Clyne v. Deputy Federal Commissioner of Taxation.

Judges:
Rogers J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 28 January 1983.

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Rogers J.

The facts which ground the claim for relief in these proceedings are not in dispute.

On 10 December 1982, the second defendant Paul James Holding, an officer of the Australian Taxation Office, laid an information against the plaintiff. The information alleged a breach of reg. 40 of the Banking (Foreign Exchange) Regulations. A warrant for the plaintiff's arrest was executed by the Federal Police at 10 p.m. that night. The Bail Sergeant, exercising the powers conferred upon him by Pt. III of the Bail Act, 1978, granted bail. Bail was granted on condition that the plaintiff deposit $3,000

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in cash and enter into an agreement to forfeit that amount if he failed to comply with his bail undertaking. The plaintiff signed the necessary agreement. Three thousand dollars was duly deposited in cash and a receipt issued by the Bail Sergeant.

On the following Monday, 13 December 1982, the plaintiff was brought before the Court of Petty Sessions, sitting at the St. James Centre, 111 Elizabeth Street, Sydney. Bail was continued and the proceedings stood over until 20 December 1982. By that date the consent of the Treasurer to the prosecution had been sought and obtained as required by sec. 70 of the Banking Act 1959. The learned Magistrate who presided on that day varied the conditions of bail by increasing to $50,000 the sum to be deposited, and, in the event of failure to appear, forfeited. In the meantime, as provided by reg. 13 under the Bail Act, the $3,000 previously lodged at Central Police Station was remitted to the Clerk of Petty Sessions at St. James Centre. The plaintiff deposited the further sum of $47,000 on 20 December. He executed a fresh Bail Undertaking whereby he agreed to forfeit to Her Majesty the Queen $50,000 in the event of his failure to appear in accordance with his undertaking.

On 17 January 1983, when he next appeared before the Court of Petty Sessions, the plaintiff sought a reduction in the amount deposited by way of bail. The learned presiding Magistrate apparently indicated a willingness to accede to that request failing any strong evidence or argument to persuade him to the contrary and stood the matter down in the list in order to permit the Crown to prepare such evidence and/or argument. During the period of this adjournment there was delivered to the Clerk of Petty Sessions under the cover of a letter of 17 January 1983 two documents purporting to be notices under sec. 218 of the Income Tax Assessment Act 1936 (``the Act''). Each notice was addressed to ``Clerk of Petty Sessions, Court of Petty Sessions, 2nd Floor, St. James Centre 107-111 Elizabeth Street Sydney''. The first notice required the recipient ``being a person by whom any money is due or accruing or may become due to Peter Leopold Clyne'' to pay such moneys to the Deputy Commissioner of Taxation in discharge of the plaintiff's liability to tax under the Act. The second notice made like requirement to the same person ``being a person having authority from some other person to pay money to Peter Leopold Clyne''.

When the application for reduction of bail was again called on, the learned presiding Magistrate, who I might say was not told anything by the representative of the informant about the service of the Notices, reduced the amount of bail to $30,000. Thereupon the plaintiff signed a fresh Bail Undertaking and sought return of $20,000, part of the amount previously deposited. Not unnaturally this request was refused in the light of the notices served upon the Clerk of Petty Sessions.

On 18 January the plaintiff applied to me, ex parte, to restrain payment of the $20,000 to the Commissioner in purported compliance with the Notices served. At the time of the application there was no summons available for me to consider, only an affidavit by the plaintiff. The affidavit indicated that the plaintiff proposed to submit at the hearing that the notices were ineffective because (a) sec. 218 of the Act had no application where moneys had been lodged as bail; (b) the first defendant's actions constituted an abuse and/or mala fide exercise of the powers vested in him; (c) his action was an abuse of and/or a direct interference with the criminal law procedures and processes of the State of New South Wales and therefore unconstitutional; (d) the actions of the first defendant constituted an acquisition of property on other than just terms and were therefore in violation of the Constitution of Australia and void; (e) the provisions of sec. 218 were likewise unconstitutional for the same reason. I granted interlocutory relief and ordered that a summons be filed and served. The summons which was filed named the Deputy Commissioner of Taxation as first defendant, the informant Mr. Holding as the second defendant and the Clerk of Petty Sessions, St. James Court of Petty Sessions Sydney, as the third defendant. It sought orders declaring the Notices null, void and of no effect; that the third defendant be restrained from paying out moneys lodged by the plaintiff as and on account of bail and that the first defendant be restrained from issuing any further notice purporting to be

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based on sec. 218 of the Act. Finally the summons sought an order that the third defendant pay to the plaintiff the sum of $20,000 forthwith and the balance of $30,000 on the termination of the criminal proceedings.

