[2002] AATA 1190

Re Hart and Deputy Commissioner of Taxation

B J McCabe, Member

19 November 2002 - Brisbane

B J McCabe, Member.


   Michael Hart has sought review of decisions made by the Commissioner of Taxation in relation to the applicant's request under the Freedom of Information Act 1982 (Cth) (the FOI Act). The respondent has identified a range of documents potentially falling within the scope of the request made on the applicant's behalf. Some of the documents have been released. The Commissioner wishes to withhold certain documents, and delete material from other documents. He says some of the documents contain irrelevant material. He also relies on exemptions provided for in Pt IV of the FOI Act. The applicant has asked the tribunal to consider whether the respondent can properly withhold access to the documents.

The material before the tribunal

  2  The tribunal was provided with documents under s 37 of the Administrative Appeals Tribunal Act 1975 (Cth). It took evidence at the hearing from Fiona Alexandra Parcell, an employee of the respondent. Her affidavit was received into evidence. The affidavit includes 2 schedules of documents setting out the exemption(s) claimed in relation to each document. Unexpurgated versions of the documents in dispute were provided to the tribunal pursuant to s 64 of the FOI Act. I made an order under s 35 of the FOI Act directing that the documents not be disclosed to any person apart from the tribunal and its staff.

  3  Another document was provided to the tribunal by the respondent under cover of a letter dated 3 October 2002. The letter explained the document had only been located recently. For convenience sake, I will refer to this document as Document 1 in Sch 3, although it shall be treated as a part of exhibit R2 (the documents referred to in Schedules 1 and 2) and is subject to same orders with respect to confidentiality.

  4  The respondent also indicated there might have been other documents yet to be uncovered in the search process. Ms Campbell, for the Commissioner, said there were many documents to be reviewed. She said the applicant would be informed of the existence of additional documents and the Commissioner's attitude to them as soon as possible. I indicated at the time the tribunal would proceed to make its decision on the application insofar as it dealt with the documents referred to in the schedules. If a dispute arose in relation to other documents, I agreed the parties could seek a directions hearing in relation to those documents so that a further decision could be made in relation to them. It follows that the reasons given in this decision and the directions that flow from it only apply to the documents referred to in exhibit R2 (as amended by the inclusion of the document delivered to the tribunal under cover of the letter of 3 October 2002).

The facts

  5  The applicant is a solicitor. He is a member of the Brisbane law firm Cleary and Hoare. The respondent commenced an investigation into tax planning schemes and issued a notice under s 264 of the Income Tax Assessment Act 1936 (Cth) (the ITAA 1936) requiring the disclosure of certain information. The respondent's officers also visited the offices of Cleary and Hoare with a s 263 notice and required access to documents. The applicant and the respondent are now involved in proceedings in the Federal Court.

  6  The applicant issued a request under the FOI Act to the respondent. There was a good deal of correspondence in relation to the original request. The request and correspondence were directed to identifying documents that might shed light on the respondent's motivation and strategy behind the issue of the notices under ss 263 and 264. The applicant also sought access to those documents through the discovery process in the Federal Court, but he was unsuccessful.

  7  There has been considerable delay in complying with the FOI request. The respondent has taken a number of procedural points. In particular, the respondent claimed he was uncertain about the scope of the original FOI request. His lawyers suggested it only related to documents in relation to the issuing of the s 263 notice. On 6 September 2002, the tribunal decided the request extended to documents relating to the issue of notices under ss 263 and 264. That decision apparently caused the respondent to reassess its position. It sought more legal advice and brought in new staff to process the application. I was told the officer in charge of dealing with the request was on leave.

  8  Mr Hack, SC, counsel for the applicant, said the applicant was at a disadvantage because he had not seen the documents in question. Mr Hack submitted the tribunal was ultimately required to listen to the respondent's arguments in relation to the exemptions and then consider in relation to each document whether the exemption was made out. Mr Hack was therefore unable to assist the tribunal with anything more than general arguments about the interpretation of the provisions creating the exemptions.

The relevant legislation

  9  A person has a legally enforceable right to access documents held by a Minister or agency (such as the Commissioner) pursuant to s 11(1) of the FOI Act. The right of access is not affected by the applicant's reasons for seeking access: s 11(2). It follows the applicant's desire to use accessed material in the course of litigation or for any other purpose does not affect his right of access, although that right of access is always subject to other provisions of the FOI Act.

  10  The Commissioner is not required to disclose material that is irrelevant: s 22. He may also invoke certain exemptions provided for in Pt IV of the FOI Act to deny access to the document, or to provide the document with exempt material deleted. The decision to invoke an exemption is a reviewable decision that attracts the jurisdiction of the tribunal.

  11  In this case, the Commissioner says some of the documents (or parts of the documents) include irrelevant material that should not be disclosed. He also relies on one or more exemptions mentioned in Pt IV in relation to each of the disputed documents. The documents, and the grounds for non-disclosure in respect of each document, are identified in 3 schedules. Two schedules are attached to the affidavit of Ms Parcell, and the third is comprised of the document provided after the hearing under cover of the letter from the Australian Government Solicitor dated 3 October 2002. I will deal firstly with the claim that documents include irrelevant material that ought to be deleted under s 22(1)(a)(ii) of the FOI Act. I will address the other claims for exemption in turn.

