RE THE FALLON GROUP PTY LTD AND FC of T

Judges:
LS Katz M

Court:
Administrative Appeals Tribunal

Judgment date: 8 August 1995

LS Katz (Member)

By letter dated 20 January 1994 The Fallon Group Pty Ltd (``Fallon''), a company apparently engaged in sales tax consulting, requested access under the Freedom of Information Act 1982 (``the Act'') to certain documents of the Taxation Commissioner (``the


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Commissioner'') brought into existence between 1 January 1993 and 20 January 1994. Those documents were described in the letter of request as falling into two classes: first, ``minutes of meetings for the Sales Tax Technical Discussions Group for New South Wales''; and, secondly, ``Technical Notices prepared by Sales Tax Officers in New South Wales''.

2. On receipt of the letter of request, the Commissioner identified twenty-one documents as falling within the first class of documents to which access had been requested; those documents were minutes of meetings of a body known as the New South Wales Sales Tax Technical Discussion Group. The Commissioner also identified a further fifty documents as falling within the second class of documents to which access had been requested; those documents were known as New South Wales Sales Tax Group Technical Notices and each one bore a designation in the form ``TN NSW0xx'', beginning with TN NSW033 for the first of them and ending with TN NSW082 for the last of them.

3. Both at the stage of initial decision making (notified to Fallon on 17 March 1994) and at the stage of internal review (notified to Fallon on 3 May 1994), the Commissioner refused to grant to Fallon access to any of the twenty-one documents identified as falling within the first class of documents; further, the Commissioner refused to grant to Fallon access to any of the fifty documents identified as falling within the second class of documents, except for TN NSW034, TN NSW046 and TN NSW049. In the case of each of the three documents just referred to, access was granted, but with deletions therefrom. The deletions from TN NSW034 and TN NSW049 were relatively minor; those from TN NSW046 were more substantial.

4. On 10 May 1994 Fallon made application to the Tribunal for review of the Commissioner's decision to refuse access wholly to sixty-eight of the seventy-one documents which had been identified as falling within its request and to refuse access in part to the other three documents which had been so identified. That application was not, however, heard by the Tribunal until 15 May 1995. Much of the delay between 10 May 1994 and 15 May 1995 was with the concurrence of the applicant, due to its hope that it might resolve its dispute with the respondent by negotiation, a hope which ultimately proved fruitless. (I should perhaps add here that on 31 October 1994 the Commissioner did write to Fallon, enclosing a new version of TN NSW034, with, so it was said, ``information previously considered to be exempt now included''. That newly-disclosed information was as follows: ``***This document is NOT available under F.O.I.***''. If the additional information just referred to represented the fruit of the negotiation referred to above, then that negotiation was a stunted tree indeed.)

5. On 28 October 1994 the Commissioner lodged with the Tribunal a schedule of the documents wholly or partially in dispute in the proceedings, that schedule being of the type required by the relevant Tribunal practice direction. According to that schedule, the Commissioner, in justifying the decision under review, intended to place reliance at the hearing before the Tribunal on the exemptions contained in sections or paragraphs 36, 37(1)(a), 37(1)(b), 38, 40, 42 and 43(1)(c) of the Act.

6. Ultimately, however, the exemptions contained in paragraph 37(1)(a), section 40 and paragraph 43(1)(c) were not relied upon by the Commissioner at the hearing before the Tribunal.

7. First, as to paragraph 37(1)(a) of the Act, the Commissioner did not persist with claims for exemption under that provision, which claims had been foreshadowed in respect of two only of the seventy-one documents in dispute in the proceedings. The reason is to be found in evidence given at the hearing by Mr DP McCarthy on behalf of the Commissioner that the relevant documents ``no longer contain information about on-going investigations of possible breaches of sales tax law which could prejudice the investigations''.

8. Secondly, the claims for exemption under section 40 of the Act, which had been foreshadowed in respect of all seventy-one of the documents in dispute in the proceedings, would have related in every case only to material in the document concerned which would have disclosed one or more of: the name, position, telephone number and fax number of an officer or officers of the Taxation Office. However, at the outset of the hearing of the matter before the Tribunal, Mr Tony Grant, a director of the applicant who conducted the


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matter on its behalf, informed the Tribunal that the applicant did not wish to have access to any material in the documents in dispute, which material was of the type just described. That put an end to the Commissioner's foreshadowed section 40 exemption claims.

