Hearsay ... the Journal of the Bar Association of Queensland
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High Court of Australia Judgment Summary Notes Print E-mail

The following summary notes of recent decisions of the High Court of Australia have beenhighcourtintro.jpg prepared by the Public Information Officer, Fiona Hamilton. They provide a brief overview of each case. For more detailed information, please consult the Reasons for Judgment which may be downloaded by clicking on the case name.



The following Judgments are summarised in this issue. The summary notes follow after this list:

  •  CTM v The Queen [2008] HCA 25
  • Kuru v State of New South Wales [2008] HCA 26
  • Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27
  • MZXOT v Minister for Immigration and Citizenship [2008] HCA 28
  • Northern Territory of Australia v Arnhem Land Aboriginal Land Trust [2008] HCA 29
  • CGU Insurance Limited v Porthouse [2008] HCA 30
  • Shi v Migration Agents Registration Authority [2008] HCA 31
  • Commissioner of Taxation v Futuris Corporation Limited [2008] HCA 32

CTM v The Queen [2008] HCA 25 (11 June 2008)

Honest and reasonable mistake of fact about the age of a girl was a potential ground of exculpation in a charge of sexual assault of a girl under 16, the High Court of Australia has held. The Court also held that CTM had not discharged the evidential burden of raising that ground at his trial.

In October 2004, in Coffs Harbour, the complainant had been out drinking with two friends and they ended up at CTM’s flat where he was also drinking with four other males. The girl fell asleep and was taken to a bedroom and her friends left. CTM, a co-accused and another male whom the girl could not positively identify, allegedly sexually assaulted her. CTM and the girl had become friends that year through attending the same high school. CTM was aged 17 and in year 11. He told police he thought the girl was in year 10 and that she had told him some time before that she was 16, but she was 15 and in year nine. He also denied having sex with the girl.

CTM was charged with sexual intercourse with the girl, knowing she was not consenting. In the NSW District Court, he was acquitted of this charge, but was found guilty of the alternative charge of sexual intercourse with a person aged between 14 and 16, contrary to section 66C(3) of the NSW Crimes Act, which carries a penalty of 10 years’ imprisonment. He was given a suspended 18-month sentence. Before the Act was amended in 2003 it provided a defence to heterosexual acts with under-age people if the offender reasonably believed that the child to whom the charge related was aged at least 16, and provided that the child was at least 14 and had consented to the sexual activity. After the 2003 amendments, the Act said nothing expressly about mistake as to age. CTM appealed to the Court of Criminal Appeal against both his conviction and his sentence. The CCA upheld the conviction but held that the District Court had made errors in sentencing and remitted the case to the District Court. CTM appealed to the High Court in relation to his conviction.

The Court, by a 6-1 majority, dismissed the appeal. The majority held that the ground of exculpation applied, but that in the circumstances of the trial CTM could not rely on it. The Court held that the NSW Parliament had not excluded the principle of criminal responsibility that a person who does an act under an honest and reasonable, but mistaken, belief was not criminally responsible to any greater extent than if their belief had been correct. An honest and reasonable belief that the girl was aged 16 was an answer to a charge under section 66C(3). The evidential onus of raising such a ground of exculpation for consideration lay with the accused. If it were raised the prosecution then had the onus of proving beyond reasonable doubt that the accused did not honestly believe on reasonable grounds that the other person was consenting and was at least
16. In CTM’s case, he did not give evidence at his trial and it was not put to the girl in cross- examination that she had said anything to CTM about her age.

handcuffed.jpgKuru v State of New South Wales [2008] HCA 26 (12 June 2008)

Police officers who declined to leave Mr Kuru’s home after he asked them to go and thereafter engaged in a physical struggle with him had committed trespass to both his person and his property, the High Court of Australia has held.