The claims under section 22(1)(a)(ii)

  12  Section 22(1)(a)(ii) provides, relevantly:



 (a)  an agency or Minister decides: ...
 (ii)  that to grant a request for access to a document would disclose information that would reasonably be regarded as irrelevant to that request; and
 (b)  it is possible for the agency of Minister to make a copy of the document with such deletions that the copy: ...
 (ii)  would not disclose such information; and
 (c)  it is reasonably practicable for the agency or Minister, having regard to the nature and extent of the work involved in deciding on and making those deletions and the resources available for that work, to make such a copy;
the agency or Minister shall, unless it is apparent from the request or as a result of consultation by the agency or Minister with the applicant, that the applicant would not wish to have access to such a copy, make, and grant access to, such a copy.

  13  The starting point must be the terms of the request. In this case, the request for documents was expressed in general terms. That is not unusual. FOI requests often require a degree of speculation on the applicant's behalf as to the material that might be found in the files of the relevant Minister or agency. But the decision-maker must not lose sight of the policy of openness that underlies the FOI Act. The decision-maker should keep the challenges facing the applicant in mind when making his or her assessment of relevance.

  14  This point was made by the tribunal in Re Russell Island Development Association Inc and Department of Primary Industries and Energy (1994) 33 ALD 683. Deputy President Forgie warned (at 692):


... a request cannot be interpreted with the same degree of precision as one would approach a piece of legislation or even a set of pleadings. It is neither legislation nor pleadings and has not necessarily been drafted with the same eye to detail.

 Deputy President Forgie added (at 692):

The request cannot be considered solely in isolation but must be considered in the context in which it is made.

 Later, on the same page, the Deputy President said:

Finally, I must stand back and take an overall view of the request and the context in which it is made bearing in mind that those making requests under the Act cannot necessarily be expected to have an intimate knowledge of the subject matter of the documents they seek or of the workings of government ...

  15  It is then necessary to consider whether the document in each case contains information that "would reasonably be regarded as irrelevant to that request". The tribunal discussed the meaning of that expression in Russell Island. After referring to the decision in Attorney-General's Department v Cockcroft (1986) 10 FCR 180, Deputy President Forgie said (at 691) the expression "would reasonably be regarded" requires the decision-maker to:


... consider whether disclosure of certain information might reasonably, as opposed to irrationally or absurdly, be considered or looked on as irrelevant to the request for access made under the Act.

  16  The request in this case was contained in a letter from the applicant's solicitors to the respondent dated 4 February 2002. The respondent initially took the view that the request did not relate to documents connected with the decision to issue a s 264 notice. There was also some question about whether documents were being sought on behalf of other entities, including the Cleary and Hoare Practice Trust. Following the tribunal's directions issued on 6 September 2002, it was accepted the documents relating to the decision to issue s 264 notices and to Cleary and Hoare Practice Trust were covered by the request.

  17  The original request reads, in part:


... In accordance with the Freedom of Information Act 1982 (Cth) our client requires that you provide to him documents which you have in your possession relating to the current strategy the ATO has of identifying current tax planners arrangements who may pose the risks to the revenue. The strategy which we are referring to is that which has been adopted by the Commissioner and referred to in his speech to the American Club on 17 September 1999 - "A Question of Balance".


In particular we believe that documents which the Commissioner has which relate to the following matters may be relevant:

 ·  The existence of such a policy and when the policy was formed;
 ·  Criteria which the Commissioner has adopted to identify aggressive tax plans;
 ·  Criteria which is used by the Commissioner to identify aggressive tax planners;
 ·  Any processes which are used in applying the criteria;
 ·  Memoranda which show at which level a decision is made;
 ·  Whether there are any automatic review procedures (internally) of that decision before implantation;
 ·  Action options against aggressive tax planners;
 ·  The number of solicitors and/or accountants (separately) who have been identified as such in the separate states and territories (with a breakdown of those numbers per occupation per state/territory);
 ·  How those numbers have varied annually since the inception of the policy;
 ·  Whether any advisers identified as such have been deleted from the list;
 ·  The processes authorities leading to the visit in August 2001 to our clients premises at 145 Eagle Street by officers employed with the ATO;
 ·  Any documents which were in existence in particular relating to the investigation by our client by the ATO "aggressive tax planners" in Melbourne.

  18  In subsequent correspondence - particularly a letter from the applicant's solicitor to the Australian Government Solicitor dated 24 April 2002 - the applicant sought to refine that request. I accepted in the tribunal's directions issued on 6 September 2002 that the letter of 24 April clarifying the original request formed part of that request (see Re Hart and Commissioner of Taxation [2002] AATA 786). That letter reads, relevantly:


... We are seeking documents relating to any internal review procedures that exist once a decision has been made to issue a s 263 or s 264 notice before a notice is issued.


