Re Commissioner of Taxation of the Commonwealth of Australia v Brian Edwin Elton [1990] FCA 19; 12 Taxation 90 Atc 4078 20 Atr 1796 (6 February 1990)

FEDERAL COURT OF AUSTRALIA

Re: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
And: BRIAN EDWIN ELTON
No. G241 of 1989
FED No. 12
Taxation
90 ATC 4078
20 ATR 1796

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies J.(1)

CATCHWORDS

Taxation - Appeal from Administrative Appeals Tribunal - assessable income - burden of proof created by s.190(b) of the Income Tax Assessment Act - whether error of law - whether decision unreasonable.

Income Tax Assessment Act 1936 (Cth) - ss.177(1), 190(b)

HEARING

SYDNEY
6:2:1990

Counsel for the applicant: Mr D.B. McGovern

and Mr R.H. Stephen

Solicitor for the applicant: Australian Government
Solicitor

Counsel for the respondent: Mr. F. Carnovale

Solicitors for the respondent: Gillis Delaney

ORDER

The application be dismissed.

The applicant pay the respondent's costs of the application.

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

DECISION

This is an appeal from a decision of the Administrative Appeals Tribunal which allowed objections to amended assessments issued to the respondent, Brian Edwin Elton, for the years ended 30 June 1976 and 1977 and to an original assessment issued to him for the year ended 30 June 1978.

2. The amended assessments and assessment arose from an investigation of the activities of a number of persons including the respondent, Mr Elton, to whom the Tribunal referred in its reasons for decision as "Dick".

3. Mr Elton had himself been an investigating officer with the Taxation Office. In the course of his activities as such, Mr Elton had an association with a company which the Tribunal called "Wal-Co.". One of the events that occurred was that Mr Elton misappropriated a taxation refund cheque for $10,620.99 issued in favour of Wal-Co.. In March 1978, he was arrested and, in November 1979, he pleaded guilty to offences with which he was charged in respect of this matter.

4. The matters giving rise to the assessment in dispute concern not that misappropriation but more extensive activities. The Commissioner of Taxation took the view that Mr Elton and others had conspired together to defraud members of the public and the Commissioner in a number of ways, based upon the business of Wal-Co.. The Tribunal recorded the following facts:-

"The conspiracy alleged by the Commissioner
flowed out of the affairs of WAL-CO. WAL-CO
was a company which carried on business from
Sydney. It was controlled by a New Zealander
('Suter'). Its business was to generate
revenue by soliciting by mail advertising
subscriptions from business houses on the
promise of publishing commercial directories.
It was an effective technique. Subscriptions
flowed in by mail directed to a private G.P.O.
Box. The conduct of the business involved the
printing of materials which was carried out by
a suburban printery operated by a printer
('Caxton'). The preparation of mail for
despatch was carried out by a suburban typing
service controlled by a lady related to
Caxton. The collection and banking of
subscriptions was carried out by the same
lady and, possibly the distribution of
directories. Subscriptions came from all
States, except Tasmania and South Australia.
Subscribers included many institutions of
supposed commercial acumen. A directory
printed in 1978 was produced in evidence as a
sample of what Dick believed to have been
published. It was a poor example of the art
of advertising, even to the point of being
badly proof-read with obvious errors uncorrected.
The investigators were able to satisfy
themselves that the scheme had involved some
or all of the conspirators in -
(a) obtaining access to the G.P.O. Box
of WAL-CO and diverting cheques
drawn in favour of WAL-CO to
accounts controlled by the
conspirators;
(b) incorporation of two companies
using fictitious names adopted for
the purpose by at least two of the
conspirators;
(c) thereafter using those companies
to carry on the business
previously carried on by WAL-CO;
(d) carrying on business in those
names - one of which (WALBANK) was
superficially similar to the name
of WAL-CO - the other (GRANTCO)
was not; and
(e) depositing moneys received
thereafter to accounts in the
names of WALBANK and of GRANTCO;
to accounts in false names
controlled by Tom; and to accounts
in false names controlled by Dick."