Early on 16 June 2001, six police went to a flat after receiving a report that a man and a woman were fighting. Mr Kuru and his then fiancée (now wife) had had a noisy argument but by the time police arrived the fiancée had left with Mr Kuru’s sister. When police walked in the open door, two visiting friends were in the living room and Mr Kuru was taking a shower. After he came out of the bathroom, he allowed police to look around. Mr Kuru explained that his fiancée had left, wrote down his sister’s telephone number, then asked police to leave. Despite repeated demands that police leave the flat, they declined to go. Mr Kuru jumped on to the kitchen bench, later saying this was to get their attention. He jumped off the bench, although it was disputed whether it was towards the police or away from them, but moved towards them with his arms outstretched and made physical contact with an officer. A violent struggle followed, and Mr Kuru was punched, sprayed with capsicum spray and handcuffed. He twice fell down stairs from the flat. Mr Kuru was locked in a police station cell for several hours wearing nothing but boxer shorts.

Mr Kuru brought proceedings in the NSW District Court against the State of NSW, claiming damages for trespass to his flat and his person and false imprisonment. He was awarded $418,265, including aggravated and exemplary damages. The NSW Court of Appeal unanimously allowed an appeal by the State. It held that, despite Mr Kuru’s withdrawal of permission to remain in his flat, the police were not trespassers when he first made contact with one officer. The Court held that police had both statutory and common law justification for remaining as they were investigating whether a domestic violence offence was committed. Mr Kuru appealed to the High Court.

The Court, by a 4-1 majority, allowed the appeal. The appeal was argued on the basis that the decisive question was whether the police were trespassing at the time of the physical encounter with Mr Kuru. The Court held that police had neither statutory nor common law justification to remain at the flat. Under section 357F of the Crimes Act, if invited by a domestic violence victim, police were entitled to enter or remain even if the occupier of the home objected. Section 357H provided that where police entered a house by invitation or with a warrant they were to stay only as long as needed to investigate whether an offence had been committed, to render aid to an injured person, to make an arrest, to prevent any further offence, and to establish whether firearms were present. The police had already inspected the flat and did not need to stay to speak to the fiancée. They were not invited to enter the flat by a victim of domestic violence. The Court held that their remaining at the flat after Mr Kuru had asked them to go was not authorised by sections 357F or 357H. Unless a victim of domestic violence asked police to stay, police had no authority to stay without permission of the occupant. If they had needed to stay they could have telephoned a magistrate for a warrant. The common law recognised that trespass on land in emergencies was justified, but in this case there was no danger to life or property. This was not a case where Mr Kuru’s refusal or withdrawal of permission to enter or remain could be overridden. Common law powers to prevent a breach of the peace did not extend to entry to investigate whether a breach of the peace had occurred or whether one was likely. By the time police went to the flat there was no ongoing breach of the peace and none was threatened.

The case was remitted to the Court of Appeal for consideration of further issues about damages.

law-library-books.jpgLumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27 (18 June 2008)

The owners of an Adelaide house did not owe any money to a company which built the house but which was not the company with which the owners contracted for the work, the High Court of Australia has held.

Matthew Lumbers owned the land and his father Warwick Lumbers had an unregistered lease of the property for life and lived in the house in the suburb of North Haven. The house was large, of unusual design and expensive, costing more than $1 million to build. In late 1993 the Lumbers entered into an oral agreement with W Cook & Sons (“Sons”) to build the house, completed in May 1995. Warwick Lumbers dealt with long-time employee of the Cook companies David McAdam. The Lumbers chose Sons because of its reputation and because of Mr Lumbers’s confidence in Mr McAdam. The informality of the contract was due in part to this trust. No price was fixed, the contract was never put into writing, and no invoices were ever issued. Rather than progress payments for actual costs incurred, Mr McAdam would periodically phone Mr Lumbers to seek a round sum and Mr Lumbers would send a cheque. Following a corporate reorganisation and without the knowledge of the Lumbers, the work, including engagement of subcontractors and supervision, was performed not by Sons but by an associated company, W Cook Builders (“Builders”). Builders was not a licensed builder. The lump-sum payments to Sons were passed on to Builders. Builders went into liquidation in June 1998. The Lumbers were unaware of Builders until August 1998. In February 1999, Sons director Malcolm Cook wrote to Warwick Lumbers explaining that Builders had taken over building the house following a restructure and advised that nothing was owed by the Lumbers to Sons for the house.