... We are seeking documents relating to the processes undertaken by officers prior to the visit to our client's premises. The authority is that referred to in the Commissioner's Practice Statement 2002/10. A copy of this document is enclosed to assist you. We are also seeking documents relating to any authorisations from any other ATO officers to found the fact (in the Statement of Reasons provided by Mr McKay) that Cleary Hoare is involved in aggressive tax planning.


[We are also seeking] Any documents which are in existence in particular relating to the investigation of our client by the ATO "aggressive tax planners" in Melbourne. It is our client's understanding that there have been investigations undertaken by the ATO office in Melbourne. If there are any documents in existence relating to this investigation, we seek copies of the same.


We further particularise our client's request as follows:

 1.  Any document relating to our client's tax planning schemes which were relied upon by officers in making the decision to issue the section 263 and 264 Notices to our client; and
 2.  Any documents, including but not limited to, any intra-office emails, diary notes and memorandums between Mr Malcolm McKay, Mr Iain Young, Mr Neil Mann and any officers of the Aggressive Tax Planning Unit relating to the decision to issue the section 263 and 264 Notices to our client. ...

  19  It is important to set out the context in which the requests are made. The context can be identified from the request and the correspondence. The respondent has used intrusive investigative powers to elicit information that the applicant apparently believes might be used against him, members of his firm or his clients. He wants to identify the motives of the respondent, and the policies that inform the Commissioner's modus operandi.

  20  In the course of evaluating each document, I have had regard to the request as elaborated in subsequent correspondence. I have also considered the context in which the request was made.

  21  I am satisfied that material in the following documents should not have been withheld under s 22:  Schedule 1

 ·  The second sentence in the final paragraph of document 3;
 ·  Pages 65-77 of document 15 (ie, the material under headings 1.1-1.4);
 ·  The whole of the schedule to document 21 (pp 100-108);
 ·  The whole of document 22 apart from the material deleted from line 2 on p 112 after the word "A.Hewlett", under the heading "Partnership";
 ·  The whole of documents 9, 11, 13, 16, 20, 23, 24, 25, 26, 27, 28, 36, 37, 38, 39, 40, 41, 42, 43, 47 and 48;
 ·  That part of document 35 contained in the second of 3 e-mails sent at 12.02pm on 23 March 2001;
 ·  The material in numbered para 4(d) and (e) and numbered para 3 in document 44;
 ·  The whole of document 49 apart from the material deleted from para 1; and
 ·  The material deleted from that part of document 50 under the heading "2. Background and business drivers".
 Schedule 2  I am satisfied that the claim of irrelevance has been made out in relation to all of the material in the documents referred to in Sch 2.  Schedule 3  I am satisfied that the claim of irrelevance has been made out in relation to this document.

Section 36

  22  The respondent relies on the exemption contained in s 36 in relation to document 12 in Sch 1. Section 36(1) provides:


Subject to this section, a document is an exempt document if it is a document the disclosure of which under this Act:

 (a)  would disclose matter in the nature of, or relating to, opinion, advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of an agency or Minister or of the Government of the Commonwealth; and
 (b)  would be contrary to the public interest; ...

  23  The respondent says the deleted portion of the document contains a recommendation on how a particular shortcoming in the ATO's systems that might lead to fraud is to be addressed. The respondent says disclosure of that information concerning the shortcoming might enable others to take advantage of the vulnerability and thereby defraud the Commonwealth. That cannot be in the public interest, the Commissioner argues.

  24  If the exemption is to apply, one must characterise the (deleted) information in the document as "matter in the nature of, or relating to, opinion, advice or recommendation ...". In addition, one must be satisfied the matter was disclosed in the document "in the course of, or for the purposes of, the deliberative processes involved in the functions ...".

  25  The second limb of the test can be explained more readily. The tribunal has in the past interpreted the expression "deliberative processes" as the decision-maker's "thinking processes": see Re Waterford and Department of the Treasury (No 2) (1984) 5 ALD 588 at 606; see also Re Zacek and Australian Postal Corporation [2002] AATA 473 at para 55-61. The tribunal explained in Waterford that the deliberative process extends beyond the business of making policy to the design and operation of administrative systems. It might catch employment issues, as in Zacek. But it does not extend to every document that is prepared by the Minister or agency in the course of discharging its functions. Documents that are merely descriptive or which deal with procedural issues might fall short of forming part of the deliberative process: see Waterford at 606. That approach is consistent with s 36(5) which says the section does not protect documents containing purely factual material.

  26  The first limb of the test imposed under s 36(1) requires a more active process of characterisation. The full Federal Court made it clear in Harris v Australian Broadcasting Corporation (1984) 1 FCR 150 that the characterisation process was not simply a matter of examining the form of words used in the document. The use of the words "It is my opinion that ..." or "I advise ..." or "I recommend" in the course of the document is not conclusive. It may be such statements are essentially statements of fact, and s 36(5) says pure statements of fact are not exempt under the section. Conversely, a summary or report of facts might in some circumstances be properly characterised as opinion, for example, because the process of selecting and distilling and compiling the facts forms part of a deliberative process: Harris at 154-55 (although the court noted it will not be enough to establish that the selection of facts is founded upon expertise or involves the application of a standard: Harris, at 154-55). One must instead look to the essence of the statements to determine their nature for the purposes of s 36(1): Harris, at 155-56.