On 20 January, when the matter was called on, counsel then appearing for the plaintiff indicated that the constitutional arguments foreshadowed in the affidavit would be abandoned and the only ground which would be argued would be the inapplicability of sec. 218 of the Act to the moneys here in question.

Senior counsel for the first defendant in turn indicated that he intended to submit at the hearing that there was no jurisdiction in the Supreme Court of New South Wales to make the orders sought. This was said to be because jurisdiction was confided exclusively to the Federal Court of Australia. It was agreed that the issues tendered for determination be argued as on a final hearing on 24 January.

At the hearing on that day the plaintiff appeared in person. He immediately sought leave to amend the summons in a very substantial manner. The reasons prompting the application for amendment were twofold. First it was thought that the proposed amendment would overcome the jurisdictional objection foreshadowed by counsel for the first defendant. Secondly, it was intended to cure a misapprehension, said to have been common to both parties, that bail moneys were paid to and held by the Clerk of Petty Sessions and not to and by the Court of Petty Sessions. The amendment proposed to delete both the second and third defendants as parties and substitute as the second defendant the ``Court of Petty Sessions, St. James Centre, 111 Elizabeth Street, Sydney''. Further, instead of the orders sought the following relief was claimed; firstly, a declaration that the two notices issued in purported reliance upon sec. 218 of the Act were of no effect; secondly, orders restraining the proposed second defendant from paying any of the bail moneys to any person other than the plaintiff or as he may direct and thirdly, orders for the payment out of the moneys as to $20,000 forthwith and as to the balance upon determination of the proceedings either to the plaintiff or as he may direct. The amendment was opposed by counsel for the first defendant but it was agreed that the question of the amendment raised some of the same matters of substance as were involved in the merits of the dispute and that a ruling was better deferred until the conclusion of the argument. Similarly, it was agreed between the parties that the question of jurisdiction should be argued as part of the merits and resolution of the question deferred until the conclusion of the argument. I acceded to the course proposed by the parties.

It is now necessary to describe the statutory background against which the competing contentions of the parties require to be determined.

Presently, Courts of Petty Sessions are established by and regulated by the provisions of the Justices Act, 1902. Section 5 provides that the Governor may establish Courts of Petty Sessions and appoint the place and the district for which any such Courts shall be held. The Court of Petty Sessions held at the St. James Centre was established by proclamation in the Government Gazette of 23 November 1979. Part III of the Justices Act provides for the appointment of Stipendiary Magistrates and their jurisdiction. By sec. 14, in that Part of the Justices Act, every Stipendiary Magistrate while sitting in the exercise of his jurisdiction shall, except in cases where he is acting ministerially, be deemed to be a Court of Petty Sessions with all powers and authorities incident by law to such a Court. By sec. 18, in any police district for which a Clerk of Petty Sessions is not appointed, a Stipendiary Magistrate may discharge all his duties. The Justices Act does not make many references to the duties and functions of Clerks of Petty Sessions. Some of the few references are in sec. 83(3), 95, 100A(2), 100A(2A), 100E.