In November 1999, Builders served the Lumbers with a demand for an alleged shortfall of $181,904 and $92,887 as a 10 per cent fee for supervising the work, totalling $274,791. No claim had been made before and the supervision fee only appeared in Builders’ books after the liquidation. Builders also sought $274,791 from Sons. It commenced action in the South Australian District Court against both the Lumbers and Sons. Builders failed to provide security for Sons’ costs so the action against Sons was stayed. Builders claimed against the Lumbers on the basis that Sons had assigned the contract to Builders (rather than it being a subcontractor) and for restitution/unjust enrichment. Judge Barry Beazley dismissed both claims. The SA Court of Appeal rejected the assignment claim, but upheld the appeal on restitution, holding that an incontrovertible benefit was conferred on the Lumbers at Builders’ expense and it would be unconscionable for them to keep the benefit of the service without paying a reasonable sum for it.

The Lumbers appealed to the High Court which unanimously allowed the appeal and restored Judge Beazley’s judgment. The Court held that the Court of Appeal had not taken sufficient account of the rights and obligations under the contractual relationship between Sons and the Lumbers. The Lumbers were not shown to have unconscionably accepted a benefit at Builders’ expense. They had never asked Builders to do anything in connection with the house. Builders’ remedies lay under its subcontract with Sons.

immigration.jpgMZXOT v Minister for Immigration and Citizenship [2008] HCA 28 (18 June 2008)

It was not necessary and incidental to the exercise of the High Court of Australia’s original jurisdiction that, in the absence of a law made by Parliament conferring the relevant jurisdiction on the Federal Magistrates Court, the High Court had the power to decline to exercise its jurisdiction and remit a matter to the FMC, the High Court has held.

MZXOT, a Nigerian national, entered Australia in 2006 on a business (short stay) visa. He applied for a protection visa on the basis of persecution due to his religion. The Immigration Department refused the application in April 2006 and sent a letter to his last known address. MZXOT only learned of the decision in January 2007. In February 2007 he applied for judicial review of the decision in the FMC and was given a copy of the letter. The Minister filed an objection to the competency of the application and the proceeding was discontinued. MZXOT also applied to the Refugee Review Tribunal which determined it had no jurisdiction because the application was outside the 28-day time limit. He was deemed to have received the letter 10 days after the letter was posted and the 28-day period for lodging an application expired on 26 May 2006.

The Migration Act was amended in 2005 to impose short time limits upon applications to the Federal Magistrates Court, the Federal Court and the High Court. In 2007, the High Court held that the time limits on applications in the Court’s original jurisdiction were invalid. MZXOT then invoked the original jurisdiction of the High Court conferred by section 75(v) of the Constitution to seek orders for certiorari to quash the department’s decision and mandamus to direct the Minister to determine his visa application. He wanted the High Court, where he was not necessarily barred by time limits, to remit these proceedings for constitutional relief to the FMC where he would be eligible for legal aid. Last November High Court Justice Kenneth Hayne stated a case for the Full Court. This asked questions concerning the validity of provisions of the Migration Act and the Judiciary Act in so far as they impaired or frustrated the exercise of what MZXOT argued was an implied power in the High Court to remit his application to another court.

The Court unanimously held that remitting MZXOT’s application for constitutional relief to the FMC was not possible under the legislation. Section 44 of the Judiciary Act would empower the Court to remit the application to the FMC, but section 476B of the Migration Act states that the Court must not remit migration matters unless the FMC had jurisdiction under section 476. Section 476 provides that the FMC has the same original jurisdiction under section 75(v) as the High Court, but it has no jurisdiction in relation to “primary decisions” about protection visas that had been reviewed by the RRT if applications were not made within the specified time. The department’s decision was a “primary decision”. The Court held that the power to invest the Court’s original jurisdiction in another court was entirely a matter for Parliament and under section 77 of the Constitution Parliament can define the jurisdiction of any federal court other than the High Court. The FMC lacked authority to deal with the subject matter and accordingly the High Court lacked the authority to remit the matter to the FMC. Because the time limits in relation to the High Court’s original jurisdiction have already been held to be invalid, only the High Court may hear cases such as MZXOT’s. Four Justices held that the burden of exclusive determination of applications made outside the 2005 Act time limits did not sufficiently impair the discharge of the High Court’s constitutional functions so as to call into question the validity of the changes made by that Act.

