Holmes & Ors v. Deputy Federal Commissioner of Taxation
Judges:Davies J
Court:
Federal Court
Davies J.
The matters before the Court are of an interlocutory nature only. The first issue is whether concurrent proceedings in the Local Court, Sydney, brought against the applicants, Holmes and Wright, should be stayed pending the hearing and determination of the proceedings in this Court.
The three proceedings in this Court have been brought under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (``the ADJR Act'') seeking an order of review with respect to notices issued against all the applicants under sec. 264 of the Income Tax Assessment Act 1936 (Cth) (``the Assessment Act'') and of a subsequent decision to prosecute the applicants, Holmes and Wright, under sec. 8C of the Taxation Administration Act 1953 (Cth) for failure to comply with those notices. Section 264 of the Assessment Act provides, inter alia:
``(1) The Commissioner may by notice in writing require any person, whether a taxpayer or not, including any officer employed in or in connexion with any department of a Government or by any public authority -
- (a) to furnish him with such information as he may require; and
- (b) to attend and give evidence before him or before any officer authorized by him in that behalf concerning his or any other person's income or assessment, and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto.
(2) The Commissioner may require the information or evidence to be given on oath and either verbally or in writing, and for that purpose he or the officers so authorized by him may administer an oath.
...''
Under this provision. Holmes and Wright and, later Wouters were given a notice in the following form, differing only as to the date for attendance:
``Take notice that in exercise of the powers and functions conferred upon me as acting Deputy Commissioner of Taxation by delegation from the Commissioner of Taxation under the provisions of the Taxation Administration Act 1953, I, John Wilfred Osborne, do by this notice require you to attend at the Australian Taxation Office, 13th Floor, 7-13 Hunter Street, Sydney, on Monday 30 March 1987 at 10 o'clock in the forenoon and give evidence on oath before Keith Gregory Johnson and Brian Stephen Fague, officers employed in the Australian Taxation Office whom I hereby authorise in that behalf, concerning the income or assessment of Grundy
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Television Pty Limited for the period from 1 July 1980 to 30 June 1986.''
On 27 March 1987 the solicitors for the applicants responded as follows:
``Our clients have been advised that the letters do not constitute valid Notices pursuant to S. 264; and that even if they did, they have not been served upon our clients. Furthermore, the time allowed is clearly unreasonable. In this regard, we note that you sent these letters in the clear knowledge that Mr Wright, who is also a company solicitor, was overseas at the time.
Nonetheless, our clients are prepared - without prejudice however to their rights in relation to the above - to volunteer to attend your offices. In this regard, they however wish to have Counsel with them; and in particular, Counsel who has been briefed in relation to the affairs of Grundy Television Pty Limited at all material times.
The dates you have indicated are not convenient to Counsel. Please contact us to organise both a date suitable to Counsel and our clients as well as yourselves.''
Subsequently, discussions as to dates for the examinations were discussed and, on 2 April 1987, the solicitors for the applicants wrote as follows:
``We have made enquiry from Counsel and it would appear that the earliest dates convenient to our clients and Counsel are the 24th and 25th June, 1987.''
However, fresh notices were served dated 6 April 1987 requiring the attendance of Mr Holmes on 2 June 1987 and of Mr Wright on 24 April 1987.
The applicants did not attend on the dates appointed by either the first or the second notices. On 23 April 1987, an officer of the Australian Taxation Office laid informations against each of the applicants, Holmes and Wright, for an offence against sec. 8C(f) of the Taxation Administration Act 1953 (Cth). That provision reads:
``8C. A person who refuses or fails, when and as required under or pursuant to a taxation law to do so -
- ...
- (f)to attend before the Commissioner or another person, to the extent that the person is capable of doing so is guilty of an offence.''
Messrs Holmes and Wright were summonsed to appear on 15 June 1987 at the Local Court, St James Centre, Sydney.
On 28 April 1987, these proceedings in this Court were commenced seeking an order declaring that the notices issued under sec. 264 of the Assessment Act were invalid and for an order directing the informant to discontinue the proceedings in the Local Court.
The points of claim filed in this Court raise some issues of a technical nature, such as the authority of the particular officer to issue the notices, the lack of personal service and the fact that each applicant was required to attend for examination before two persons. Other points of claim go to the reasonableness of the time specified and to the propriety of the issue of the notices, having regard to the information that had already been made available to the Australian Taxation Office.