The Tribunal came to the view that the total assessable income derived from the conspiracy was not less than $107,007.00. There is no challenge to that finding.

5. The amended assessments and the assessment were issued on the basis that each of three identified conspirators, including Mr Elton, had derived one-third of the profits of the conspiracy. The Tribunal took a contrary view, concluding:-

"As the evidence stands, Dick has persuaded me
that it is more probably true than not that
the financial benefits derived by him from his
association with the scheme were limited to
his share of the refund cheque: and that that
amount did not constitute assessable income -
something not disputed by the Commissioner
and, therefore not a matter in issue before me.
The Applicant lent his assistance to a grossly
improper scheme. For his crime he has been
punished. For his gross misconduct as an
officer of the Commissioner he has suffered
the loss of the privileges of his office.
However, he has persuaded me, on the balance
of probabilities, that, despite his
involvement in that extraordinary and
reprehensible affair, he did not derive any
moneys from it by way of assessable income
such as has been attributed to him in the
assessments before me."

6. The first challenge made by counsel for the Commissioner to the Tribunal's finding is that the Tribunal misapplied the provisions of s.190(b) of the Income Tax Assessment Act 1936 (Cth).

7. Counsel submitted that the Tribunal's approach to onus of proof was wrong and that the Tribunal thus took a tainted view of the facts. Counsel submitted that, because of the provisions of s.177(1) of the Act, which provides that, subject to appeal, notice of assessment is conclusive evidence of the taxpayer's liability and because of the provisions of s.190(b), the Tribunal should have approached its task on the footing that the assessment was prima facie correct and that it remained correct until shown to be excessive in any particular. Counsel submitted that, in proceedings before the Tribunal, there is a presumption that the assessment is correct in every particular and that the effect of the Tribunal's approach was to ignore this presumption and to invert the onus and place the burden of proof upon the Commissioner.

8. However, the Tribunal said, in the course of its reasons:-

"When proceedings commence before this
Tribunal, there is no presumption that the
assessment made by the Commissioner is
correct. The determination by the Tribunal
must be founded only in the evidence presented
before it. If, upon a consideration of that
evidence, the Tribunal is satisfied that Dick
derived no part of that taxable profit, to
that extent the assessment will be set aside.
If the Tribunal determines upon the evidence
before it that Dick derived something less
than has been attributed to him, to that
extent the assessment will be set aside. If
the evidence persuades the Tribunal that the
assessment is sound, then the determination of
the Commissioner upon the objection will be
upheld. In all of those cases, the standard
of satisfaction required is for the Tribunal
to be persuaded, 'on the balance of
probabilities'. Given that the Tribunal is so
satisfied, it is unnecessary for the Tribunal
to bring into play s.190 of the Act which
provides that:-
'Upon every ... reference ... -
(a) .............................; and
(b) the burden of proving that the
assessment is excessive shall lie
upon the taxpayer.'
As a result, it is only when, upon the close
of the evidence, the Tribunal is not persuaded
one way or the other, that the statutory
direction as to the burden of proof comes into
play with the result that, where neither party
has persuaded the Tribunal that its
contentions are more probably correct, then
the Applicant fails."

In my opinion, that statement of the principle was correct.

9. I do not propose to discuss at length the principles applicable to s.190(b) and the burden of proof. While there may be minor areas left for debate, the present case does not raise any such question. The general principles have been clearly expounded in cases such as Krew v. Federal Commissioner of Taxation (1971) 71 ATC 4213, Macmine Pty Limited v. Federal Commissioner of Taxation (1979) 79 ATC 4133 and McCormack v. Federal Commissioner of Taxation [1979] HCA 18; (1979) 143 CLR 284. The principles laid down in those cases were the principles stated by the Tribunal. I see no error in the Tribunal's remarks.