Northern Territory of Australia v Arnhem Land Aboriginal Land Trust [2008] HCA 29 (30 July 2008)

Traditional Aboriginal owners had the right to exclude fishermen and others from tidal waters within Blue Mud Bay in north-east Arnhem Land, the High Court of Australia has held.
 
In 1980, pursuant to the Commonwealth Aboriginal Land Rights (Northern Territory) Act (the Land Rights Act), the Governor-General granted estates in fee simple of two areas to the Arnhem Land Aboriginal Land Trust, which held title to the land and exercised its powers as owner for the benefit of the Aboriginals concerned. The Land Trust had to do so in accordance with the direction of the Northern Land Council (NLC). The mainland grant covered 90,000 square kilometres between the mouth of the East Alligator River in Van Diemen Gulf in the west and the mouth of the Roper River in the Limmen Bight in the east, excluding Cobourg Peninsula. The islands grant covered all islands, except Groote Eylandt, adjacent to the mainland grant. Each grant extended to the low-water mark. The Yolngu people are the traditional owners of parts of Arnhem Land, including Blue Mud Bay, which lies in the mainland grant. Section 70(1) of the Land Rights Act prohibited outsiders from entering or remaining on Aboriginal land. Under the NT Aboriginal Land Act, a land council may grant permission to enter and remain on Aboriginal land.

In the Federal Court of Australia in 2005, the Land Trust, the NLC and the native title holders sought declarations of their rights under the grants, along with orders restraining the NT and the Director of Fisheries from issuing fishing licences for areas subject to native title claims, including areas within the grants. Commercial fishing and fishing by non-Aboriginals in Blue Mud Bay had been observed over many years. The NLC argued that the Director could not authorise fishing in waters overlying Aboriginal land. The Director argued that tidal waters were not part of Aboriginal land and fishing licences validly authorised fishing there. Justice Bradley Selway dismissed the proceeding. He held that grants under the Land Rights Act gave the Land Trust an estate in fee simple to the low-water mark but did not confer a right to exclude fishing in tidal waters. Before orders giving effect to these conclusions could be made, Justice Selway died, and Justice John Mansfield finalised the orders. The Land Trust, the NLC and native title holders appealed to the Full Court of the Federal Court against Justice Mansfield’s orders. The Full Court made declarations that the NT Fisheries Act did not apply to the grant areas, did not confer on the Director of Fisheries a power under that Act to grant licences to authorise or permit fishermen to enter and take seafood from those areas, and was invalid and of no effect regarding the grant areas. The NT and the Director appealed to the High Court.

The High Court, by a 5-2 majority, allowed the appeal in part, to the extent that the declarations were too broad and needed to be reframed. The Land Trust, the NLC and native title holders accepted that none of the three declarations should stand and that a more limited declaration should be made, to the effect that the Fisheries Act did not by itself authorise or permit entry into the grant areas. The Court held that without permission from a land council a person holding a fishing licence could not fish in tidal waters within the grant areas. Fishing in those waters was to enter or remain on Aboriginal land, contrary to section 70(1). The common law right of fishing could be abrogated or regulated. By necessary implication, the Fisheries Act abrogated any public right to fish in NT tidal waters and the comprehensive statutory regulation of fishing provided by that Act supplanted any public right to fish in tidal waters. The NT, Director of Fisheries and the Seafood Council submitted that the section 70 prohibition against entering or remaining on Aboriginal land extended only to land and did not include entering or remaining in tidal waters over that land. The Land Trust, the NLC and native title holders submitted that the grants related to a defined geographical area and that entry to that area, whether covered by tidal waters or not, was prohibited by section 70. The majority accepted that submission. It held that the Land Rights Act expressly provided for the grant of estates in fee simple over areas that included sections that would be covered by tidal waters.
 