9. Finally, there were the claims for exemption under paragraph 43(1)(c) of the Act, which claims had been foreshadowed in respect of a considerable number of the documents in dispute in the proceedings. Those claims disappeared from consideration in the following way: first, those claims would have been made in part at least by reason of material in the documents concerned disclosure of which would have directly disclosed the names of taxpayers (and, where relevant, of their representatives) and their file numbers. However, as to such material, Mr Grant again informed the Tribunal at the outset of the hearing that the applicant did not wish to have access to any material in the documents in dispute, which material was of the type just described. Secondly, as to the balance of the material in the documents in respect of which a claim for exemption under paragraph 43(1)(c) had been foreshadowed, during the course of his final submissions, Mr Alan Robertson of counsel, who appeared for the Commissioner, submitted that in the present proceedings paragraph 43(1)(c) afforded no greater protection to any material in the documents in dispute than did section 38, so that it was unnecessary to go beyond a consideration of the Commissioner's claims under section 38 to a consideration of those under paragraph 43(1)(c). (I should add that, contrary to the position which had obtained at the time of the lodging of the schedule in October 1994, by the time Mr Robertson made that submission there was no document in respect of which the Commissioner had been relying upon the exemption in paragraph 43(1)(c) as to which the Commissioner was not also relying upon the exemption in section 38.)

10. In the result, the Commissioner, in justifying the decision under review, relied in the present proceedings only on the exemptions contained in the following provisions of the Act: section 36; paragraph 37(1)(b); section 38; and section 42.

11. It is convenient to turn first to section 36 of the Act and to the claims for exemption made thereunder.

12. Subsection 36(1) provides that, subject to that section, a document is an exempt document if its disclosure under the Act would meet two conditions: first, (relevantly) that it would disclose matter in the nature of or relating to opinion or recommendation 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 (paragraph 36(1)(a)); and, secondly, that it would be contrary to the public interest (paragraph 36(1)(b)).

13. Exemption claims under subsection 36(1) were made by the Commissioner in respect of all minutes of meetings of the New South Wales Sales Tax Technical Discussion Group (``the minutes'') and almost all New South Wales Sales Tax Group Technical Notices (``the technical notices''). In order to understand the basis upon which it was claimed that the documents for which such exemption claims were made fall within subsection 36(1), it is necessary to be aware of the circumstances of the documents' creation. Those circumstances were the subject of evidence by Mr McCarthy, of which evidence the following appears to me to be an adequate summary for present purposes.

14. Until July 1989 the making of decisions and the giving of advice in respect of sales tax matters occurred only in the Australian Taxation Office (``ATO'') National Office. It was at that time that a process was begun, involving both the devolving of such functions to ATO Branch Offices and the increasing of the number of such Branch Offices. That process naturally gave rise to a greater risk of inconsistency in the performance of such functions than had been present when such functions had been limited to the ATO National Office and experience showed that such inconsistency was occurring. In an attempt to eliminate such inconsistency, at least two steps were taken nationally, beginning in the second half of 1991.

15. The first such step was the division of the country into four different regions for sales tax purposes, each such region having an officer appointed as ``Regional Technical Manager''. It was the function of each such Manager to oversee technical discussion on sales tax issues within his or her region and to link his or her region with the other three regions so far as the


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outcome of regional technical discussions was concerned.

16. One of the four regions into which the country was divided was the New South Wales region (which region included, not only the State of New South Wales, but also the Australian Capital Territory). Within that region a body was created known as the New South Wales Sales Tax Technical Discussion Group, whose function was to co-ordinate the operations of the region's Branch Offices. That body began its life as a loose discussion group, but as time went on its membership became more strictly defined, consisting ultimately of the Regional Technical Manager (who was Mr McCarthy), a representative of each Branch Office in the region and one representative involved in ``Appeals and Review''.

17. The second presently relevant step taken nationally in an attempt to eliminate inconsistency was the commencement of a system of publishing Technical Notices, which notices were intended to deal with important sales tax issues which had arisen in Branch Offices.

18. So far as the New South Wales Region was concerned, drafts of such notices were prepared at the Branch Office level and then discussed at meetings of the New South Wales Sales Tax Technical Discussion Group. Draft technical notices were not the only subject of discussion at meetings of the New South Wales Sales Tax Technical Discussion Group, but as time went by discussion of such drafts occupied an increasing part of the time of such meetings.