The grant of bail is now regulated by the Bail Act, 1978. Section 4 defines ``authorised officer'' as meaning, in relation to a person in custody, a police officer who may grant bail to a person under Pt. III. ``Court'' is defined by the same section as meaning, inter alia, a Court of Petty Sessions and includes a Magistrate or Justice not sitting as a Court. ``Justice'' means a Justice of the Peace but

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does not include a police officer, a Magistrate or a Judge. I have already referred to the provisions of Pt. III in authorising the police to fix bail. Part IV Div. 2 deals with the grant of bail by Magistrates and Justices. Pursuant to sec. 23 a Magistrate or Justice may at any time grant bail to a person brought or appearing before him accused of an offence. It is of interest to note that sec. 25 makes different provision for the permissible length of adjournments depending on whether the adjournment is granted by a Magistrate, or a Justice who is a Clerk of Petty Sessions, or a Justice who is not a Clerk of Petty Sessions. Section 36 provides that bail may be granted unconditionally or subject to conditions imposed by instrument in writing. Subsection (2) goes on to enumerate a number of possible conditions which may be imposed. One of them is subsec. (g) which provides for a condition that the accused person deposit:

``... with an authorised officer or court a specified amount of money in cash and enter into an agreement to forfeit the amount deposited if the accused person fails to comply with his bail undertaking''

(my emphasis).

Pursuant to sec. 39 money may be deposited, where that is a bail condition, with ``the authorised officer or court to whom the bail undertaking is given'' (my emphasis). Section 40 requires that a receipt be given for the money.

Finally, sec. 218 of the Act provides as follows:

``(1) The Commissioner may at any time, or from time to time, by notice in writing (a copy of which shall be forwarded to the taxpayer at his last place of address known to the Commissioner), require -

• (a) any person by whom any money is due or accruing or may become due to a taxpayer;
• (b) any person who holds or may subsequently hold money for or on account of a taxpayer;
• (c) any person who holds or may subsequently hold money on account of some other person for payment to a taxpayer; or
• (d) any person having authority for some other person to pay money to a taxpayer,

to pay to the Commissioner, either forthwith upon the money becoming due or being held, or at or within a time specified in the notice (not being a time before the money becomes due or is held) -

• (i) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of any tax and of any fines and costs imposed upon him under this Act, or the whole of the money when it is equal to or less than that amount; or
• (ii) such amount as is specified in the notice out of each of any payments which the person so notified becomes liable from time to time to make to the taxpayer, until the amount due by the taxpayer in respect of any tax and of any fines and costs imposed upon him under this Act is satisfied,

and may at any time, or from time to time, amend or revoke any such notice, or extend the time for making any payment in pursuance of the notice.

(2) Any person who fails to comply with any notice under this section shall be guilty of an offence.

Penalty: $100.

...

(6) In the foregoing provisions of this section -

• ...
• `person' includes company, partnership, the Commonwealth, a State and public authority (corporate or unincorporate) of the Commonwealth or a State.''

The plaintiff has made two broad submissions. Firstly, he submitted that the money in question having been paid to a Court, such entity was not a ``person'' within the meaning of sec. 218 and accordingly no notice could be directed to it. Alternatively, it was submitted that neither the requirements of sec. 218(1)(a) nor (d) have been satisfied in that there was neither any money due or accruing or becoming due in

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the future nor was there a person having authority from some other person to pay money to the taxpayer. It was submitted that, assuming the existence of the requisite ``person'', the provision most nearly appropriate would have been sec. 218(1)(b), the provisions of which have not been sought to be utilized by the service of a Notice. However, in order to avoid further litigation, I was informed by counsel that a further Notice would be served claiming the moneys pursuant to that provision. I was invited to determine the present dispute on the basis that such a Notice has been given.

In support of the first of these avenues of attack, it was submitted that the money in question was clearly paid to a Court and not to an individual. Notwithstanding the definition of ``Court'' in the Bail Act as including Magistrates and Justices, the payment was not to a particular individual as such. When bail is ordered to be deposited by an order of this Court and money deposited, the payment is to the Supreme Court of New South Wales and not the individual officer who may be the Justice of the Peace accepting the bail undertaking.