  27  How does one identify the essence of the matter in order to characterise it for the purposes of the section? The court in Harris suggested one might usefully refer to the distinction sometimes made by lawyers between primary facts and ultimate facts. The court said that ultimate facts - conclusions derived from the analysis of other (often unstated) facts - might still be essentially factual in nature. The court explained (at 155):


Many common statements of fact may, if analysed, be found to be based on primary facts. For example, the statements X has a cold or Y resides in Sydney are both statements based on primary facts, which are unstated. On the other hand, a conclusion which involves opinion, advice or recommendation for the purposes of the deliberative process may well prevent material from being purely factual and render it exempt.

  28  The test appears to turn on whether the matter is capable of being deliberated upon, as opposed to being merely noted or referred to in the course of the deliberative process. Opinions, advice and recommendations are protected because they agitate the thinking of the Minister or agency concerned. They are "a part of the agency give-and-take - of the deliberative process - by which the decision itself is made ...": Vaugh v Rosen (1975) 523 F(2d) 1136 at 1144, cited in Harris at 154.

  29  It is necessary to qualify what has been said in one important respect. Section 36(6) deals with opinions rendered in reports by scientific or technical experts. Where material that would otherwise be considered as opinion (or recommendation or advice) is contained in a report of a scientific or technical expert, it will nonetheless be exempt by reason of s 36(6).

  30  Where does that leave the Commissioner and the applicant with respect to document 12? The document is a memorandum from several ATO officers apparently charged with the investigation of the applicant's firm in connection with tax planning arrangements. The opening paragraph of the report reads:


The following is a report on the potential high risk to the revenue posed by the above named firm of solicitors as a result f some preliminary risk assessment.

  31  The document then proceeds to document the risk assessment made by the investigators. One of the conclusions they reach is set out in the portion of the document presently under consideration.

  32  I do not think it is possible to dismiss the deleted material as a bare observation of fact, especially when it is read in the context of a document prepared for the purpose of assessing risks. The risks identified and the course of action proposed as a response to the risk form part of the deliberative processes of the Commissioner. The material does not merely record the facts without any expectation of a response. The Commissioner and his officers might be expected to do more than merely note the information. The deleted material is itself a part of the thinking about how to identify and contain risks to the revenue.

  33  The deleted material does recount the advice of someone who is presumably a technical expert. The opinion is recounted by the authors of the report in support of their advice as to how the ATO should deal with the risk they identified. I do not think the authors' reference to the report of an expert brings the material within the exemption contained in s 36(6). That section denies protection to the report itself. It does not prevent the exemption being claimed in relation to material that includes consideration of or deliberations with respect to the report.

  34  I am satisfied that exposing the shortcoming referred to in the deleted material would make it possible for unscrupulous individuals to defraud the revenue. In this case, at least, I think it is contrary to the public interest to provide directions on how to find the Commissioner's blind spots.

  35  It follows I am satisfied that the exemption has been properly claimed with respect to document 12.

Section 39

  36  An exemption was also claimed in respect of the material on document 12 under s 39. Section 39 provides:


(1) Subject to subsection (2), a document is an exempt document if its disclosure under this Act would have a substantial adverse effect on the financial or property interests of the Commonwealth or of an agency.


(2) This section does not apply to a document in respect of matter in the document the disclosure of which under this Act would, on balance, be in the public interest.

  37  Few of the cases dealing with exemptions under Pt IV of the FOI Act deal with the operation of s 39. Deputy President Forgie rejected a claim under s 39 in Re The Staff Development and Training Centre and Secretary, Department of Employment, Workplace Relations and Small Business [2000] AATA 78. That decision was ultimately overturned by the full Federal Court (Secretary, Department of Employment, Workplace Relations and Small Business v The Staff Development and Training Centre Pty Ltd [2001] FCA 1375), although there was little discussion in any of the judgments arising out of the case as to the correct approach to the interpretation of the section.

  38  There was a more extensive discussion of s 39 in Re Connolly and Department of Finance (1994) 34 ALD 655. In that case, Deputy President McMahon allowed the Department of Finance to withhold documents containing information about the Commonwealth's plans for selling off its uranium stockpile. The tribunal held (at 662) that disclosure of the Commonwealth's disposal strategy might prevent it from maximising the sale price, and would "cause a substantial adverse effect of the value of the Commonwealth's property in its uranium stockpile". The Deputy President went on (at 662) to find that to be "substantial", the adverse effect must be serious or significant: see also Re James and Australian National University (1984) 2 AAR 327 at 341. The Deputy President had no difficulty in concluding the adverse effect in that case would be substantial given the size of the stockpile and the "thin, confidential and sensitive market": at 661.