10. It is one thing to say that s.190(b) creates a rebuttable presumption that an assessment is not excessive, to use the words of Jacobs J. in McCormack v. Federal Commissioner of Taxation at p 314, it is another thing to say that, in addition to overcoming the burden of proof imposed by s.190(b), a taxpayer must overcome a presumption or presumptions of fact raised by an assessment, as counsel suggested. Such an approach has been clearly rejected. In Macmine Pty Limited v. Federal Commissioner of Taxation at p 4146, in a lengthy and considered passage, Stephen J. explained that s.190(b) has nothing to say about any particular presumption of fact concerning a taxpayer's affairs. In McCormack v. Federal Commissioner of Taxation, at p 302, Gibbs J. explained that the taxpayer's evidence should be considered on its merits, in the light of the circumstances of the case, without any prepossession, favourable or unfavourable. At p 314, Jacobs J. explained that s.190(b) has only the effect of placing upon a taxpayer the onus of proving that the assessment is excessive, and does not in addition raise a presumption supplying evidence of fact upon which the assessment is based. See also the function of the Administrative Appeals Tribunal as explained in Drake v. Minister for Immigration and Ethnic Affairs [1979] AATA 179; (1979) 24 ALR 577 per Bowen C.J. and Deane J. at p 589 and per Smithers J. at p 599.

11. As the Tribunal took the trouble to explain its approach to the review and to the operation of s.190(b), I would be reluctant to hold that the Tribunal did not apply the principles which it stated. There is, in any event, no significant passage in the reasons of the Tribunal which suggests that the Tribunal did, as counsel submitted, place an onus of proof upon the Commissioner. Counsel referred to a passage in which the Tribunal said that it would not draw an inference against Mr Elton because he had not called as witnesses either "Tom" or "Harry", the other two identified co-conspirators. The Tribunal explained that, if anything, it was the Commissioner who might have been expected to call these persons as witnesses. This comment was not made in the context of a suggestion that the Commissioner ought to have called these two persons as witnesses but simply to explain that no inference would be drawn against Mr Elton because he did not call them.

12. Counsel for the Commissioner pointed out that the Tribunal said:-

"I have heard evidence from Dick denying that
he participated in the scheme in such a way as
to derive assessable income from it and I have
heard evidence from both Dick and Ann which
persuades me that, on the balance of
probabilities, there was no in-flow of moneys
into their home at the relevant time which
cannot be explained from what has been
admitted. Had the investigators examined more
closely into the affairs of Dick they might
have produced some evidence in support of the
assessments. Had the interrogation of Dick
been something other than the very limited
enquiry which it was, the result might have
been different. Had the Commissioner called
to the stand Tom or Harry, or both of them,
the result might have been different. But it
is not for me to speculate about those matters."

All the Tribunal meant by this passage was that it recognised that the true facts might be otherwise than the facts which it found but it was obliged to come to a decision upon the evidence that was before it. In this approach, the Tribunal was correct. It was not placing an onus upon the Commissioner to do anything. An Administrative Appeals Tribunal must determine a review upon the material which is before it.

13. Another point of challenge was that, early in his evidence, Mr Elton admitted to receiving some small sums from the companies. He said:-

"During the course of this investigation no
moneys were received by me, other than cash
reimbursement, for incorporation costs ... And
some nominal cash gifts or small amounts."

Counsel for the Commissioner submitted that this evidence constituted an admission that assessable income had been received and, accordingly, as Mr Elton had not shown how much was received or when, the assessments must stand, the taxpayer not having satisfied the onus of proof. The evidence was, however, not taken any further. The Tribunal did not discuss it.

14. I treat this matter as being de minimis, as apparently the Tribunal also did. Had the Tribunal or counsel for the Commissioner considered this evidence to be significant, it should have been further pursued.