The substance of matters raised in this Court are available to be taken by the applicants Holmes and Wright by way of defence to the proceedings in the Local Court. In the Local Court, the applicants may not be able to rely upon all of the points in precisely the same form, but the substance of the issues are as much available in the proceedings in the Local Court as in proceedings in this Court.
Section 9 of the ADJR Act, which excludes the jurisdiction of a court with respect to certain matters, limits its ambit to ``jurisdiction to review''. The term ``review'' is defined in sec. 9(2). That subsection provided:
```review' means 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.''
This provision does not encompass a defence to a prosecution. Therefore, it is open to the applicants to allege in the Local Court that the notices issued were invalid for the reasons set out in the points of claim. It is of particular relevance that, in
Ganke v. D.F.C. of T. 75 ATC 4097,
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the Court of Criminal Appeal held that it was an implied term of sec. 264 of the Assessment Act that the time appointed for the examination be a reasonable one and that in a prosecution the onus is upon the prosecutor to prove that the date and time appointed in the notice were reasonable.Accordingly, it was open to the respondent to seek, at an early stage in these proceedings, an order that these proceedings be stayed. The Court has inherent power to stay proceedings before it if the issues raised, or some of them, are raised in other proceedings in another court, particularly a criminal court. Wilcox J. examined this matter in
Cameron's Unit Services Pty. Ltd. v. Whelpton & Associates Pty. Ltd. (1984) 59 A.L.R. 754 and I need not myself recapitulate the authorities and principles to which his Honour referred. I would merely add a reference to a decision in the taxation field,
F.C. of T. v. Ahern 83 ATC 4698, which, like the other authorities, shows that a court will not automatically refrain from exercising its jurisdiction because a proceeding in another jurisdiction is also on foot.
No application was made to this Court by the respondent that the proceedings should be dismissed pursuant to sec. 10(2) of the ADJR Act or should be stayed pursuant to the inherent jurisdiction of the Court. Rather, all parties adopted the view that the proceedings in this Court would determine the issues raised by the applicants as to the validity of the notices issued under sec. 264 of the Assessment Act.
Those issues are, of course, entirely appropriate to be considered by this Court, having regard to the special function which it has in the review of decisions of officers of the Commonwealth by virtue of the provisions of the ADJR Act and of sec. 39B of the Judiciary Act 1903 (Cth). Moreover, the Court has a particular interest in the interpretation and application of the Assessment Act by virtue of the referral upon it of jurisdiction, exclusive of State's courts, with respect to taxation appeals. But, that is not to say that, if application had been made to it by the respondent, the Court may not have considered that an order should be made dismissing or staying the proceedings. It is simply to say that the matters raised in the applicant's points of claim are matters within the Court's jurisdiction and touching upon areas of particular concern to the Court. Moreover, while there are three applicants before this Court, the prosecution proceedings touch only two of them.
Perhaps with these considerations in mind, the parties allowed the proceedings in this Court to go ahead and the hearing of the applications has now been fixed for 28, 29 and 30 March 1988. The parties originally sought a stay or adjournment of the proceedings in the Local Court but, more recently, the prosecutor of those proceedings has sought a date for trial and that date has been fixed for 13 and 14 April 1988.
It is the fixing of that date which gives rise to the first motion before this Court, which is a motion to stay the proceedings in the Local Court.
This Court has power to stay those proceedings pursuant to sec. 15 of the ADJR Act which provides, inter alia:
``15(1) The making of an application to the Court under section 5 in relation to a decision does not affect the operation of the decision or prevent the taking of action to implement the decision but -
- (a) the Court or a Judge may, by order, on such conditions (if any) as it or he thinks fit, suspend the operation of the decision; and
- (b) the Court or a Judge may order, on such conditions (if any) as it or he thinks fit, a stay of all or any proceedings under the decision.''
The proceedings in the Local Court are proceedings under the decisions which are challenged in this Court and may therefore be stayed.