19. The intention in discussing draft technical notices was to develop a regional view on the issues dealt with in the drafts. If that occurred in respect of a particular draft technical notice, then that notice became a New South Wales Technical Notice and had a designation allocated to it in the form ``TN NSW0xx''. That New South Wales Technical Notice was then circulated to the other three regions across the country in an attempt to obtain national approval thereof. If all other regions approved of the New South Wales Technical Notice, then it was taken to represent the policy of the ATO nationally and, where that policy affected a significant number of taxpayers, could be published as a public ruling, either a Bulletin or a Sales Tax Ruling. (In other cases, it could be issued as a private ruling only.) A New South Wales Technical Notice which had not received the approval of the other three regions was described as ``unfinalised'' and was not to be used as a precedent.

20. Of the technical notices in respect of which a section 36 exemption claim was made in the present proceedings, all of them, except for TN NSW073, were ``unfinalised'' in the sense just described. In the case of TN NSW073, it did receive the approval of the other three regions, but the views expressed in it were afterwards superseded, so that, in the result, it, like all the other technical notices presently under consideration, contained views which were provisional only.

21. My summary of Mr McCarthy's evidence concerning the circumstances of the creation both of the minutes and of the technical notices being now complete, I turn first to the claims of exemption in respect of the technical notices.

22. I mentioned at the outset of these reasons that there were fifty such notices identified as falling within Fallon's request for access, comprising TN NSW033 to TN NSW082. I also mentioned that as to three of the notices, namely, TN NSW034, TN NSW046 and TN NSW049, Fallon has had partial access and as to the remainder it has had no access at all.

23. As to the three notices to which partial access has been granted, exemption claims under section 36 were pursued before the Tribunal in respect of those parts of TN NSW046 and TN NSW049 to which access was not granted, but no exemption claim under section 36 was pursued in respect of that part of TN NSW034 to which access had not been granted. As to the forty-seven notices to which no access at all has been granted, exemption claims under section 36 were pursued before the Tribunal in respect of forty-three of them, excluding only TN NSW039-041 and TN NSW060.

24. I should say immediately that the making of a section 36 claim in respect of that part of TN NSW049 to which access was not granted was obviously a slip. There were only four deletions from TN NSW049, consisting of: the name of an ATO officer, the telephone number of that officer, the name of a representative of a taxpayer and the notation, ``***This document is NOT available under F.O.I.***''. It is apparent that none of those deletions was intended to be justified under section 36. As to the last of them, it was the self-same deletion which had at first been made in respect of TN


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NSW034 and then afterwards reversed. As to the first three deletions, each was plainly intended to be justified under either section 38 or 40 only, rather than under section 36; since those deletions consisted only of material of types to which, in any event, Mr Grant informed the Tribunal that the applicant did not seek access, I need not give further consideration in any respect to TN NSW049 in these reasons.

25. I therefore have to consider section 36 exemption claims in respect of a total of forty- four notices, not including TN NSW034, TN NSW039-041, TN NSW049 or TN NSW060.

26. I am satisfied, without referring to any of them in detail, that the forty-four technical notices, having come into existence in the circumstances which I have summarised above, fall within paragraph 36(1)(a) of the Act as ``deliberative process'' documents; indeed, Mr Grant for the applicant did not submit that the evidence before the Tribunal failed to lead to that conclusion. To apply to the notices some of the language used by the Tribunal in
Re Waterford and Department of the Treasury (No 2) (1984) 5 ALD 588, 606, which language was referred to with approval by Davies J, sitting as the President of the Tribunal, in
Re Howard and the Treasurer (1985) 7 ALD 626, 630, they all fall into the class of the agency's ``thinking documents'', recording its ``thinking processes - the processes of reflection, for example, upon the wisdom and expediency of a proposal, a particular decision or a course of action''.

27. The question next arises whether the notices, falling within paragraph 36(1)(a), also fall within paragraph 36(1)(b), that is to say, whether their disclosure would be contrary to the public interest.

28. In that connection, Mr Robertson relied on the reasons of Davies J in the Howard Case mentioned above as setting out the basic framework of inquiry. The passage in those reasons of particular importance for present purposes appears at 634-635 of the report and it is convenient to set it out now. It is as follows:

``... in each case the whole of the circumstances must be examined including any public benefit perceived in the disclosure of the documents sought but...:

  • (a) the higher the office of the persons between whom the communications pass and the more sensitive the issues involved in the communication, the more likely it will be that the communication should not be disclosed;
  • (b) disclosure of communications made in the course of the development and subsequent promulgation of policy tends not to be in the public interest;
  • (c) disclosure which will inhibit frankness and candour in future pre- decisional communications is likely to be contrary to the public interest;
  • (d) disclosure, which will lead to confusion and unnecessary debate resulting from disclosure of possibilities considered, tends not to be in the public interest;
  • (e) disclosure of documents which do not fairly disclose the reasons for a decision subsequently taken may be unfair to a decision-maker and may prejudice the integrity of the decision-making process.''