15. The Tribunal's decision was next challenged on grounds which I need not particularise but which had two broad thrusts. First, it was submitted that the final conclusion of fact, which I have set out above, and a number of intermediate findings leading to that conclusion were unreasonable, that no reasonable decision-maker could have arrived at the findings of the Tribunal. The other way in which the matter was put was that the only conclusion reasonably open on the evidence was that Mr Elton had received some profits or assessable income from the conspiracy, even if he had not received one-third of the $107,007.00, and that, as the onus was on the taxpayer to prove not merely that the assessment was wrong but by how much it was excessive (see McAndrew v. Federal Commissioner of Taxation [1956] HCA 62; (1956) 98 CLR 263 at p 271), Mr Elton had failed to establish that his objections should be allowed.

16. Counsel for the Commissioner relied upon Edwards (Inspector of Taxes) v. Bairstow & Anor. [1955] UKHL 3; (1956) AC 14. I accept the principle therein stated by Lord Radcliffe at pp 33-36 and I need not repeat it. Moreover, the Federal administrative law package has emphasised the need for decision-makers to state in full their reasoning process and therefore, in this country, even greater attention can be given to the actual reasoning process. A flaw in the reasoning process, if sufficiently significant, may flaw the decision itself. It is sufficient for me to refer to my own discussion of this matter in Independent FM Radio Pty Limited v. Australian Broadcasting Tribunal and Anor (delivered 2 April 1989), in which I said:-