The principles to be applied in the exercise of the discretion in sec. 15 of the ADJR Act have been discussed in
Perkins v. Cuthill & Ors (1981) 34 A.L.R. 669 and
Capello v. Minister for Immigration and Ethnic Affairs (1980) 2 A.L.D. 1014 See also, the decision of Bowen C.J. in
Collins v. Minister for Immigration and Ethnic Affairs (G216 of 1982, 26 November 1982, unreported). The Court will need to be persuaded that there are reasons which justify it in staying the proceedings in another court. However, as Mason, Brennan and Deane JJ. said in
Stack v. Coast Securities (No. 9) Pty. Ltd. (1983) 154 C.L.R. 261 at pp. 297-298:
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``it is plainly undesirable for both courts to set about a determination of the same issues
...''
At p. 308, Wilson and Dawson JJ. said:
``The interests of the litigants is the primary consideration and there can be little doubt that it would not be in the interests of either litigant for each proceeding to proceed to a hearing and determination independently of the other.''
Of pertinence also are the remarks of Buckley J. in
Thames Launches Ltd. v. Trinity House Corporation (Deptford Strand) (1961) Ch. D. 197, a case in which his Lordship exercised the inherent jurisdiction of a civil court to stay prosecution proceedings in another court. At p. 204 his Lordship said:
``Jurisdiction of that kind, in my judgment, is very clearly a jurisdiction which must be exercised with the greatest care; and this court would be very slow to interfere with the course of criminal proceedings unless it was clear that the issues in the civil proceedings and the criminal proceedings really raised in substance the same issue and that if the civil proceedings succeeded the criminal proceedings must necessarily fail. In principle the court discourages multiplicity of litigation in any form. In other words, the court must be satisfied that to allow the criminal proceedings to be proceeded with pending the decision of the civil proceedings would really be vexatious.''
In the present case, Mr A. Robertson, of counsel, who appeared for the respondent, did not submit that the applicants do not have an arguable case in the proceedings before this Court. Mr J. Lichtenberger, who appeared on the motion to represent the prosecutor in the proceedings in the Local Court, put a submission that there is no substance in the applicants' case. However, it does not appear to me that the applicants do not have a case to put or that the prospects of success are so slight as not to justify the staying of the proceedings in the Local Court.
The position is thus that there are proceedings before two courts, this Court and the Local Court, which raise substantially the same issues and are proceedings effectively between the same parties, save for the applicant Wouters. The informant in the Local Court proceedings is an officer of the Taxation Department. Both Courts have jurisdiction but clearly it would be inappropriate that both Courts should sit to hear and decide the same issues.
Having regard to the history of that matter, to the absence of any application to stay the proceedings in this Court and to the fixing of a date for hearing of these proceedings prior to the hearing of the proceedings in the Local Court, it appears to me to be inevitable that the proceedings in the Local Court should be stayed until the hearing and determination of the proceedings in this Court. It would be vexatious for both proceedings to go ahead on the dates now fixed. One court or the other should sit to hear and determine the issues raised as to the validity of the sec. 264 notices, not both. As the parties have been content to allow the proceedings in this Court to go ahead and as a date for the hearing in this Court has been fixed, the proceedings in the Local Court must abide the judgment of this Court upon the issues raised as to the validity of the sec. 264 notices.
Having expressed this view, I shall not presently make a formal order. The proper course is for the informant in the prosecutions to seek a new date for the hearing of those proceedings, the date being sufficiently in advance to enable this Court to give judgment and for that judgment to be considered before the prosecutions are heard. I shall reserve leave to the applicants to seek a formal order should one be necessary.
I turn now to the second interlocutory issue. The applicants have, in a Notice of Motion dated 12 November 1987, sought a further affidavit of documents from the respondent directed to certain documents in respect of which privilege has been claimed in the affidavits of documents which have been filed and served.
In the course of the hearing of this motion, it transpired that the applicants sought rather an order that they be given inspection of the documents in respect of which privilege has been claimed or an order, as a preliminary step, that the subject documents be lodged with the Court for inspection by the Court so that the Court may satisfy itself in each case that the claim for privilege is well-founded or an order
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that the respondent file and serve a further affidavit giving more particulars of the grounds upon which privilege is claimed.Order 15 r. 11(1) of the Federal Court Rules provides that the Court may, subject to any question of privilege which may arise, order a party to produce for the inspection of another party any documents referred to in a list of documents filed by the party under O. 15 or referred to in an affidavit filed by the party. In the exercise of this discretion, the Court may direct the filing of a further affidavit to clarify or to elaborate a ground of privilege which has been claimed. Order 15 r. 13(1) provides that the Court may order any party to produce to the Court any documents in his possession, custody or power relating to a matter in question in the proceeding and O. 15 r. 14 provides that the Court may inspect a document for the purpose of deciding the validity of a claim of privilege or an objection to production on any other ground.