(I note, incidentally, that the passage I have just quoted was recently quoted with approval by Beazley J in
Australian Doctors' Fund v The Commonwealth (1994) 49 FCR 478, 489-490, an appeal from a decision of this Tribunal.)

29. In his evidence Mr McCarthy (who, I should add, has now been involved in sales tax work with the ATO for a dozen years) expressed his opinion as to the respects in which disclosure of the notices claimed to be exempt under subsection 36(1) would be contrary to the public interest. I summarise those respects as follows.

30. First, members of the public might be misled into believing that those notices represented the final views of the ATO and might order their affairs accordingly, with adverse implications for their taxation positions. Secondly, ATO officers themselves unaware of the status of the notices might be misled (or, if not so unaware, then coerced) into acting in accordance with the views expressed in them if presented with them by members of the public. Thirdly, disclosure would mean that ``policy [ was] be[ing] developed in a fishbowl'' and that ``the development of policy [was] be[ing] made public in the short term''.

31. I will deal with those matters in the reverse order to that in which I have just set them out.


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32. In the present context, ``fishbowl'' is to be understood as a code word, Mr McCarthy's true appeal being to what is more familiarly described as the ``candour'' argument: compare
Re Lianos and Secretary to Department of Social Security (1985) 7 ALD 475, 494.

33. That that was what had been intended by Mr McCarthy's third assertion was reinforced by Mr Robertson's reference in his submissions to a passage from the joint reasons for judgment of Mason CJ and Brennan, Deane, Dawson, Gaudron and McHugh JJ in
The Commonwealth v Northern Land Council (1992-1993) 176 CLR 604. That case concerned a claim of public interest immunity in respect of minutes of deliberations of Cabinet and Cabinet committees. The passage on which Mr Robertson relied is at 614-615 of the report and is as follows (footnote omitted):

``... the documents for which the Commonwealth claims immunity from disclosure are documents which record the actual deliberations of Cabinet or a committee of Cabinet. They are not documents prepared outside Cabinet, such as reports or submissions, for the assistance of Cabinet. Documents of that kind are often referred to as Cabinet documents. When immunity is claimed for Cabinet documents as a class and not in reliance upon the particular contents, it is generally upon the basis that disclosure would discourage candour on the part of public officials in their communications with those responsible for making policy decisions and would for that reason be against the public interest. The discouragement of candour on the part of public officials has been questioned as a sufficient, or even valid, basis upon which to claim immunity. On the other hand, Lord Wilberforce has expressed the view that, in recent years, this consideration has `received an excessive dose of cold water'.

But it has never been doubted that it is in the public interest that the deliberations of Cabinet should remain confidential...''

34. Whilst Mr Robertson sought to gain some comfort from the High Court's reference in the passage quoted above to Lord Wilberforce's expression of view on the treatment recently accorded to the ``candour'' argument in the public interest immunity context, I must say that I do not regard the existence of that reference as being of any real assistance in the present matter, it being, in my view, entirely equivocal as a pointer to the High Court's attitude to the ``candour'' argument so far as concerns public officials.

35. For his part, Mr Grant made two basic points in response to the Commissioner's ``fishbowl'' or ``candour'' argument: first, that, so far as the evidence went, the offices of those responsible for the creation of technical notices were not sufficiently high to justify reliance on such an argument; and, secondly, that in any event the evidence of the causing, by disclosure of documents such as those presently in dispute, of a discouragement of future candour on the part of their authors was too vague to satisfy the Commissioner's burden of persuasion before the Tribunal.

36. Of those two points, I reject the first, but accept the second. As to the first, I do not see why any relative lack of seniority of the officers concerned would prevent acceptance of the ``candour'' argument in the present matter, provided, of course, that there were specific evidence before the Tribunal of potential discouragement of future candour in such officers; as to the second, there is before the Tribunal no such specific evidence of the sort to which I have just referred - Mr McCarthy's assertion on the topic appears to me to be nothing more than ``boilerplate''. The Tribunal has referred in numerous earlier cases to the necessity for specific evidence on this matter if an agency hopes to succeed with such an argument; if an agency does not put such evidence forward, it must by now surely be aware of the inevitable outcome.