"... recent federal legislation has emphasised
the need for reasoned decision-making. See
the Freedom of Information Act 1982 (Cth),
s.13 of the ADJR Act, ss. 28(1) and 43(2B) of
the Administrative Appeals Tribunal Act 1975
(Cth) and s.25B of the Broadcasting Act. Thus
instances may be found in the cases where
decisions have been set aside because, being
insufficiently supported by reason, they
appear to be an improper exercise of the power
conferred or arbitrary or there was no
evidence or other material sufficient to
justify the making of the decision or the
decision was so unreasonable that no
reasonable person could have so exercised the
power. The cases have developed, I believe,
to the extent that the making or failure to
make a particular finding of fact in the
course of the reasoning process may be
attacked on such grounds and that the taking
into account of a fact found unreasonably or
the failure to take into account a fact that a
reasonable decision-maker must have found and
taken into account provides a ground of review
under ss.5(1)(e) and 5(2)(a) and (b) of the
ADJR Act.
The point has been put in many different ways.
Thus, in Singh and Another v. Minister for
Immigration and Ethnic Affairs, cited above,
Forster J. said at p 10:-
'If assertions of important facts were
disbelieved without reason then I should
suppose that the decision-maker would be
guilty of 'failing to take a relevant
consideration into account''.
In Television Capricornia Pty Limited v.
Australian Broadcasting Tribunal and Ors
(1986) 70 ALR 147, Wilcox J. said at
p 150-151:-
'There are also cases in which 'no
evidence' has been treated as an aspect
of some other ground. A finding made
without appropriate evidence will
generally be erroneous in point of law:
see Smith v. General Motor Cab Co Limited
(1911) AC 188 at 190. And the necessity
for adequate evidence has been said to be
a component of natural justice: see
Minister for Immigration and Ethnic
Affairs v Pochi [1980] FCA 85; (1980) 31 ALR 666; 44 FLR
41 in which Deane J (ALR at p 689; FLR at
pp 63-8) adopted the statement of Diplock
LJ in R v Deputy Industrial Injuries
Commissioner; Ex parte Moore (1965) 1 QB
56 at 488 that natural justice requires
that a decision must be based on
evidence, in the sense that 'it must be
based upon material which tends logically
to show the existence or non-existence of
facts relevant to the issue to be
determined, or to show the likelihood or
unlikelihood of the occurrence of some
future event the occurrence of which
would be relevant'. This test was
restated in slightly different words by
Lord Diplock, as he had then become, in
the judgment of the Judicial Committee of
the Privy Council prepared by him in
Mahon v Air New Zealand (1984) AC 808 at
821: 'The technical rules of evidence
applicable to civil or criminal
litigation form no part of the rules of
natural justice. What is required by the
first rule is that the decision to make
the finding must be based upon some
material that tends logically to show the
evidence of facts consistent with the
finding and that the reasoning supportive
of the finding, if it be disclosed, is
not logically self-contradictory.''
In Prasad v. Minister for Immigration and
Ethnic Affairs [1985] FCA 47; (1985) 6 FCR 155 at p 169,
Wilcox J. said:-
'Under s.5(1)(e) and 5(2)(g) the Court is
concerned with the manner of exercise of
the power. The power is exercised in an
improper manner if, upon the material
before the decision-maker, it is a
decision to which no reasonable person
could come. Equally, it is exercised in
an improper manner if the decision-maker
makes his decision - which perhaps in
itself, reasonably reflects the material
before him - in a manner so devoid of any
plausible justification that no
reasonable person could have taken this
course, for example by unreasonably
failing to ascertain relevant facts which
he knew to be readily available to him."
In Western Television Limited v. Australian
Broadcasting Tribunal and Anor (1986) 12
FCR 414 at p 429, Pincus J. said, with
respect to s.5(3)(b) of the ADJR Act:-
'A narrower reading, which makes more
practical sense, is that par (b) refers
only to instances in which express
findings made are plainly incorrect.'
In Akers v. Minister for Immigration, Local
Government and Ethnic Affairs (WAG 147 of
1988, delivered 22 December 1988) Lee J. said:-
'In proceeding upon an erroneous premise
on a fundamental matter, the authorized
officer took into account an irrelevant
consideration in that it was information
other than the information the American
Consulate had endeavoured to convey. To
proceed to a decision upon the
misapprehension of matters material to
the decision, may be described as an
improper exercise of power (see Minister
for Immigration and Ethnic Affairs v.
Haj-Ismail [1982] FCA 51; (1982) 40 ALR 341 at pp 348
and 365 and Sezdirmezoglu v. Acting
Minister for Immigration and Ethnic
Affairs (1983) 51 ALR 561 at
pp 572-573).
Such a situation may be contrasted with
an opinion genuinely formed upon
conflicting materials placed before the
decision-maker, which opinion is sought
to be called into question by reference
to further evidence or material (see
Akpan v. Minister for Immigration and
Ethnic Affairs [1982] FCA 46; (1982) 58 FLR 47).
Such a circumstance provides no ground
for review.'
In Khan and Ors v. Minister for Immigration
and Ethnic Affairs (G159 of 1987, delivered 11
December 1987) Gummow J. said:-
'It is not for the Court to study
administrative decisions too finely or
precisely; they are to be regarded
carefully but sensibly, and not zealously
in the pursuit of error. (Smith v. MIEA
(1984) 53 ALR 511 at 544 per Lockhart J.).
Nevertheless, in my opinion, on the
whole of the evidence the applications in
question were not each given proper,
genuine and realistic consideration upon
the merits.'
In the United Kingdom, similar principles are
emerging. See Wade's Administrative Law, 6th
Ed., pp 329-30."

See also the discussion by Davies, Burchett and Lee JJ. in Pashmforoosh v. Minister for Immigration, Local Government and Ethnic Affairs (delivered 28 June 1989).

17. In the present case, some matters which favour the Commissioner's view were either not mentioned or were not discussed in detail in the Tribunal's reasons. And some crucial findings of fact in the Tribunal's reasoning may be questionned. Certainly their cogency is not obvious.

18. For example, the Tribunal rejected Mr Elton's evidence that, when he engaged in the many transactions that were proved and when he transferred moneys between accounts maintained by him in fictitious names and between accounts operated by him in the names of two companies, Walbank and Grant-Co., and so on, he did so for the purpose of conducting an investigation as an officer of the Taxation Office. The Tribunal said "I completely reject that." And the Tribunal went on to say:-

"I find that he (Elton) was his own master in
what he did in the way of opening accounts in
fictitious names and in the selection of the
names to be used. I find that he was a free
agent in the preparation of the incorporation
documents in relation to each company. I
further find that, by advancing all of the
disbursements necessary to effect the
incorporation of the companies, he had no
belief that, in doing so, he was serving in
any way the interests of the Commissioner or
the community."