The principles behind such rules of practice were explained by Hamilton L.J. in
Birmingham and Midland Motor Omnibus Company Ltd. v. London and North Western Railway (1913) 3 K.B. 850 at pp. 858-859:
``Although an affidavit of discovery cannot be controversially challenged, as by cross-examination, counter-affidavit, or administration of interrogatories,
Jones v. Montevideo Gas Co. (1880) 5 Q.B.D. 556 lays down authoritatively how and how far it can be challenged otherwise: `If from the affidavit itself, or from the documents therein referred to, or from an admission in the pleadings of the party from whom discovery is sought, the Master or judge is of opinion that the affidavit is insufficient, he ought to make an order for a further affidavit, but except in cases of this description no right to a further affidavit exists.' Now that r. 19A(2) has given the judge power to inspect documents as to which there is a disputed claim of privilege, the documents which are not disclosed are available, either at the instance of the opposite party or in the discretion of the judge himself, as material on which to shew the insufficiency of the affidavit, because both are equally `documents therein referred to.' The only difference is that in such case they are to be seen only by the judge and not by the party. In fact the decisions in
Ehrmann v. Ehrmann [1896] 2 Ch. 826 and
Ainsworth v. Wilding [1900] 2 Ch. 315 shew that the terms of the rule are to be read widely and that they include inspection of the documents, for which privilege is claimed, for the purpose of deciding the validity of such a claim, even when the ground of the claim is the allegation that the documents were brought into existence in fact for a purpose which would make them privileged. I accept these decisions. I think in so far as the documents themselves and their contents throw light on the validity of the claim the judge can consider them. I think, further, that in doing so he can bring to bear on them the ordinary knowledge of life and business which he possesses. He could not well do otherwise. He is not bound to regard them as documents of the nature of which he can know nothing. I think that he can test the accuracy of the affidavit and of the terms in which it claims the privilege by means of the documents themselves. I do not say that I think there is any ground for doubting the good faith of the affidavit in this case, but misunderstandings as to the meaning and application of the rules on discovery, and also misconceptions as to the character and contents of particular documents, are constant, and the judge cannot be wrong at least in using the documents themselves to see whether such misunderstanding or misconception has in fact occurred.''
In the same case Buckley L.J., with whom Vaughan Williams L.J. agreed, said, at pp. 855-857:
``Further under the particular rule relating to a specific document, order XXXI, r. 19A(3), he may file an affidavit specifying further documents and calling upon the party making the affidavit of documents to account for them. But subject to these qualifications the affidavit of documents cannot be called in question, but must be accepted as being correct.
...
Having inspected the documents, as I think we are entitled to do, I am satisfied that this affidavit has not been made with a view to sheltering under a form of words, which in itself covers the ground, documents which ought to be produced. Were I of a contrary
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opinion I should not hesitate to make an order to defeat that intention. For I concur in the opinion which Hamilton L.J. has expressed at greater length that no particular formula of words can be conclusive against evidence furnished by the documents themselves or inferences to be drawn from their contents and from a reasonable view of the circumstances under which documents of their class come into existence.''
As to the circumstances in which a court will go behind a claim of privilege and inspect the documents themselves, Jenkins L.J. said in
Westminister Airways Ltd. v. Kuwait Oil Co. Ltd. (1951) 1 K.B. 134 at p. 146:
``The question whether the court should inspect the documents is one which is a matter for the discretion of the court, and primarily for the judge of first instance. Each case must depend on its own circumstances; but if, looking at the affidavit, the court finds that the claim to privilege is formally correct, and that the documents in respect of which it is made are sufficiently identified and are such that, prima facie, the claim to privilege would appear to be properly made in respect of them, then, in my judgment, the court should, generally speaking, accept the affidavit as sufficiently justifying the claim without going further and inspecting the documents.''