It was then further submitted, notwithstanding the evident desire of the Parliament of the Commonwealth to encompass all conceivable entities, whether actual persons or juristic entities and whether private citizens or Governmental instrumentalities or indeed the State - it could not be supposed that it was intended that Courts of Justice, whether they be Courts having a juristic personality, such as the Supreme Court or District Courts, or inferior Courts, such as Courts of Petty Sessions - were intended to be subject to notices under sec. 218. The submission drew attention to the provisions of sec. 218(2) and it was argued that it was inconceivable that Courts should be exposed to the possibility of a fine being imposed on them. Prima facie there is much force in this submission although it could be said that it would be equally surprising that the Parliament of the Commonwealth should expose the Commonwealth itself to the possibility of the imposition of a fine. However, the answer seems to me to lie in the approach adopted by Brennan J. in
Clyne v. D.F.C. of T. 81 ATC 4429; (1981) 55 A.L.J.R. 552. In those proceedings the Court was concerned with the proper interpretation of sec. 218 of the Act although the attack which was launched on the Notice there in question was on a quite different ground. In the course of his judgment, Brennan J. (at ATC p. 4441; A.L.J.R. p. 560) said:

``The section enables the Commissioner to recover the amount of tax due out of money due and payable to the taxpayer by the person to whom the notice is given (whom I shall call the third person). The power of the Commissioner to require the third person to pay money in accordance with a notice is complemented by subsec. (2). That subsection creates an offence of non-compliance and prescribes a penalty, but the duty upon the third person to comply with the notice does not stem solely from the provision of a criminal sanction for non-compliance. Indeed, I do not think that that subsection applies to some of those whom subsec. (6) brings within the ambit of sec. 218. Subsection (6) defines `person' to include the Commonwealth or a State or any public authority (corporate or unincorporate), and there is `the strongest presumption against attaching to a statutory provision a meaning which would amount to an attempt to impose upon the Crown a liability of a criminal nature' (
Cain v. Doyle per Dixon J. (1946) 72 C.L.R. 409 at p. 424).''

The strong presumption of which the judgment in Cain v. Doyle (supra) speaks should in my view have equal application to a Court of law. At least some of the considerations which weighed with members of the Court in Cain v. Doyle (supra) have equal application to the question whether Courts should be considered bound by criminal sanctions incorporated in legislation. In the result, I do not think that the presence of subsec. (2) should be seen as supporting the general submission that the section as a whole has no application to Courts.

That conclusion, of course, still leaves the question whether Courts are encompassed within the word ``person'' In
Cowan v. Stanhill Estates Pty. Limited (1966) V.R. 604, Mr. Justice Pape was concerned to determine whether a provision in the Land Tax Act, which prohibited persons appointed

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under the Act from communicating any matter coming to their knowledge in the course of performance of their official duties ``to any person whomsoever'', precluded such officers from giving evidence in Court. His Honour held that a Court was not included in the expression ``any person whomsoever''. In coming to this conclusion his Honour referred to a number of statements by Judges to the effect that Courts can hardly be called ``persons''. It is to be observed however that in none of those cases was there a wide ranging definition of the kind appearing in sec. 218(6) of the Act. The definition in the legislation under consideration by Mr. Justice Pape was somewhat more expansive than in the earlier cases. At p. 608 his Honour said:

``In addition to that, one must, I think, look at the position of a Court in considering sec. 4(4). There is in this Act a definition section, in which `person' is defined as including a body of persons whether corporate or unincorporate, and by and large that is the type of argument that usually occurs when the word `person' is sought to be construed. Is it confined to natural persons, or is it in all the circumstances to be held to extend to others who might come within the general purview of the idea? And if one looks at it in that light, is a Court a person, a natural person? Or is a Court a corporation? I think the answer to those questions must be that it is neither. If you look at the definition of `Court' in Halsbury's Laws of England 3rd ed., vol. 9 at p. 342, you will find that it is said there that the term `Court' has, inter alia, the original meaning of the King's palace, and it has acquired the meaning of the place where Justice is administered, and thence again the meaning of the persons who exercise judicial functions under authority derived either immediately or mediately from the King. That takes you back to the definition of `Court' which you will find in Coke upon Littleton which is referred to in Stroud 3rd ed., vol. 1, at p. 667. I should have thought for myself that you must regard the Court here as one of the arms of government set up under the Constitution by direct royal authority, and it does seem to me to be very difficult in those circumstances to say that a provision in an Act which says that an officer shall not disclose information to any person is intended to apply to a Court. That may be all the more the intention of the legislation when you find that there is a definition of `person' in the Act, and it does not purport to say that a person includes a Court. Therefore, for those reasons it seems to me that Farrell is not precluded by sec. 4(4) of the Act from giving this information, and that he should, therefore, be required to do so.''