That being so, counsel for the Commissioner reasonably asks why Mr Elton would have entered into the transactions, which earned assessable income and profits, if it had not been for the purpose of sharing in that income and profits.

19. The Tribunal found in Mr Elton's favour because it thought that no assets, the source of which could not be identified, could be traced to him. The Tribunal said:-

"Those assets might have been known, such as
the new home, the new car and the new holiday
cottage, but I am satisfied that they have
been accounted for without reference to any
scheme moneys other than the refund cheque moneys."

The Tribunal came to this conclusion in part because Mrs Elton had won $30,000 in a lottery in February 1977 and this money assisted with the acquisition of new assets. Yet, the relevant period, unlike periods before and after, was a time when Mrs Elton did not work and a period in which a new home, a holiday cottage and a new car were acquired. So the period was one of prosperity for Mr and Mrs Elton and the quantum of the moneys alleged to have been derived from the conspiracy, $35,669.00, over three years of income, was not out of proportion to this prosperity.

20. The financial transactions of the Elton family were not fully explained. Mr Elton gave this evidence inter alia:-

"So just to get it clear there were two
accounts with the RSL Permanent Building
Society, both in your name, but one in trust
for the children and one in your own right.
Is that right?---Yes, that is right.
Well, the records show, Mr Elton, that in
relation to the RSL Permanent Building Society
account in your own name, account number - I
just cannot see the number that is stamped -
there was a deposit or deposits into that
account of $1000 on 18 May 1976, $500 on 27
May 1976, $1000 on 10 June 1976, a total of
$2500 within the month. Can you tell us the
source of all or any of those funds? ---Not
now, I cannot, no. It could have been from
intercompany - inter account transfer.
Also moving into the 1977 calendar year, into
that account there was deposited on 8 June
1988, $1000, and on 16 June 1977, $500;
another $1500 within 8 days. Can you tell us
anything about the source of those
moneys?---Not now.
Well, you see, it seems that on 8 June 1977
you were able to deposit into the childrens'
RSL Permanent Building Society account, $2000,
and at the same time into your own account for
that building society, $1000 and again on 16
June 1977 $500 went into the childrens account
and another $500 into your account. Can you
give any explanation as to where those moneys
came from?---There could have been savings
from other accounts or moneys I borrowed."

Mr Elton gave this further evidence:-

"You have a look at your deposit butt book for
that account and I will put a yellow sticker
just to direct your attention to the relevant
butt. Do you see that butt there?---Yes.
It is your handwriting, filled in by
you?---That is right.
It represents a deposit of $4954.95 into that
Rural Bank account in your true name?---That
is right.
And the only detail you have completed at the
back of that slip is the ---?---Cheque butt.
Is the cheque refund amount of $954.95?---That
is right.
Now, has that helped you to remember that
$4000 was cash?---It would have been cash, I
would say.
Well, now, where did $4000 - what was the
source of that cash for you on that date or
thereabouts?---I cannot answer that off the
cuff directly. It could have come from
another account. It could have come from my
wife. It could have come from anywhere.
What was the source of the moneys that your
wife had to enable her to give you $4000 on
cash on about that date?---My wife was earning
as much money as I was.
You did not have $4000 cash on that day?---No,
but my wife could have had $4000 cash."