37. I am no more impressed by Mr McCarthy's second assertion, namely, of the existence of a risk of the misleading or coercion of ATO officers by members of the public armed with technical notices of the type presently in dispute. For one thing, it runs contrary to his assertion, to which assertion I have already referred above, that such notices ``were not to be used as precedents''. For another, if such risk were of any real significance, I would have expected some specific evidence of instances of such misleading or coercion in similar contexts.

38. Coming finally to Mr McCarthy's first assertion, namely, that the taxation positions of members of the public might be adversely affected by their acting in accordance with their mistaken belief that the notices in dispute


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represented the final views of the ATO, unlike Mr McCarthy's other two assertions, I am persuaded by this one to the conclusion that disclosure of the documents in respect of which this exemption is claimed would, on balance, be contrary to the public interest.

39. The statement made by Davies J in the Howard Case (see the passage quoted above) that, ``[D]isclosure, which will lead to confusion... resulting from disclosure of possibilities considered, tends not to be in the public interest'', appears to me to be apposite here.

40. It must, of course, be remembered that, although the particular applicant in the present matter might not, because of the sophistication which I assume it has in sales tax matters, be at risk of being so confused, if it is entitled to access to such documents, so would be all others who applied; it is not to be assumed that such others would be similarly placed in that respect. My consideration of the public interest must involve consideration of the position of such others as well.

41. I therefore accept that the technical notices in respect of which section 36 claims have been made do fall within that provision.

42. The conclusion which I have just reached does not, of course, mean that the relevant technical notices are necessarily exempt documents in their entirety (or, in the case of TN NSW046 only, necessarily exempt to the extent to which access to it has thus far been refused). Subsection 58(1) of the Act generally confers on this Tribunal in proceedings under Part VI thereof power to decide any matter in relation to the request to grant access that, under the Act, could have been decided by the agency. Whilst the provision to which I have just referred is expressed in terms of conferring power to decide that which could have been decided, I take it as encompassing as well a duty to decide that which should have been decided.

43. One of the things which an agency should decide when it decides not to grant a request for access to a document on the ground that it is an exempt document is whether it should, under subsection 22(1) of the Act, make and grant access to a copy of the document with certain deletions therefrom. That subsection relevantly provides as follows:

``Where:

  • (a) an agency... decides:
    • (i) not to grant a request for access to a document on the ground that it is an exempt document;... and
  • (b) it is possible for the agency... to make a copy of the document with such deletions that the copy:
    • (i) would not be an exempt document;... and
  • (c) it is reasonably practicable for the agency... to make such a copy,

the agency... shall, unless it is apparent from the request or as a result of consultation by the agency... with the applicant, that the applicant would not wish to have access to such a copy, make, and grant access to, such a copy.''

44. Subsection 22(1) is, I consider, as applicable to the Tribunal, mutatis mutandis, as it is to an agency. Taking that view, I have come to the conclusion that, leaving aside any questions of possibility or reasonable practicability, Fallon would not wish to have access to copies, with appropriate deletions therefrom, of the technical notices which I have held to fall within section 36. I reach that conclusion, not as a result of ``consultation'' with the applicant of the type which would have occurred had I been a primary decision-maker, but as a result of the ``consultation'' involved in my having heard Fallon's application to this Tribunal.

45. Mr Grant made it apparent in the way in which he conducted the applicant's case before the Tribunal that Fallon wished to have access to the technical notices only to the extent that they revealed precisely that matter which in part made the notices exempt documents, that is to say, only to the extent that they revealed the agency's deliberative processes regarding the construction and application of the sales tax legislation; in so far as the notices might reveal, for instance, what is described in subsection 36(5) of the Act as ``purely factual material'', it was made apparent by Mr Grant that Fallon had no interest whatever in them.

46. In those circumstances, my conclusion that the technical notices in respect of which section 36 claims have been made do fall within that provision leads to my upholding the Commissioner's denial of access to them,


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whether that denial was in whole or, as in the case of TN NSW046 only, in part.

47. Turning now to the minutes, in respect of all of which exemption was claimed, as I have already said, under section 36, I can deal with them relatively shortly.

48. First, as to whether the minutes were deliberative process documents, Mr Robertson characterised them in argument as ``archetypal'' in that respect. On the other hand, as with the technical notices, there was again no argument before me by Mr Grant to the effect that the minutes did not fall into that category. I have no difficulty in concluding that the minutes were deliberative process documents and thus within paragraph 36(1)(a) of the Act.