Lockhart J. cited this passage with approval in
Trade Practices Commission v. Sterling (1979) 36 F.L.R. 244 at pp. 246-247. Also to be kept in mind are the remarks of Stephen, Mason and Murphy JJ. in Grant v. Downs (1976) 135 C.L.R. 674 at pp. 685 and 688-689:
``It is well accepted that the court in allowing production and inspection of documents exercises a judicial discretion. In so doing it needs to scrutinize with care claims of privilege made on the ground now under consideration. It is for the party claiming privilege to show that the documents for which the claim is made are privileged. He may succeed in achieving this objective by pointing to the nature of the documents or by evidence describing the circumstances in which they were brought into existence. But it should not be thought that the privilege is necessarily or conclusively established by resort to any verbal formula or ritual. The court has power to examine the documents for itself, a power which has perhaps been exercised too sparingly in the past, springing possibly from a misplaced reluctance to go behind the formal claim of privilege. It should not be forgotten that in many instances the character of the documents the subject of the claim will illuminate the purpose for which they were brought into existence.''
When the claim is made of legal professional privilege in respect of documents brought into existence by reason of the proceedings before him, a trial Judge will be reluctant to embark upon an inspection of the documents, for to do so may be thought to prejudice his impartiality. Barwick C.J. referred to this aspect in Grant v. Downs, cited above, at p. 677:
``Whether or not a document does so qualify is a question ultimately to be decided, if need be, upon an inspection by the judge of the document itself, and by the application of the stated principle. I say `if need be' because where the judge who hears the application for inspection may possibly be the trial judge, sitting without a jury, it may be better to decide the matter upon the evidence as to the purpose of the production of the document rather than upon an inspection of it, thus avoiding any complication which might arise from the document having been seen by the judge and privilege from inspection accorded to it.''
A useful example of the working out of these principles may be seen in the decision of Lockhart J. in
Trade Practices Commission v. Bata Shoe Company of Australia Pty. Ltd. (No. 1) (1979) 44 F.L.R. 145. In that case, his Honour decided not to inspect the disputed documents and concluded, at p. 148:
``In my opinion the fact that the claim for privilege is formally correct, the nature of the documents themselves and the evidence describing the circumstances in which they were brought into existence, established a claim for privilege. The application is dismissed.''
In the present proceedings, a claim of legal professional privilege was made with respect to documents numbered 84, 85, 87, 91, 93, 106 and 111 in the affidavit of Stephen Catt, sworn 18 September 1987, and with respect to
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documents 128, 135, 137, 138, 139, 140, 142, 144, 149, 153, 154, 156 and 157 in the affidavit of Jennifer Ann Granger, sworn 14 September 1987.In their affidavits, the deponents Catt and Granger claimed that the subject documents were subject to legal professional privilege and described the documents in terms which were consistent with that claim. Thus, the deponent Catt described document 84 as ``File notes by Catt of telephone attendances on Lichtenberger of DPP'' and the deponent Granger described document 128 as ``Copy of letter from J. Lichtenberger (DPP) to ATO.'' The date given for document 84 was 12 June 1987 and the date given for document 128 was 6 April 1987. Thus document 128 appears to have been brought into existence at a time when the prosecution proceedings were in contemplation and document 84 appears to have been brought into existence when the prosecution proceedings and the proceedings under the ADJR Act were on foot. The one item which is not described in terms touching upon legal professional privilege is document 111 referred to in Mr Catt's affidavit. This document was given no date and was described simply as ``Notes supplied by respondent''.
Nevertheless, notwithstanding that there is no particular reason to doubt that the documents are in fact privileged, the claim is not made in due form. Order 15 r. 6(4) requires that the affidavit ``sufficiently state the grounds of the privilege''. To merely state the head of privilege or the name of the privilege, e.g. ``legal professional privilege'' will not usually state sufficiently the grounds upon which the privilege is claimed. There are many bases of legal professional privilege, as Lockhart J. made clear in Trade Practices Commission v. Sterling, cited above, at pp. 245-246. The point was made clear by Cotton L.J. in
Gardner v. Irvin (1878) 4 Ex. D. 49 at p. 53:
``They ought to say not only that the documents are privileged, which is a statement of law, but they ought to set out the facts from which we can see that the defendants' view of the law is right....