  39  The explanatory memorandum that accompanied the Freedom of Information Bill 1981 (Cth) does not enlarge on the words of the section. It offers no real guidance to the approach one should take to the section. One is left with the words of the section itself, and with Connolly.

  40  The result in Connolly is easy to understand. The Commonwealth and its agencies have an interest in maintaining and, where necessary, being able to realise the value of assets. The section clearly exempts disclosures that would have the effect of reducing the value of an asset that was to be sold or privatised. But the Commissioner is seeking to stretch the exemption further than that.

  41  The respondent's argument in support of the s 39 exemption can be summarised as follows: the deleted material identifies vulnerability in the revenue collection and enforcement process. If that vulnerability were widely known, unscrupulous individuals might successfully avoid or evade their obligation to pay tax. Tax avoidance and evasion reduces the amount of revenue collected by the Commonwealth. A reduction in revenue collection inevitably impacts on the finances of the Commonwealth. Crudely speaking, if there is less money collected, there is less money available to spend. The Commonwealth can therefore be said to have a financial interest in the revenue collection process that will be adversely effected by the disclosure of the documents which might facilitate tax avoidance and evasion. (I assume the Commissioner is concerned with the Commonwealth's interests in the revenue, since the Australian Taxation Office cannot itself have an interest in the amount of revenue it collects on behalf of the Commonwealth. It is not the Commissioner's money).

  42  The Commissioner cannot rely on the exemption contained in s 39 to protect information that might impact on revenue collection. Although the Commonwealth is generally interested in the amount of revenue it collects through the tax system, that is not the same thing as a financial interest in the sense intended by the section. Revenue collection is a process, and one does not have an interest in a process. To analogise, one does not have a financial interest in one's employment, even though it yields revenue that might be deposited in the bank. One has a financial interest in the contents of that bank account, or in any investments that are purchased using that money (although they would also qualify as property interests), and in the income streams generated through those assets. I do not think the taxpayer is the same as an asset in that sense in which the Commonwealth has an interest. Nor do I accept the taxation system that extracts the revenue is the equivalent of an income stream yielded by an asset, like the sale of the uranium stockpiles referred to in Connolly. While the interest in question does not need to be a proprietary interest, it must be more than a concern like that which the Commissioner and the Commonwealth properly have to ensure the revenue collection process operates efficiently and with integrity.

  43  Section 39 apparently intends to provide the Commonwealth and its agencies with the same level of confidentiality that a private individual or business would enjoy in managing its own financial and property assets. There are other sections that may be used to protect the Commonwealth's revenue collection functions, most obviously ss 36, 37 and 40. To read s 39 as widely as the Commissioner contends would extend its reach to the point where a vast range of documents in the possession of the Commissioner were shielded from disclosure since it would presumably be possible to argue that a great deal of the Commissioner's paper-work might have some implications for his success in collecting revenue.

  44  It is unnecessary to consider the operation of s 39(2) as I do not accept the exemption under s 39(1) can properly be claimed in respect of document 12 in Sch 1.

Section 37(1)(a)

  45  Section 37(1)(a) creates an exemption for documents where disclosure of those documents, or parts of the documents, would frustrate the enforcement of the law. The sub-section provides:


(1) A document is an exempt document if its disclosure under this Act would, or could reasonably be expected to:

 (a)  prejudice the conduct of an investigation of a breach, or possible breach, of the law, or a failure, or possible failure, to comply with a law relating to taxation or prejudice the enforcement or proper administration of the law in a particular instance; ...

  46  The exemption has been claimed in respect of the whole or parts of documents 11, 25, 26, 27, 38, 47 and 48 in Sch 1.

  47  The respondent must establish he has a reasonable expectation that disclosure will prejudice the conduct of the investigation. As Woodward J explained in the course of his decision in the full Federal Court in News Corporation Ltd v National Companies and Securities Commission (1984) 5 FCR 88 (at 101-102):


... the words "would, or could reasonably be expected to ... prejudice" mean more than "would or might prejudice". A reasonable expectation of an event requires more than a possibility, risk or chance of the event occurring ... In my view it is reasonable to expect an event to occur if there is about an even chance of it happening ...

  48  Fox J agreed (at 95) "that it is not sufficient that there be a mere risk of prejudice to the conduct of an investigation": see also Bartlett v Secretary, Department of Social Security (1997) 49 ALD 380 at 381 per Heerey J.

  49  Ms Parcell in her affidavit said she was told by an officer involved in the investigation that disclosure of the material in question would forewarn the applicant and others about the extent of the respondent's knowledge. She also recounted the investigator's fear that disclosure of the information would enable individuals subject to an investigation to anticipate the "action options" (which I assume to be investigative and enforcement strategies). Armed with that knowledge, the officer told Ms Parcell, the individuals in question could modify their behaviour, making the investigation more difficult.