The High Court made the declaration that the Fisheries Act did not confer on the Director of Fisheries a power to grant a licence under that Act which would, without more, authorise or permit the holder to enter and take fish or aquatic life from areas within the boundary lines of the mainland grant and the islands grant.
 
* The listed native title holders are Gawirrin Gumana, Djamawa Marawili, Marrirra Marawili, Nuwandjali Marawili, Daymambi Munuggurr, Manman Wirrpanda and Dhukal Wirrpanda, on behalf of the Yarrwidi Gumatj, Manggalili, Gumana Dhalwangu, Wunungmurra (Gurrumuru) Dhalwangu, Dhupuditj Dhalwangu, Munyuku, Yithuwa Madarrpa, Gupa Djapu, Dhudi Djapu, Marrakula1, Marrakula2, and Nurrurawu Dhappuyngu (Dhurili/Durila) groups.

CGU Insurance Limited v Porthouse [2008] HCA 30 (30 July 2008)

A barrister, who failed to advise that a compensation claim be filed before an amendment to the New South Wales Workers’ Compensation Act barred the claim, was not entitled to insurance to cover the damages he would have to pay to his client, the High Court of Australia has held.
 
In 1999 James Bahmad was injured while performing work under a community service order. He was raking grass on a steep embankment when he slipped and fell, injuring his right shoulder.Mr
Bahmad consulted solicitors about rights to compensation. Mr Porthouse, a barrister, was briefed in 2001 to advise whether Mr Bahmad had a claim under the Act or a claim for negligence against the Department of Corrective Services. On 12 June 2001, Mr Porthouse wrongly advised that the Act did not apply as Mr Bahmad was not in paid employment. Around this time, as part of comprehensive tort reform, the NSW government foreshadowed restrictions on common law claims for injuries governed by the Act. Proceedings brought before the commencement date of the
amending legislation would be unaffected and it became well known that this date would be 27 November 2001. Before the Act changed, damages for economic loss could not be awarded unless the worker suffered a serious injury. The amendment prohibited the awarding of damages unless the injured worker had a degree of permanent impairment of at least 15 per cent, but Mr Bahmad’s
injury, although serious, was below this threshold. On 26 November 2001, Mr Porthouse was instructed to draft a statement of claim against the State of NSW. It was filed on 11 December 2001. On 4 November 2002, Mr Bahmad obtained an award at arbitration of $120,687.15. The State applied to have the matter listed for rehearing in the District Court on 15 May 2003. On that day, Mr Porthouse became aware that the State intended to argue that the 2001 amendment to the Act applied to bar Mr Bahmad’s claim. Mr Porthouse obtained an adjournment. When the case proceeded on 29 August 2003, it was common ground that if the amended Act applied Mr Bahmad
could not recover any damages. The District Court found his claim was covered by the Act before it was amended but a year later the Court of Appeal allowed an appeal by the State.

In May 2004 Mr Porthouse filled out a CGU professional indemnity insurance form for 2004-05. It asked: “Are you aware of any circumstances, which could result in any Claim or Disciplinary Proceedings being made against you?” He answered “No”. The High Court noted that the form only asked about the possibility, not the certainty, of a claim being made and that answering the question did not call for an assessment of the prospects of success of any claim or the strength of possible defences to it. Section 6 of the policy stated that it did not cover known claims and known circumstances. “Known Circumstance” was defined in section 11.12 as: “Any fact, situation or circumstance which: (a) an Insured knew before this Policy began; or (b) a reasonable person in the Insured’s professional position would have thought, before this Policy began, might result in someone making an allegation against an Insured in respect of a liability, that might be covered by this Policy”. In March 2005 Mr Bahmad commenced proceedings against his original solicitors and Mr Porthouse, stating that had his lawyers been reasonably diligent and filed a statement of claim earlier his claim would have escaped the 2001 amendment. Mr Porthouse joined CGU, which refused to indemnify him, as a cross-defendant. In the District Court, Judge Audrey Balla held that both the solicitors and Mr Porthouse had been negligent and gave judgment for $170,000 plus costs, to be borne equally between them, but ordered that CGU indemnify Mr Porthouse. She held that the exclusion clause did not apply. The Court of Appeal, by majority, dismissed an appeal by CGU, which had argued that Judge Balla had erred by considering the subjective state of mind of Mr Porthouse when construing the exclusion clause. CGU appealed to the High Court.

