
is well established - see, e.g., Pinson v. Lloyds
and National Provincial Foreign Ltd ((1941) 2 KB
72.) and George v. Federal Commissioner of Taxation
per Kitto J. ((1952) [1952] HCA 21; 86 CLR 183, at p 190.).
This is exactly the case where s.260 is relied upon
to support an assessment."

His Honour, accepting that the court had power to order delivery of particulars in Pt.V proceedings, at p 230 agreed with the general principle enunciated by Jeffrey J. in Tomlinson v Federal Commissioner of Taxation (1974) 2 NSWLR 186, that:

"...in the exercise of its discretion the court will
give paramountcy to the principle that the
appellant should have the fullest particulars
necessary to him to enable him to appraise the case
which he has to disprove and should have access to
documents necessary for the proof by him of this
case."

At the same time his Honour said at p 232 that "it is of course a matter for the court to decide in each case whether particulars should be ordered...".

23. As the Full Court (Woodward, Wilcox and Ryan JJ) has recently observed, Bailey's case affirmed the existence of a discretion to order particulars in a taxation appeal - Federal Commissioner of Taxation v Hydrocarbon Products Pty Ltd (1987) 72 ALR 391, 410. And their Honours also appear at 412 to have accepted the observation of Mason J. in his separate reasons in that case at p 220 that:

"...There is therefore no foundation for the notion
that the Commissioner stands apart from ordinary
litigants in some special position in relation to
the giving of particulars. Like any other litigant
he may be ordered to give particulars in an
appropriate case, that is, when they are required
so that the other party to the litigation, and for
that matter the court itself, may be acquainted
with the nature of the case that is intended to be
presented, so that the issues to be determined may
be defined. To conclude otherwise would result not
merely in injustice to the taxpayer, who will
remain in doubt as to the Commissioner's case until
it is presented at the hearing, but also in
unnecessary preparations and in a hearing of
unnecessary length as the taxpayer endeavours to
deal with matters on which, as it may subsequently
transpire, the Commissioner is placing no reliance
whatsoever."

CONCLUSION

24. The parties have been directed to and have filed statements of the grounds of appeal and response thereto. The applicant asserts in each that the Commissioner failed to address his mind to matters set out in sub-para.(b) of sub-s.18(1) of the TUCTA Act and he was therefore not in a position to and did not in fact form the opinion that vendors recoupment tax was likely to be payable by any person or persons. The Commissioner denies that contention. By implication therefore, he asserts that he did address the requisite matters and form the requisite opinion. He has given particulars of the date of its formation. His case however, does not necessarily involve the positive assertion that he formed the opinion in question. It may be that at the close of the applicants' cases he will decide to call no evidence on the basis that the applicants have failed to prove that he did not form the requisite opinions. He may, on the other hand, decide to adduce evidence to show that they were held. Where the position is open the Court, rather than treating the plea as embarrassing, should assume in the absence of any express disclaimer, that it at least embodies a positive case in the alternative. Insofar as the applicant may have to meet a contention that the relevant opinion was formed, he does not, given the nature of the case, have to anticipate a variety of possible cases. And in that respect the present appeals are distinguishable from Bailey's case. The issues are, in my opinion, adequately defined by the statements, responses and particulars already filed. The Court has not in any relevant sense been kept in the dark as to what the decision making process was - cf. Mostyn v Deputy Federal Commissioner of Taxation 86 ATC 4931, 4932 (Lockhart J.). The applications for particulars now sought attract the cautionary policy considerations to which I have already referred. The applicants have shown no ground for any suspicion that there is a case that the matters required to be addressed under the TUCTA Act were not addressed or that the opinions in question were not formed. To make the facility of further particulars available in these circumstances would be to lend the assistance of the court to a fishing expedition. If those facilities are so readily available, then it is unnecessary for an applicant to do more than to make assertions of the failure to form the requisite opinion and when those assertions are denied, invoke the assistance of the court to find out whether in fact the opinion was formed. To place the Commissioner in that position as a matter of general principle, would place him in a position different from that of an ordinary litigant. And it is as proceedings between ordinary litigants, albeit regulated by a particular statutory framework, that these proceedings should be regarded. In the circumstances the motion for particulars in each case will be dismissed.