An affidavit in answer to an application for discovery must be construed strictly, because the other side cannot adduce evidence to contradict it. The person seeking discovery is bound by the affidavit made by his opponent, and therefore it ought to be full. It is not sufficient for the affidavits to say that the letters are a correspondence between a client and his solicitor, the letters must be professional communications of a confidential character for the purpose of getting legal advice.''
Appropriate statements of grounds are found in standard works.
I shall therefore order the respondent to file and serve a further affidavit or affidavits of documents with respect to the documents in respect of which legal professional privilege is claimed. Such affidavit should be filed and served on or before 18 January 1988.
I am presently of the view that, in order to remain impartial in this matter, I shall not inspect the documents in respect of which legal professional privilege is claimed unless, in the further affidavit, the grounds upon which privilege is claimed are insufficiently stated or there be reason to doubt or query the privilege claimed.
The next documents in issue are those in respect of which Crown privilege or public interest immunity are claimed. They are document 67 in the affidavit of the deponent Catt and documents 124 and 126 in the affidavit of the deponent Granger. Document 67, dated 9 March 1987, was described as a ``Copy of submission by Johnson'', document 124, dated 9 March 1987, was described as ``Submission by Johnson'' and document 126, dated 30 March 1987, was described as ``Johnson's report on section 13 requests''. With respect to documents 124 and 126 the deponent Granger said:
``2. The documents enumerated in Part 2 of Schedule 1 are privileged from production on the grounds -
- ...
- (c) as to documents numbered 124 and 126, that sections of the documents are derived from and refer to information which was provided by a foreign government pursuant to a Double Tax Agreement with Australia which provides that information provided shall be treated as secret. Disclosure of the information and the source of the information would be contrary to the public interest in that disclosure would
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seriously inhibit the respondent's ability to obtain information which is provided voluntarily by officers of foreign governments and would prejudice the respondent's ability to obtain information essential to inquiries and investigations.''
A like claim was made by the deponent Catt.
The basis upon which this privilege was claimed was that the information contained in the document came from an overseas source and that the disclosure of that information would be likely to prejudice the confidential supply of information to Australia from the supplying country. However, Mr A.P. Webb Q.C., senior counsel for the applicants, referred to Article 25 of the Australia-United States Double Tax Agreement which provides, inter alia:
``(1) The competent authorities shall exchange such information as is necessary for carrying out the provisions of this Convention or for the prevention of fraud or for the administration of statutory provisions concerning taxes to which this Convention applies provided the information is of a class that can be obtained under the laws and administrative practices of each Contracting State with respect to its own taxes.
(2) Any information so exchanged shall be treated as secret and shall not be disclosed to any persons other than those (including a Court or administrative body) concerned with the assessment, collection, administration or enforcement of, or with litigation with respect to, the taxes to which this Convention applies.''
Mr Webb submitted that like provisions appear in most double tax agreements entered into by Australia and that it was likely that the country supplying the subject information to Australia was bound by the provisions of that agreement. He submitted that the decision of Mr Justice Wilcox in
Nestle Australia Limited v. F.C. of T. 86 ATC 4499; (1986) 67 A.L.R. 128, which was upheld on appeal by Bowen C.J., Lockhart and Sheppard JJ. in
F.C. of T. v. Nestle Australia Limited 86 ATC 4760; (1986) 69 A.L.R. 445, should not be followed for the reason that the attention of Wilcox J. was not drawn to the terms of the double tax agreements and therefore that his Honour proceeded upon an incorrect factual basis.
It is not necessary for me presently to consider this aspect of the matter further. The affidavits of Catt and Granger do not make it clear what is the relevance, if any, of the subject documents to the current proceedings or why the fact that some of the information in the documents is confidential should make the whole of each document privileged from production. I shall, therefore, order that a further affidavit or affidavits be filed and served on or before 18 January 1988 setting out whether the confidential material may or may not be separated from the remainder of each document and, if it may be separated, on what grounds privilege is claimed for the non-confidential section of the documents. As an inspection of the documents is not likely to prejudice my impartiality in these proceedings, I shall also order that documents 67, 124 and 126 be produced in my chambers on 18 January 1988 for my inspection.