The Court unanimously allowed the appeal. It held that the intention of limb (b) of the definition of “Known Circumstance” was to prevent an insured from avoiding the exclusion clause by saying that they did not disclose facts and circumstances because they did not know that these might give rise to an allegation of a liability which might be covered by the policy, even though a reasonable person in the same professional position would have thought those facts and circumstances might give rise to such an allegation. The Court held that Judge Balla’s error, which was not corrected by the Court of Appeal, was that she gave no consideration to the section 11.12(b) standard, which was independent of Mr Porthouse’s subjective view of facts and circumstances known to him. It held that section 11.12(b) posits an objective standard with a modification related to professional, not personal, matters. Nothing in the policy suggested that the hypothetical reasonable person was to be imputed with the insured’s idiosyncrasies or state of mind, or that a conclusion that an allegation might be made had to be plain and obvious. Mr Porthouse knew of the potential effect of the 2001 amendment to the Act on Mr Bahmad’s case and of his own role in creating the problem which gave rise to the State’s appeal. The High Court held that a reasonable barrister knowing these things would have thought there was a real possibility that an allegation might be made in respect of a liability which might be covered by the policy and that the exclusion therefore applied.

Shi v Migration Agents Registration Authority [2008] HCA 31 (30 July 2008)

The Administrative Appeals Tribunal (AAT) was entitled to take account of fresh evidence when reviewing a decision by the Migration Agents Registration Authority (MARA) to cancel a migration agent’s registration, the High Court of Australia has held. The Court held that the AAT was entitled to lift a caution imposed on an agent in the light of the evidence of subsequent events.

In July 2003, MARA cancelled Mr Shi’s registration. It refused to renew his registration in October 2003, suspended his registration in April 2004, and again refused to renew his registration in August 2004. Each decision was stayed, enabling Mr Shi to continue acting under supervision as a migration agent. The stay of the cancellation was conditional upon his undertaking not to handle protection visas and upon his being supervised by another agent. MARA had found 98 breaches of the Code of Conduct prescribed under the Migration Act. These related to Mr Shi’s dealings with clients; his knowledge of the Act and regulations; his control of his office, financial and other records; and his supervision of staff. Most of the breaches of the Code concerned applications for protection visas. MARA was satisfied Mr Shi was not a person of integrity or a fit or proper person to give immigration assistance. He applied to the AAT for review of the cancellation decision.
 
On 6 April 2005, the AAT published its findings about the breaches of the Code of Conduct. It found 51 breaches, concluding that other breaches had not been established. On 2 September 2005, the AAT published its decision on the review of MARA’s decision about Mr Shi’s registration. It concluded that it was not satisfied that he was not a person of integrity or not otherwise a fit and proper person to give immigration assistance, and set aside the cancellation decision and the other decisions. The AAT decided Mr Shi should instead be cautioned and that the caution would be lifted on 1 September 2008 so long as he did not assist with protection visas and if he were supervised by another migration agent. In deciding whether or not Mr Shi was person of integrity or was a fit and proper person, the AAT took into account evidence of his conduct since July 2003 when MARA cancelled his registration.
 
MARA appealed to the Federal Court of Australia, which accepted its submission that the AAT had made an error of law by asking whether, at the time the AAT made its decision in September 2005, Mr Shi was shown not to be a person of integrity or was not a fit and proper person to give immigration assistance. MARA argued that the appropriate time for consideration of the evidence was July 2003 and that the AAT should have considered whether at that date the proper action was to cancel Mr Shi’s registration. Justice Richard Edmonds held that neither MARA nor the AAT could set conditions for the lifting of a caution given to a migration agent if those conditions could not be imposed as conditions of registration. Mr Shi appealed to the Full Court of the Federal Court which, by majority, dismissed the appeal. He then appealed to the High Court.
 