49. Next, as to whether disclosure of the minutes would be contrary to the public interest, again I have no difficulty in concluding that, on balance, it would. In so far as the minutes record discussion about technical notices, disclosure of which I have already held would be contrary to the public interest, disclosure of those portions of the minutes would be contrary to the public interest at least for the same reason as would be disclosure of the notices themselves. In so far as the minutes record discussion about other technical notices, I am of the view that disclosure of those portions of the minutes would, on balance, be contrary to the public interest for the reason that those who make decisions should be judged by the quality of those decisions themselves, rather than by the matters they considered before making them (compare the matter lettered (e) in the passage from the reasons for decision of Davies J in Howard's Case set out above). Further, there is the problem concerning all of the minutes, according to Mr McCarthy's evidence, that ``[t]he minutes generally are of a relatively low standard and are occasionally incorrect and misleading'', so that they do not necessarily even reflect matters actually considered before deciding in any particular case.

50. Finally, as with the technical notices, it was apparent that Fallon was only interested in the minutes in so far as they revealed what was said in meetings about the content of the technical notices, so that no question arises of the severance of the minutes under section 22 of the Act.

51. For those reasons, I uphold the Commissioner's denial in whole of access to the minutes.

52. Having reached the conclusions which I have expressed above concerning both the minutes and those technical notices in respect of which section 36 exemption claims are made, I have no need to consider the exemption claims which were made in respect of those documents by the Commissioner under other provisions of the Act. In particular, I note that I have no need to consider the claim of exemption under paragraph 37(1)(b) of the Act, which was made only in respect of TN NSW054. There are, however, as I have already mentioned, a number of technical notices in respect of which no claim for exemption under section 36 was made, namely, TN NSW034, TN NSW039-041 and TN NSW060 and with those notices I must deal separately.

53. As to TN NSW034, I have already mentioned that that is a document to which the applicant was given partial access by the Commissioner, the deletions therefrom being relatively minor. Those deletions consisted merely of the names of two officers of the Taxation Office, the telephone number of one of them and the name of a person who is either a taxpayer or the representative of a taxpayer or taxpayers. Given the approach to such information announced by Mr Grant at the outset of the hearing, I need make no further reference in these reasons to TN NSW034.

54. As to the remaining notices, TN NSW039-041 and TN NSW060, claims of exemption were made in respect of all four documents under section 38 of the Act, whilst a claim of exemption was also made under section 42 of the Act, but in respect of TN NSW039 only.

55. It is convenient to deal with the latter claim first.

56. Subsection 42(1) provides that a document is an exempt document if it is of such a nature that it would be privileged from production in legal proceedings on the ground of legal professional privilege.

57. It is claimed by the Commissioner that TN NSW039 is a document of the nature just described, by reason of the inclusion therein of certain material.

58. The relevant material is said to be the first sentence of the paragraph numbered (ii)


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under the heading ``ANSWERS TO ISSUES''. That sentence is to the effect that ``legal opinion'' on a certain matter ``indicates'' a certain conclusion. According to evidence given at the hearing by Mr McCarthy, the opinion referred to had been ``obtained by the ATO from counsel''. Mr McCarthy also asserted (unhelpfully, because the assertion merely amounted to the expression of a conclusion on a matter of law) that that opinion ``is itself subject to legal professional privilege''.

59. It appears to me to be appropriate to characterise the material identified above in TN NSW039 as amounting to a statement made by a tax officer, in a document which, as Mr McCarthy's evidence at the hearing disclosed, was intended for internal distribution within the Taxation Office, of the substance of a certain opinion given to the Taxation Office by a member of the Bar on a certain legal question.

60. The question which now arises is whether TN NSW039, containing as it does material of the type I have just characterised, is of such a nature that it would be privileged from production in legal proceedings on the ground of legal professional privilege.

61. It appears to me convenient to begin to answer this question by hypothesising that in the instance referred to in the document the opinion expressed by counsel had been reduced by him or her to writing (as would be usual) and that production of such written opinion was being sought in legal proceedings.

62. In those circumstances, I would have been prepared to infer, merely on the material before me in the present proceedings (other than Mr McCarthy's assertion to that effect), that the document was of such a nature that it would have been privileged from production in such legal proceedings on the ground of legal professional privilege. Counsel's opinion has traditionally been considered to be privileged; one case often cited in that connection is
Mayor and Corporation of Bristol v Cox (1884) 26 Ch D 678. Nothing in the material before me suggests any reason to doubt that such document as I have hypothesised existing would be anything other than a confidential legal advice given by a barrister to a client in the ordinary way in the course of a professional relationship.

63. Next, I hypothesise in the case of the opinion a tax officer's bringing into existence a document for internal distribution within the Taxation Office, which document contained no information other than the substance of that opinion.