In the case of sec. 218 Parliament has left no doubt of its general intention. It has armed the Commissioner of Taxation with a powerful and far reaching weapon to enable him to collect moneys from sundry third parties in satisfaction of the liability to tax of other taxpayers. The width of the provision has only recently been made clear by the decision of the High Court in Clyne v. D.F.C. of T. (supra).

The section enables the Commissioner, by service of a notice, to attach an undefeatable entitlement to moneys which may, at the time of service of the notice, not even be due and payable to the taxpayer. As the Chief Justice pointed out in Clyne (supra at ATC p. 4433; A.L.J.R. at p. 555), ``the section is obviously designed to confer exceptional powers on the Commissioner to facilitate the collection of tax''. The definition of ``person'' signals a clear intention by the Parliament of its wish to ensure that whoever it may be that has or will have money in his or its control, which might otherwise stand to the benefit of the taxpayer, should pay it to the Commissioner. On the other hand the definition makes no specific mention of Courts. For the reasons given by Pape J. I do not consider that a Court is a person in the ordinary sense of that word. The only expression in the enlarged meaning which subsec. (6) bestows on the word which could at all conceivably apply to Courts is ``public authority''. In my opinion, on its proper interpretation, the definition should be read as not embracing Courts.

Money comes into the hands of a Court, generally speaking, only in pursuance of an order made by the Court. Occasionally there is a voluntary payment such as a payment into Court. Overall however, moneys are paid in to Court pursuant to orders or

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judgments or as in the present case to satisfy a condition. In other words moneys are required to be paid by a party to proceedings by exercise of the coercive powers of the Court. It seems to me that, in the course of the proper administration of justice, a Court should not find it necessary, by reason of sec. 218 of the Act, to pause to consider whether or not to make an order such as, for example, an order for payment into Court of moneys by way of security for costs, or security for a verdict, which is subject to appeal. That, by a notice served pursuant to sec. 218 of the Act, a fund garnered together by a litigant, perhaps by borrowing money, in order to enable justice to be done between the parties to the litigation, should be exposed to attachment pursuant to a notice under sec. 218 in my view calls for very clear words. It would be highly detrimental to the proper administration of justice, both civil and criminal, that the section should have the operation contended for by the Commissioner.

It is not out of any tender regard for Mr. Clyne's person that the operation of the section must be confined in the manner I have stated. His efforts to avoid the payment of moneys, considered by the Commissioner to be payable by him and therefore made immediately payable by the provisions of the Act, even whilst the validity of the assessments is tested, are well documented in recent issues of the law reports. However, the implications of the case at the Bar far transcend any question of Mr. Clyne's personal rights. We are well used to the clear division between the legislative executive and judicial branches of government. It is to me inconceivable that sec. 218 could be interpreted as extending to moneys which may be held by the legislative branch of government. It will be remembered that from time to time, the Parliament has had occasion to call persons before the Bar. Assume that some of these persons were to be temporarily released on deposit of moneys with Parliament to secure their future attendance. It is hardly to be thought that those moneys should then be capable of being seized or attached by a Notice served upon the Parliament of the Commonwealth. In the same way, it seems to me that the judicial branches of government, whether State or Commonwealth, are outside the contemplation or reach of the section. Courts should not be held covered by the expression ``public authority'' in the definition and a Court is accordingly not a ``person''.

My conclusion makes it unnecessary to consider the alternative basis of argument which has been propounded by the plaintiff.

It is however necessary now to come to the contention of the first defendant, that notwithstanding that, in my view, the section relied upon has no application to the sum deposited by the plaintiff as and by way of bail, I cannot grant any relief to the plaintiff. Indeed if the submission be upheld all that I have said so far has been writ in sand. On this view whether I am right or wrong my labours have been in vain. The scarce judicial resources of the State have been wasted and time and money expended in useless argument. This is said to be so because the plaintiff knocked on the wrong door. Instead of being on level 12 of the Law Court Building he should have gone to level 21 or 22 of the same building where a similarly wigged and gowned figure would have had jurisdiction to give effect to the view on the merits I have expressed.