  50  Mr Hack criticised Ms Parcell's affidavit on the basis that she had no first-hand knowledge of the investigation. Her cross-examination revealed she had uncritically accepted the word of the officers to whom she had spoken about the risks of prejudice. Mr Hack said Ms Parcell's affidavit did no more than assert a risk of prejudice without providing evidence of how that might occur. He said I should not rely on her assertions.

  51  Mr Hack added the failure to call the officers who did have direct knowledge of any investigation justified an inference that their testimony would not have assisted the respondent's case in the absence of an explanation for their absence. Mr Hack referred to the decision of the High Court in Jones v Dunkel (1959) 101 CLR 298. In that case, Kitto J observed (at 308):


... any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence.

 (Menzies J expressed a similar view at 312; Windeyer J agreed at 319).

  52  Mr Hack said I should effectively disregard Ms Parcell's evidence about the likelihood of prejudice and conclude there is no difficulty with disclosure unless the potential prejudice is obvious from a reading of the document. He urged me to let the documents speak entirely for themselves.

  53  There is a good deal to be said for Mr Hack's argument on this point - particularly in light of the suggestion in Ms Parcell's affidavit (at para 54) that:


Those investigations are, generally speaking, at a preliminary stage and generally there are a number of options which auditors might undertake to continue the investigation.

  54  If the investigations are at such an early stage, it is very difficult to form a view of the extent to which the investigation might be prejudiced by disclosure of what the Commissioner already knows.

  55  I am not prepared to go so far as to entirely disregard Ms Parcell's evidence about prejudice, but I agree that it carries much less weight than evidence given by an officer with direct experience of the investigative process in this case.

  56  Ms Campbell, for the respondent, said the Commissioner was not only concerned about prejudice to investigations carried out into the applicant's affairs. She pointed out that documents were in the public domain once they were released. They could be disclosed to other individuals who might be less scrupulous than the applicant in their responses to the investigation. Once the information was publicly available, the damage to the investigation(s) (in the sense that investigative options might be foreclosed) was done even if it transpires that particular individuals being investigated acted honestly without seeking to exploit the knowledge: see the tribunal's decision in Re News Corporation Ltd and National Companies and Securities Commission (1984) 9 ACLR 21 at 23. I accept her submissions on this point.

  57  I turn first to document 11 in Sch 1. I have no difficulty with the deleted material on p 37, but I fail to see how the material deleted from p 35 will prejudice the investigation. At any rate, I am unable to ascertain the nature and extent of any prejudice from the evidence presented before the tribunal. I am also unable to see how the first sentence of the deleted material on p 34 of the document will prejudice the investigation, although I accept the balance of the paragraph attracts the exemption.

  58  I am satisfied the exemption has been properly claimed in respect of the deleted material in documents 25, 26 and 27 insofar as the material identifies an individual who might be targeted for investigation. The exemption is also properly claimed in relation to the deleted material in document 38 insofar as it identifies information to be obtained and dates within which steps should be taken. The exemption is properly sought in respect of the information delated from documents 47 and 48 insofar as it identifies dates for action or decision.

  59  I am also satisfied that the exemption has been properly claimed in relation to document 1 in Sch 3.

Section 38

  60  Section 38 creates an exemption for documents affected by secrecy provisions in an Act. The section provides:


(1) Subject to subsection (1A), a document is an exempt document if:

 (a)  disclosure of the document, or information contained in the document, is prohibited under a provision of an enactment; and
 (b)  either:
 (i)  that provision is specified in Schedule 3; or
 (ii)  this section is expressly applied to the document, or information, by that provision, or by another provision of that or any other enactment.


(1A) A person's right of access to a document under section 11 or 22 is not affected merely because the document is an exempt document under subsection (1) of this section if disclosure of the document, or information contained in the document, to that person is not prohibited by the enactment concerned or any other enactment.


(2) Where a person requests access to a document, this section does not apply in relation to the document so far as it contains personal information about the person.

  61  The exception in subs (2) refers to personal information about an applicant. The applicant will ordinarily be permitted to access the documents insofar as they contain personal information about the applicant. The expression "personal information" is defined in s 4 in the following terms:


personal information means information or an opinion (including information forming part of a database), whether true or not, and whether recorded in a material form or not, about an individual whose identity is apparent, or can reasonably be ascertained, from the information or opinion.

  62  The reference to "individual" in the definition section makes it clear that personal information is information or opinion about a natural person, and not a company. The Commissioner says a corporate person cannot therefore take advantage of the exception in s 38(2) to insist that material be disclosed where that material relates to the corporation. Mr Hack, for the applicant, says there can never be personal information about a company in the sense contemplated in the s 4 definition.

  63  In this case, the application was lodged in the first instance by Mr Hart on his own behalf. The applicant subsequently provided authorities on behalf of the Cleary and Hoare Practice Trust and others.