Another passage in the evidence was as follows:-

"And on 1 June 1977 you have deposited a sum of
$1000 in that account?---Yes, right.
There is no entry on the back is there?---No.
Can we assume that that was cash?---That is
right.
What was the source of that cash?---The same
answer.
What is the same answer?---From my own savings
or my wife's savings.
And 25 days later on 26 July 1977 you have
deposited another $1000, have you not?---That
is right, yes.
And there is no entry on the back, is
there?---No, that is cash.
So that is another $1000 in cash?---That is
right.
What was the source of that money?---The same
answer.
Well, tell us again?---What, my savings or my
wife's savings or ---
Or what?---Or income I have drawn out of
another account. It had to have come from
some source.
What I am suggesting to you, so that there is
no doubt about it, is that it came from the
source, namely the enterprise of which I asked
you questions about yesterday?---I still deny
that. My only money from that was the tax
cheque."

Having regard to such passages, another Tribunal might not have concluded that the source of all funds received by Mr Elton was adequately explained.

21. The Tribunal accepted Mrs Elton as a witness of truth and accepted that she knew nothing of the source of the income alleged and that the arrest of Mr Elton came as a complete shock to her. The Tribunal also accepted her evidence that, after Mr Elton's arrest, the family was in a parlous financial state and that she had to go back to work. The Tribunal concluded from this, and its conclusion seems fully justified, that the Eltons had no hidden asset to which they could resort. Those findings do not, however, seem to address the point which was sought to be made in cross-examination that there were unexplained credits appearing in the family's bank accounts during the relevant period and that there was a significant increase in assets during that period.

22. The Tribunal did not discuss in detail the record of Mr Elton's interview with Detective Senior Constable R. McCloud on 15 March 1978. That record and interview records the following questions and answers, inter alia:-

"A. Look I now want to say something about
this matter.
Q25. What do you wish to say?
A. In retrospect of what I have already said
I do know something about the Companies
Waldene Holdings Pty Ltd and Lee Worboys
Pty Ltd. I assisted in the incorporation
of those Companies under false names and
the opening of the bank accounts at the
New South Wales King and George Streets
branch. I deposited monies to this
account Waldene Holdings Pty Ltd and made
withdrawals in cash. These monies came
from the issuing of invoices headed
'Classified Business Directories'. This
had been going on for some time before I
became involved by a Company called
Wallis Dene Pty Ltd, the principal of
this Company I believe to be called
TAYLOR. The initial deposits to Waldene
Holdings were in fact cheques made out to
Wallis Dene which were obtained I believe
from G.P.O. Box 52. When Wallis Dene
operation ceased another company was set
up. This was called Lee Worboys Pty Ltd.
This was another company I assisted
incorporating and opened bank accounts at
the Commonwealth Bank, St James Branch,
the Commercial Banking Company of Sydney,
City Tattersalls branch, and the Bank of
New South Wales, Tattersall branch.
Invoices were issued in the name of Lee
Worboys, cheques were banked to the three
accounts mentioned and cash withdrawals
were made from each bank. Later on
invoices were also issued in the name of
Walden Holdings and the proceeds from
these invoices were banked to the account
at the Wales King and George Streets branch.
...
Q51. I believe that a sum of about $140,000-00
was paid into the account of Waldene
Holdings and also Lee Worboys. Would you
agree with that?
A. I have no idea of the amount as I did not
keep any records.
Q52. Do you know if anyone associated with the
venture kept any records?
A. As far as I know they were all burnt.
Q53. Have you any idea when this was?
A. Everything was taken out about January,
1978, I think.
Q54. Of that portion, I correct myself, Can
you estimate the amount of profit made in
connection with the sending of pro-forma
invoices?
A. No I would have no idea.
Q55. Could you tell me how what profit there
was was distributed?
A. It was just roughly split up between the
parties involved about equal portions.
Q56. Would you care at this stage to tell me
who the other parties were?
A. I still do not want to say at this stage."