The Court, by a 4-1 majority, allowed the appeal and ordered that the AAT decision be restored. The Court unanimously held that the AAT was not restricted to considering evidence of the facts and circumstances as they existed at the time of MARA’s decision. The AAT was empowered under the AAT Act to exercise all the powers and discretions conferred on MARA by the Migration Act. The majority further held that the AAT was entitled to impose the conditions it did when cautioning Mr Shi and to lift the caution. The Migration Act provides for MARA to caution an agent and to set conditions for the lifting of a caution and the majority held that the AAT could also exercise these powers.

Commissioner of Taxation v Futuris Corporation Limited [2008] HCA 32 (31 July 2008)

The Commissioner of Taxation had not deliberately miscalculated Futuris’s taxable income by “double counting” in contravention of his statutory powers, the High Court of Australia held today.
 
Futuris’s 1998 tax return specified a taxable income of $86,088,045 and tax payable of $30,991,696.20. In 2002 the Commissioner served a notice of amended assessment which increased its taxable income for 1997-98 by $19,950,088, making a total taxable income of $106,038,133. The increase was attributed to an increase in capital gains tax on the disposal of shares in a subsidiary company following a corporate restructure. Futuris appealed to the Federal Court of Australia against the disallowance of its objection by the Commissioner. This proceeding, pursuant to Part IVC of the Taxation Administration Act (TAA), is still pending. Part IVC provides for the making of objections to the Commissioner, for review by the Administrative Appeals Tribunal and for appeals to the Federal Court.
 
In November 2004, the Commissioner gave Futuris a second amended assessment which increased its taxable income for 1997-98 by $82,950,090. That amount was attributed to the application of Income Tax Assessment Act (ITAA) provisions dealing with schemes to reduce income tax to the disposal of the shares. Taxable income then totalled $188,988,223 with tax payable of $68,035,760.28. Futuris claimed there had been deliberate double counting of the $19,950,088. The Commissioner disallowed an objection by Futuris, which again appealed on 1
June 2005 to the Federal Court under Part IVC of the TAA.

The litigation which reached the High Court began when Futuris then issued a third proceeding in the Federal Court. This proceeding was brought under section 39B of the Judiciary Act, which provides for writs of mandamus, prohibition or injunction to be sought against Commonwealth officers. The issue raised by section 39B was not merely whether there had been an error of fact or law by the Commissioner in giving the second amended assessment, but whether the Commissioner had acted outside the powers conferred by the ITAA so as to have committed “jurisdictional error”. Justice Paul Finn dismissed Futuris’s action, rejecting its contention that the Commissioner had deliberately overstated its taxable income by $19,950,088.
 
The Full Court of the Federal Court allowed an appeal. It held that the second amended assessment was not protected by section 175 of the ITAA, which provided for the validity of any assessment not to be affected by reason that any ITAA provisions had not been complied with. The Full Court declared that the amended assessment was invalid under the ITAA, and ordered that it be quashed, holding that the Commissioner had relied on facts he knew were untrue, which was not a bone fide exercise of the power of assessment. The Commissioner appealed to the High Court.
 
The Court unanimously allowed the appeal and held that Justice Finn was correct to dismiss the section 39B application. It held that the Commissioner did not apply the ITAA to facts known to be untrue, there was no absence of bona fides regarding the second amended assessment, and there was no jurisdictional error vitiating that assessment. The Court rejected any conclusion that the Commissioner knowingly engaged in double counting.Australian Tax Office documents showed that the second amended assessment was issued on the footing that a compensatory adjustment could later be made, depending on the outcome of the Part IVC proceedings. The Court
held that if errors in assessment occurred, they were within, not beyond, the exercise by the Commissioner of the powers of assessment given by the ITAA and would be considered in the pending Part IVC proceedings. Absent any deliberate maladministration by the Commissioner, sections 175, 175A and 177(1) of the ITAA together provided that the validity of an assessment was not affected by failure to comply with the ITAA. However, the dissatisfied taxpayer could (and Futuris did) object in the manner set out in Part IVC of the TAA. In the circumstances, the Court held that the pending Part IVC proceedings should have led the Full Court to refuse to make a declaration about the amended assessment.


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