  64  The Commissioner says the documents contain information collected by officers of the respondent acting in the course of their duties that relates to third parties (that is, persons other than the applicant). Most obviously, the documents include information collected as a result of the execution of the notices under ss 263 and 264 of the Income Tax Assessment Act 1936 (Cth) (the ITAA 1936). The Commissioner says disclosure of those documents is prohibited under s 16 of the ITAA 1936, which is referred to in Sch 3. Section 16(2) of the ITAA 1936 provides:


Subject to this section, an officer shall not either directly or indirectly, either while he is, or after he ceases to be an officer, make a record of, or divulge or communicate to any person any information respecting the affairs of another person acquired by the officer as mentioned in the definition of "officer" in subsection (1).

 Subsection (2A) goes on to say:

Subsection (2) does not apply to the extent that the person makes the record of the information, or divulges or communicates the information, in the performance of the person's duties as an officer.

  65  The expression "affairs of a person" does not only include information about the person's tax affairs. The wording of the statute suggests any information about an individual that was collected by the respondent may not be communicated: see Re Mann and FCT (1987) 18 ATR 3671 at 3673; 87 ATC 2010 at 2012; see also Re Corrs Chambers Westgarth and Commissioner of Taxation [1998] AATA 756 at par 13-14.

  66  Schedule 3 also refers to s 8WB(1)(c) of the Taxation Administration Act 1953 (Cth). That section prohibits the disclosure of an individual's tax file number to a third party. Section 8WB(1A) creates an exception to the obligation of non-disclosure where the disclosure is in connection with the discharge of an obligation imposed by a taxation law or another law of the Commonwealth like those referred to in several subsections of s 202 of the ITAA 1936.

  67  The respondent noted in its written submissions to the tribunal that the prohibitions in s 16(2) and s 8WB extend beyond disclosure to catch communication of the relevant information. The respondent says he is therefore unable to provide documents that include information already known to the applicant. There is good reason for that approach: while the information may already be known to the applicant, it may not be more widely known yet there is nothing to stop the applicant sharing the information with others. This wider view in relation to s 16 at least is also consistent with the existence of a list of specific exemptions in s 16(4) that permit information that would otherwise attract the protection of the section to be disclosed to the named individuals for particular purposes. If Parliament had intended a more relaxed view of the secrecy provisions, it would not have included such a detailed list of exceptions to those provisions.

  68  The respondent takes this argument a step further. Ms Campbell explained in her written submissions that the provisions prevent the Commissioner from disclosing information to an individual about a third person even where the third party is related to the individual and has consented to disclosure. If one takes the logic of that argument to its limits, the Commissioner would be prevented from providing documents containing information about the applicant alone to the solicitor whom the applicant was using to make the request. That seems excessive since the solicitor is obliged to maintain the confidentiality of the documents to protect the client's interests. Where the applicant is seeking information with the third party's consent, as opposed to seeking the information on behalf of the third party as that party's legal representative, the position might be different since there is no obligation of confidentiality owed to the third party.

  69  The drafting of s 16(2) and s 8WB appear to place a premium on protecting a person's privacy. As the tribunal explained in Re Mann and Federal Commissioner of Taxation (1987) 18 ATR 3671 at 3675; 87 ATC 2010 at 2014 there is a:


cardinal principle of Australian income tax law that the knowledge of a person's affairs gained by the ATO is sacrosanct, subject to carefully defined, albeit now ever extensive, statutory exceptions.

  70  That is entirely appropriate given the sensitivity of the information the Commissioner is empowered to collect. It follows that while information about the applicant himself and about him in his other capacity as trustee of the Cleary and Hoare practice trust may be considered for release without offending the prohibition, information relating to other entities with whom the applicant is involved and with whom he may have a relationship (and who have consented to release) should not be considered for release. Those entities should make a separate application of their own under the FOI Act. What they do with the information if and when it is released to them is a matter for those entities. I accept this a more cumbersome process, but the taxation legislation rightly places great store in protecting privacy. The provisions of the FOI Act should be interpreted in that light, notwithstanding the general policy evident in the Act in favour of disclosure.

  71  The position may become more complicated when the information in a document is personal information relating to the applicant and to someone else. The respondent acknowledged the tribunal decided in Re Forest and Department of Social Security (1991) 23 ALD 649 that joint personal information about the applicant and a third party fell within the exception in s 38(2) that permits disclosure of personal information. The Commissioner said in its submissions that he had:


not claimed an exemption under s 38 for small amounts of information which fall within s 38(2). In respect of those documents a claim has been made under s 41.

  72  To the extent the Commissioner has done that, there is no need to consider the decision in Forest.

  73  The information that must be protected under s 16(2) is information obtained by an officer. Section 16(1) defines "officer" in the following terms:


Officer means a person who is or has been appointed or employed by the Commonwealth or by a State, and who by reason of that appointment or employment, or in the course of that employment, may acquire or has acquired information respecting the affairs of any other person, disclosed or obtained under the provisions of this Act or of any previous law of the Commonwealth relating to income tax.

  74  Where the information is obtained through other channels - for example, through performing a search of the ASIC database like any other member of the public, or perusing media reports - the information is not protected because it has not been obtained using a law of the Commonwealth relating to income tax.