23. In that interview, Mr Elton was recorded as saying in answer to question 55 that the profits were split equally amongst the conspirators. The Tribunal said that this interview disclosed a very limited purpose and that there was nothing in the circumstances giving rise to the interview to suggest that Mr Elton was then aware of any contention touching any matter other than the refund cheque. Nevertheless, the matters discussed went to the heart of the taxation issue and Mr Elton was recorded as saying that the profits were split equally, although he said nothing as to the extent of the profits. In his cross-examination before the Tribunal, Mr Elton denied that he would have made that statement. But of course the evidence which he gave to the Tribunal that his activities were activities as a Taxation investigation officer was rejected. Once his evidence on that was rejected, his denial of the record of interview could also have been rejected.

24. I have now sufficiently discussed the facts and the Tribunal's reasons for decision.

25. On balance, I think this case is similar to Independent FM Radio Pty Limited v. Australian Broadcasting Tribunal and Anor, cited above, in which I held that a decision-maker may have made errors of fact and that its decision may to that extent have been made on wrong facts, but that no error of law was demonstrated.

26. In the present case, as in the Independent FM Radio case, I myself find some of the reasoning to be unconvincing. The evidence suggests to me that Mr Elton engaged in his activities for the purpose of profit and that there was sufficient evidence of funds moving into and out of the Elton family accounts and a sufficient acquisition of assets to support a finding of derivation by Mr Elton of income from the conspiracy over the period.

27. That, however, is to say no more than that I may myself have come to a different view of the facts if I had been the decision-maker. As Brennan J. said in Waterford v. The Commonwealth [1987] HCA 25; (1987) 163 CLR 54 at p 77:-

"A finding by the A.A.T. on a matter of fact
cannot be reviewed on appeal unless the
finding is vitiated by an error of law.
Section 44 of the A.A.T. Act confers on a
party to a proceeding before the A.A.T. a
right of appeal to the Federal Court of
Australia 'from any decision of the Tribunal
in that proceeding' but only 'on a question of
law'. The error of law which an appellant
must rely on to succeed must arise on the
facts as the A.A.T. has found them to be or it
must vitiate the findings made or it must have
led the A.A.T. to omit to make a finding it
was legally required to make. There is no
error of law simply in making a wrong finding
of fact."

See also Ruangrong v. Minister for Immigration & Ethnic Affairs (cited in 88 ATC at pp 4339), in which I said:-

"It is not the function of a court in judicial
review proceedings to reconsider the material
which was before the decision-maker and to
come to its own view of the facts as disclosed
by that material. As Diplock L.J. said in R.
v. Deputy Industrial Injuries Commissioner; ex
parte Moore (1965) 1 QB 456 at p 488:-
'If it (the evidence) is capable of having
any probative value, the weight to be
attached to it is a matter for the person
to whom Parliament has entrusted the
responsibility of deciding the issue.
The supervisory jurisdiction of the High
Court does not entitle it to usurp this
responsibility and to substitute its own
view for his.'
See also Chief Constable of the North Wales
Police v. Evans, [1982] UKHL 10; (1982) 1 WLR 1155, in which
Lord Brightman said, at p 1173:-
'Judicial review is concerned, not with
the decision, but with the
decision-making process. Unless that
restriction on the power of the court is
observed, the court will in my view,
under the guise of preventing the abuse
of power, be itself guilty of usurping power.'"

See also Holmes & Ors v. Deputy Federal Commissioner of Taxation (1988) 84 ALR 577 at pp 584-5, 88 ATC 4906 at p 4912.

28. Having given the matter anxious attention, I am not satisfied that any relevant consideration of significance was ignored by the Tribunal or that irrelevant considerations were taken into account or that the Tribunal's decision was otherwise an improper exercise of power or that the decision should be struck down as being in whole or in part unreasonable. The Tribunal has given considered reasons for its conclusions. Its reasons were lengthy and careful. The conclusion at which it arrived was, I think, open to it. I do not consider the conclusion to be a conclusion that no reasonable decision-maker could have come to. The facts were for the Tribunal which found the facts in favour of Mr Elton. Its decision must therefore stand.

29. For these reasons, the application by way of appeal will be dismissed with costs.