In more formal language the submission of counsel for the Commissioner is that the question, which I have considered, is of a kind in respect of which the Court of a State is deprived of jurisdiction by the provisions of the Administrative Decisions (Judicial Review) Act 1977.

Section 9 of that Act provides that:

``Notwithstanding anything contained in any Act other than this Act, a court of a State does not have jurisdiction to review -

• (a) a decision to which this Act applies;
• (b) conduct that has been, is being, or is proposed to be, engaged in for the purpose of making a decision to which this Act applies;
• (c) a failure to make a decision to which this Act applies; or
• (d) any other decision given, or any order made, by an officer of the Commonwealth or any other conduct that has been, is being, or is proposed

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  to be, engaged in by an officer of the Commonwealth, including a decision, order or conduct given, made or engaged in, as the case may be, in the exercise of judicial power.''

Subsection (2) defines ``review'' as meaning:

``... review by way of -

• (a) the grant of an injunction;
• (b) the grant of a prerogative or statutory writ (other than a writ of habeas corpus) or the making of any order of the same nature or having the same effect as, or of a similar nature or having a similar effect to, any such writ; or
• (c) the making of a declaratory order.''

By sec. 8 the Court, defined by sec. 3 to mean the Federal Court of Australia, has exclusive jurisdiction to hear and determine applications made ``under this Act''. By sec. 5, a person who is aggrieved by a decision to which the Act applies (a term again defined in sec. 3) may apply to the Federal Court for an Order of Review in respect of the decision on a number of enumerated grounds. These include that the person who purported to make the decision did not have jurisdiction to make it, that the decision was not authorised by the enactment in pursuance of which it was purported to be made or that the decision was otherwise contrary to law.

It is appropriate to mention the full consequence of what it would mean to accede to the submission made on behalf of the first defendant. I have already expressed the conclusion that sec. 218 of the Act does not authorise the Commissioner to seek to obtain moneys deposited by way of bail or otherwise with Courts of law. If, as is suggested, I have no jurisdiction in the matter, I am unable to give effect to my views and I have to turn away from doors of this Court, without a remedy, a litigant who, on the merits, has demonstrated an entitlement to relief. That the creation of a parallel system of Courts was likely to have this consequence was the subject of repeated warnings before legislation was passed. Since the Federal Court was brought into existence, examples of the accuracy of the apprehensions entertained have been clear for all to see. They were the subject of a paper presented at the Australian Law Convention (see 55 A.L.J. 630) and have been adverted to by the Chief Justice of the High Court in his speech on the State of the Australian Judicature (55 A.L.J. 677). The call for relief from this situation has been described by the learned Solicitor General for the Commonwealth as ``mere exasperated expostulations''. Colourful as the phrase may be, it lacks accuracy. The present is yet another instance where time and money have been required to be spent in considering a submission, which if successful, would defeat the elementary principle of justice that a litigant who has shown a good case should not be turned away from a Court of law empty handed. It merely serves to emphasize that some solution of the kind advocated by the Chief Justices of the High Court, New South Wales and Western Australia (55 A.L.J. 677; 56 A.L.J. 509; 515) is an imperative necessity.

Fortunately, in my view, in the present case the submission need not succeed. In my view the Court has power to declare that sec. 218 of the Act has no valid operation in relation to bail moneys. Such a declaration as to the proper construction of the Act of Parliament does not infringe the prohibition against ``review of a decision''. Accordingly, I hold that I do have jurisdiction to grant that relief. I do not think that it is appropriate to grant relief in the terms either of the summons or the proposed amended summons. It is not necessary to make an order for the payment of the money presently held by the Court of Petty Sessions because if my decision be upheld then undoubtedly the payment will be made. The summons should be amended to retain only the first defendant as a party. I stand the matter over to 3 February to enable the plaintiff to bring in Short Minutes. The Short Minutes should provide for the first defendant to pay the plaintiff's costs.