64. Again, in those circumstances I would have been of the view that such document was of such a nature that it would have been privileged from production in legal proceedings on the ground of legal professional privilege. Contrary to what I understood to be the submission of Mr Grant for the applicant, the sharing among servants of a client of the purport of otherwise-privileged legal advice given to the client does not, in my view, destroy the privilege which attaches to that advice.

65. The matter was dealt with in the following way in the unreported reasons for judgment of Rath J of the Supreme Court of New South Wales in
Komacha v Orange City Council (30 August 1979), quoted at 58 FLR 452, 459n:

``The privilege attaching to a document will be accorded to copies made of it, provided confidentiality is maintained. If for example counsel's advice is circulated among officers of a corporation obtaining the advice, then privilege is preserved, whether the circulation is of the original or of copies. If in such a case an officer of the corporation were to report to another officer setting out portions of the advice, privilege would attach to the report in respect of those portions.''

The approach of Rath J just referred to was approved of by Henry J in
C-C Bottlers Ltd v Lion Nathan Ltd [1993] 2 NZLR 445, 449.

66. Finally, I come to the present situation, in which a tax officer brings into existence a document for internal distribution within the Taxation Office, which document contains information which includes not only the substance of counsel's opinion, but also other information not covered by legal professional privilege. Would such a document be privileged from production in legal proceedings on the ground of legal professional privilege and, if so, to what extent?

67. Three possibilities are open: first, that such a document would lose all privilege by reason of the inclusion within it of some non- privileged material; secondly, that such document would be privileged in its entirety because of the inclusion within it of some privileged material; and, thirdly, that that part


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of the document which would have been privileged if it had been the only information in the document would retain its privileged character, whilst the balance of the document would attract no privilege.

68. In my view, the third possibility sets out the legal position correctly.

69. I have already quoted from the reasons for judgment of Rath J in the Komacha Case, in which his Honour had expressed the view that if an officer of a corporate client were to report to another such officer, setting out portions of counsel's advice to the corporation, privilege would attach to such report. His Honour then continued:

``The problem arises where the reporting officer makes recommendations that relate to the advice received. The recommendations seem to me to be an activity of the corporation, and not a transmission of the advice from one officer of the corporation to another. This will be especially so where the recommendations are not simply based on the advice received, but are made upon a critical appreciation of the advice received and the situation in which the client finds itself.

I think that a distinction should be drawn between the circulation in a corporation of advice received from legal advisers, and recommendations made by officers of the corporation as to the action to be taken, having regard to that advice. The recommendations are corporate action, and are not privileged, whether they follow the advice or disregard it. If the recommendations are found in a report which sets out the advice (or part of it) verbatim or in substance then I think that the privilege remains attached to that part of the report so setting out the advice. But if the officer making the recommendations is in substance tendering his own advice, then (if at all events he is not himself a professional legal adviser) his advice is not privileged.''

70. The approach just set out of Rath J to documents of the type he was there dealing with was approved of by Franki J of the Federal Court in
Brambles Holdings Ltd v Trade Practices Commission [No 3] (1981) 58 FLR 452, 458-459, and applied to an internal memorandum of the Trade Practices Commission.

71. Further, just as Franki J had approved in Brambles [No 3] of the approach taken by Rath J in Komacha, Deane J approved, in
Waterford v The Commonwealth (1987) 163 CLR 54, 85, of the approach taken by Franki J in Brambles [ No 3].

72. The application of that approach to the document presently under discussion leads to the conclusion that it is of such a nature that part of it, but not all of it, would be privileged from production in legal proceedings on the ground of legal professional privilege.

73. Accepting the correctness of that conclusion, I now return to the question whether such document is an exempt document under subsection 42(1) of the Act.

74. Reading that provision literally, it may be argued that such document would not be so exempt, because what that provision requires is that ``it'', that is to say, the document, and not just a part of the document, be of such a nature that it would be privileged from production in legal proceedings on the ground of legal professional privilege.

75. Even in the absence of any relevant judicial guidance on the matter, I would have rejected the literal reading of subsection 42(1) just referred to in favour of one which substituted for the word ``if'' appearing therein the words ``to the extent that''. My warrant for doing so would have been the approach to the construction of statutes considered appropriate by McHugh JA (as his Honour then was) in
Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404, 421-424, in a passage referred to with approval by the High Court in
Bropho v Western Australia (1990) 171 CLR 1, 20.

76. I am, however, relieved of the necessity to be bold in that respect by the approach of three of the five Justices of the High Court who decided the Waterford Case, already referred to.