  75  The last point that must be made before turning to consider the documents relates to the question of whether information in documents can be released if it has been "sanitised". A document is sanitised when matters that enable an individual to be identified are removed so the information that remains cannot be linked to an identified person. The process of sanitising or depersonalising information has been considered in a number of decisions of the tribunal. In Re Fallon Group Pty Ltd and Commissioner of Taxation (1995) 31 ATR 1164; 95 ATC 2134, the tribunal said there was no difficulty in releasing documents containing information that could not be linked to named taxpayers. The tribunal took a different view in Re Corrs Chambers Westgarth and Commissioner of Taxation [1998] AATA 756. In that case, Senior Member Dwyer said that the prohibition in s 16 on communicating information that related to a taxpayer could not be avoided by removing the identity of that taxpayer. Even once the identifying information was removed, the information still related to a taxpayer - albeit an unnamed one: at para 22; see also AAT Case 11,751 Re Collie and Deputy Commissioner of Taxation (1997) 35 ATR 1204 at 1212.

  76  I agree with Senior Member Dwyer's approach in Corrs. On its face the prohibition seeks to prevent the communication of information. That is a more ambitious goal than merely suppressing the identity of those with respect to whom information is released.

  77  The Commissioner has invoked the exemption in relation to a large number of the documents in question. In a number of cases, an exemption is claimed in relation to the same material under s 22.

  78  I am satisfied the exemption should not have been claimed in relation to material in the following documents:  Schedule 1

 ·  the final 11 lines of text on p 3, the first page of document 2;
 ·  the middle paragraph comprised of one sentence and the final sentence in document 3;
 ·  the first 2 paragraphs of the e-mail note addressed to "Rob" in document 5;
 ·  numbered paras 2, 3, 4, 6 and 9 of document 9; and
 ·  the last 3 paragraphs on p 151, which is the first page of document 32.
 Schedule 2  I am satisfied that the exemption has been validly claimed in respect of the documents in Sch 2.

Section 41

  79  Section 41 of the FOI Act creates an exemption for documents that affect personal privacy in some circumstances. Section 41(1) says:


A document is an exempt document if its disclosure under this Act would involve the unreasonable disclosure of personal information about any person (including a deceased person).

 Section 41(2) says:

Subject to subsection (3), the provisions of subsection (1) do not have effect in relation to a request by a person for access to a document by reason only of the inclusion in the document of matter relating to that person.

  80  The rest of the section is concerned with procedures for dealing with medical and other similar records. Those provisions have no application here.

  81  In order to establish that an exemption under s 41 is available, the respondent must show that (i) the document in question contains personal information about someone other than the applicant (see s 41(2)); and (ii) disclosure of that information would be unreasonable. I have already explained that the expression "personal information" only relates to information about a natural person by reason of the definition in s 4. It follows the Commissioner may not claim an exemption with respect to information about a company. That is a curious result in policy terms, but the words of the Act are clear enough.

  82  The question of whether a disclosure is unreasonable raises public interest considerations, according to Lockhart J in Colakovski v Australian Telecommunications Corporation (1991) 29 FCR 429 at 438. In particular, one must weigh the public interest in open government that militates in favour of disclosure against other public interest considerations: see also Kristoffersen v Department of Employment, Workplace Relations and Small Business [2002] FCA 55 at paras 27-29 per Kiefel J. In Colakovski, the competing public interest was the interest in protecting the private affairs of individuals from disclosure where they might expect their confidentiality would be respected.

  83  The tribunal concluded in Re Murtagh and FCT (1984) 15 ATR 787; 84 ATC 4516 that it would be unreasonable to disclose information about another taxpayer in the absence of consent from that taxpayer. That may be true as a general proposition, but the tribunal also recognised in Re Z and Australian Taxation Office (1984) 16 ATR 313 at 316 that:


in order to determine whether the disclosure of the personal affairs of others would ... be unreasonable, it is necessary to consider the nature of the information and any other circumstances which may be relevant including any relationship between the applicant and the person whose affairs may be disclosed.

  84  It follows there may be some matters concerning another person that are harmless enough to disclose in all the circumstances - although the tribunal cautioned in Re Williams and Registrar of Federal Court of Australia (1985) 8 ALD 219 that one should consider reasonableness of disclosure on the basis that the documents were being disclosed to the whole world, and not just to the applicant.

  85  I am satisfied the exemption has been properly claimed in relation to all of the documents referred to in para 61 of the affidavit of Ms Parcell. There are other individuals named in those documents whose consent to disclosure has not been obtained. While they might readily agree to their identities being made known to the applicant, they might be concerned about their identities being disclosed to the whole world: see Williams. I note Ms Parcell says the individuals in question have been approached for their consent. That process should have been concluded and the relevant portions of the documents should have been made available to the applicant if the other individuals consented by the time these reasons have been published, except where disclosure has been resisted on the basis that another exemption applies in addition to s 41. In the meantime, the Commissioner is acting appropriately in withholding the documents.


  86  Therefore, the decision under review is set aside and the matter remitted to the respondent to give effect to the tribunal's reasons for decision.

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