Krew v. Federal Commissioner of Taxation.

Walsh J

High Court

Judgment date: Oral judgment April 1971.

Walsh J.: A subpoena was issued on behalf of the appellant in this case addressed to Mr. James Canny, at an address in Melbourne, requiring the production of the investigator's report in the case that is before the Court, or reports of Kevin John Radic and/or of one Lowry and all statements, documents and materials upon which the opinion referred to in sec. 170(2)(a) of the Income Tax Assessment Act 1936 (Cth) as amended was based or alternatively upon which it is alleged that opinion was based or which led to or contributed to the formation of the said opinion, in relation to the affairs of the appellant in the years the subject of the assessments raised in the appeal herein.

Objection was raised to the production of such documents. The objection was made by a Second Commissioner of Taxation who appeared in court. It was also made by learned counsel appearing in this case for the Commissioner of Taxation, who is of course a party to the appeal. In support of the objection reference was made to sec.16(3) of the Act and also to the general rule that in some circumstances the courts will uphold a claim of privilege against producing documents, on the ground of public policy. A Second Commissioner was called to give in evidence an account of the documents which might come within the description of the subpoena and which he had with him. To state very shortly the effect of his evidence, he said that there was a report of an investigating officer and a report or recommendation of another officer to whom the first report was submitted, together with some documents appended to such reports.

In such cases as the present one I think the claim of privilege may properly be raised and reasons for it stated by the Commissioner or a Second Commissioner and it is not necessary that this should be done by a Minister of the Crown.

I was referred to the case of
O'Flaherty v. McBride (1920) 28 C.L.R. 283. At first sight this is a decision of a Full Court which would bind me to uphold the claim of privilege without any inspection of the documents and, indeed, without any real consideration of competing interests that are involved or may be involved when a claim of privilege is made. On due consideration I do not think that as a matter of decision that case is precisely in point. It concerned a prosecution for the making of a false return. No issue arose in the case or could arise in it concerning an opinion formed by the Commissioner. The production of a report was in that case ordered by a magistrate, when a witness for the prosecution had been asked to produce the report in order to refresh his recollection, and objected to doing so, and counsel for the defendant had called for its production. The only use, as I understand the decision, that could have been made of the document would have been as an aid to the giving of oral evidence by the witness or perhaps as a means of discrediting his oral evidence.

In such circumstances the question raised by the exception in sec.16(3), I think, assumes a different significance from that which it assumes in a case such as the present and perhaps also the general question of public policy has to be approached differently.

It must be acknowledged that the reasons given by the Court at p.288 of the report of O'Flaherty v. McBride are in point in the present case. I have decided that technically I am not bound by the decision, but ordinarily, of course, I should unhesitatingly accept and apply the reasoning contained in a judgment of a Full Court. In this instance, however, that reasoning does not accord with that of the Privy Council in Robinson v. South Australia (1931) A.C. 704, a case in which this Court's decision in
Griffin v. South Australia (1925) 36 C.L.R. 378 was considered and was not approved, nor does it accord with the pronouncements of the House of Lords in
Conway v. Rimmer (1968) A.C. 910.

In those circumstances I do not feel that I am bound, in the way in which I should ordinarily be bound, to accept the statements contained in the judgments in O'Flaherty v. McBride as constraining me to do in this case what counsel for the respondent urges I should do in relation to this objection.

Having concluded that I am not absolutely bound to uphold the claim of privilege, it does not follow of course that I must reject it. I have to consider whether I should accept without more the reasons given in evidence and those urged upon me

ATC 493

by counsel for the view that in the interests of the proper functioning of the Taxation Department and in the interests of due observance by its officers of their obligations of secrecy and in the interests of aiding the obtaining of information from third parties, that is to say, in the public interest, documents of the class described by Mr. Lanigan should be protected from production.

The other course open to me is to inspect the documents myself, so that I may come to a conclusion as to the manner in which the public interest to which I have referred would be affected in this case by production of the documents, and in order that I may be in a position to balance that interest against any detriment to the proper administration of justice in this case that may be caused by their non-production.

At the outset there are serious questions whether the opinion of the Second Commissioner, that is, of Mr. Wicks, is relevant to any issue which is now before this court in these proceedings and whether, therefore, any consideration of the materials upon which that opinion was formed is now relevant.

The correct view may be that none of this is now of any importance because the matter has been considered by a Board of Review and this is an appeal from its decision; see
Denver Chemical Manufacturing Company v. C. of T. (N.S.W.) (1949) 79 C.L.R. 296;
F.C. of T. v. Finn (1960) 103 C.L.R. 165 and see sec. 195 of the Act. But this is a view which is contested and upon which I have not yet reached a firm conclusion.

I think I must therefore at this stage treat the matter of the opinion of the Second Commissioner, Mr. Wicks, as being possibly a matter arising for consideration in this case, in the sense that I may have to determine whether such an opinion as is required by sec.170(2) was formed and, if so, whether it was or was not based on misconception of law or on capricious or irrelevant grounds; see
Australasian Jam Company Pty. Ltd. v. F.C. of T. (1953) 88 C.L.R. 23 at p.37.

If these matters are relevant, I do not think it is material for the purpose now in hand to decide finally whether the onus of proof in relation to these matters is on the appellant, as
McAndrew v. F.C. of T. (1956) 98 C.L.R. 263 appears to me as at present advised to indicate, or upon the Commissioner as the appellant contends. What matters at present is whether there is anything in the documents with which I am now dealing from which it could be seen that the production of them may have such an important bearing upon the ultimate decision of these questions that this ought to be regarded as outweighing in this case the public interest which would require that they ought not to be produced except for compelling reasons.

In my opinion this court has the power to inspect the documents for the purpose of making a judgment of the kind to which I have just referred. It is not a power which in every case the court would think it necessary or proper to exercise, but after much reflection I think in the present case I should exercise it.

What I have said relates to documents described in the subpoena and not, as I indicated a while ago, to other documents to which Mr. Lanigan referred, but which are not within the category of documents mentioned in the subpoena. I will therefore direct that the documents in the file to which the witness referred, other than those which I have just excepted, be produced to me: they will not of course be seen by anybody else and having looked through them I will then give rulings as to which, if any, of them should be produced on the subpoena.

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