I note that, to the extent that the confidential information appears not relevant to the present proceedings, but rather to the applicant's substantive liability to tax, the provisions of O. 15 r. 15 will apply. In so far as the documents do not appear to be relevant to the present proceedings, inspection by the applicants should not be ordered. Order 15 r. 15 of the Federal Court Rules provides:
``The Court shall not make an order under this Order for the filing or service of any list of documents or affidavit or other document or for the production of any document unless satisfied that the order is necessary at the time when the order is made.''
This rule emphasises the principle which was clearly stated in
Kimberly Mineral Holdings Ltd. (in liq.) v. McEwan (1980) 1 N.S.W.L.R. 210, that a court's powers with respect to discovery and inspection are discretionary and ought to be exercised to prevent abuse of its process.
The last documents in issue are documents numbered 58 in Catt's affidavit and 134 in Granger's affidavit. These are documents which constitute drafts of questions that may have been put to the applicants had they attended for examination or drafts of questions which may hereafter be put to the applicants if they attend for examination. Certainly, the
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drafts of questions that may have been put to the applicants had they attended at the appointed times are relevant to one of the issues in the ADJR Act proceedings, namely the issue as to whether the notices were improper as documents had already been made available to the Commissioner and some questions put in writing had been answered in writing.However, the privilege claimed is that of Crown privilege and, in this respect, it was put by Mr Robinson, who appeared for the respondent, that it was not in the public interest to make available to a person who is to be examined a list of the questions which are to be asked. The Commissioner of Taxation takes the view that it is preferable not to advise persons to be examined of questions likely to be asked in the examination.
As to whether it would be usually or sometimes better to make the questions available, I express no view. It is in the public interest that the Commissioner of Taxation should be free to keep confidential questions which may be asked in an examination. It is in the public interest that the Commissioner and his officers, who have the task of the administration of the Assessment Act and who have experience in the conduct of examinations, should be at liberty to maintain the secrecy of the precise questions that may be put in the examination. As to an analogous situation, the withholding from a prisoner of reasons for the refusal of parole, Lord Denning M.R. said in
Payne v. Lord Harris (1981) 1 W.L.R. 754 at p. 759:
``In the end I think the problem comes down to this: what does public policy demand as best to be done? To give reasons or to withhold them? This is more a matter for the Secretary of State than for the courts.''
Mr Webb did not contend that there were principles of natural justice which were imported into the process of assessment of tax or other administration of the provisions of the Assessment Act and which required the Commissioner to give prior notice of matters being investigated. In any event, any such principle would not avail the applicants in the present case, for it was not their affairs which the Commissioner was investigating. The affairs under consideration were the affairs of a company with which they were associated.
Accordingly, I accept the claims of privilege with respect to documents 58 and 134.
The final issue relates to an amendment to the application in proceeding G179 of 1987, proceedings brought by Harry Gerard Wouters. In that matter, an amended application for an order of review was filed on 11 September 1987. The respondent has applied to have those amendments disallowed and Mr Webb does not press the amendments. Accordingly, the amendments made in that amended application will be disallowed and the applicant, Harry Gerard Wouters, should pay the costs thrown away by the amendment.
Otherwise, the applicants have had substantial success. The respondent should pay the general costs of these interlocutory proceedings.
THE COURT ORDERS THAT:
1. Leave be reserved to the applicants to seek a formal order of stay in relation to the proceedings in the Local Court, if one be deemed necessary.
2. The respondent file and serve, on or before 18 January 1988, a further affidavit or affidavits of documents with respect to the documents in respect of which legal professional privilege is claimed.
3. The respondents file and serve, on or before 18 January 1988, a further affidavit or affidavits setting out whether the confidential material may or may not be separated from the remainder of each document in respect of which public interest immunity is claimed and, if it may be separated, on what grounds privilege is claimed for the non-confidential section of each document.
4. Document 67 in Sch. 1, Pt 2 of the affidavit of Stephen Catt, sworn 18 September 1987 and documents 124 and 126 in Sch. 1, Pt 2 of the affidavit of Jennifer Ann Granger sworn 14 September 1987 be produced in chambers on 18 January 1988 for inspection.
5. In relation to proceedings G179 of 1987 only, the amendments made by the amended application for an order of review filed on 11 September 1987 be disallowed and the applicant, Harry Gerard Wouters pay the costs thrown away by the amendment.
6. The respondent otherwise pay the costs of these interlocutory proceedings.
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