77. That case was directly concerned with subsection 42(1) of the Act, although the factual situation was somewhat different to the present. There the Court was concerned with documents brought into existence by the Attorney-General for the Treasury Department, which documents, it was assumed, contained, not only legal advice to that Department, but also advice to it on matters of non-legal policy; on the other hand, here I am concerned with a document brought into existence by a servant of a client containing both the substance of a legal adviser's earlier


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legal advice to the client and also other information. However, for present purposes, the distinction is immaterial.

78. At 66, Mason and Wilson JJ said:

``It may... be appropriate in a particular case for the [Administrative Appeals] Tribunal to require those parts of the document which do not bear the necessary relation to legal advice to be disclosed. The doctrine of legal professional privilege allows room for questions of fact and degree such as these to fall for decision. Moreover, the Act contemplates that where an exempt document contains material which, standing alone, would not render the document exempt, the agency or Minister should, if it is reasonably practicable to do so, delete the privileged material and grant access to the remainder: s. 22.''

79. At 85, Deane J said:

``The circumstance that advice of different categories was contained in some of the disputed documents did not, of itself, give rise to any insurmountable problem. If privileged material was contained in one distinct part of the document and non- privileged material was contained in another, protection of the confidentiality of the privileged part of the document would not, as the Act itself recognizes (see, e.g. ss. 22, 33(3), 33A(3), 34(3), 35(3), 36(4), 58(2), 64(2) and (4)), ordinarily require that that part which was not covered by privilege should also be immune from production...''

Later, at 93, Deane J referred, in a way which made plain that it was a legally permissible course, to an attempt by the Department to ``satisfy[] the Tribunal that all or part of the contents of such documents are exempt under s. 42(1) of the Act'' (my emphasis).

80. Whilst the passages I have set out above from Waterford's Case do not directly address the question of the proper construction of subsection 42(1) to which I have referred above, they make it plain that in the view of Mason Wilson and Deane JJ: first, a document can be an exempt document under that provision, even though only a part of it would be privileged from production in legal proceedings; and, secondly, access can be refused to part only of such a document in reliance on that provision, namely, that part which would have been privileged from production in legal proceedings. Naturally, I act in conformity with that view.

81. Accordingly, I uphold the claim of exemption under subsection 42(1) of the Act in respect of the material identified above in document TN NSW039.

82. (As I have referred above to the High Court's decision in the Waterford Case, I should record for the sake of completeness that the Tribunal's decision in the Waterford Case, already referred to earlier in connection with the subsection 36(1) exemption claims, was an earlier stage in the same matter.)

83. Before concluding my discussion of the section 42 exemption claim, I should record a submission by Mr Robertson that section 118 of the Evidence Act 1995 was relevant in determining it in so far as section 118 amounted to a legislative overruling of the ``sole purpose'' test laid down in
Grant v Downs (1976) 135 CLR 674 and the restoration of the former ``dominant purpose'' test. All other things being equal, the making out of an exemption claim under subsection 42(1) of the Act by an agency would be easier if the ``dominant purpose'' test were applied than it would be if the ``sole purpose'' test were applied.

84. As I have upheld the Commissioner's subsection 42(1) claim by reference to judicial authorities decided whilst the ``sole purpose'' test held the ring, it is unnecessary for me to deal with Mr Robertson's submission. I will, however, make one comment on it.

85. Subsection 42(1) of the Act requires the Tribunal to hypothesise the existence of legal proceedings, in the course of which legal proceedings production is sought of the document(s) in respect of which a claim for exemption is being made under the Act. The Tribunal then asks itself whether the document(s) or some part thereof would have been privileged from production in those hypothetical legal proceedings on the ground of legal professional privilege. Whilst section 118 of the Evidence Act commenced on 18 April 1995, a little less than a month before the present matter was argued, by virtue of subsection 4(1) of the Evidence (Transitional Provisions and Consequential Amendments) Act 1995, section 118 does not apply in relation to proceedings the ``hearing'' of which began before 18 April 1995. What further assumptions, if any, I ask myself, should the


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Tribunal, dealing with a subsection 42(1) claim after 18 April 1995, make about the legal proceedings the existence of which it is required to hypothesise for the purpose of that provision? In particular, on what date should it be assumed that their ``hearing'' began? Happily, for the reason I have given above, I do not have to attempt an answer to that question for the purpose of the present proceedings.

86. There remain finally for consideration the claims of exemption made under section 38 of the Act in respect of TN NSW039-041 and TN NSW060.

87. It is convenient at this point to mention certain features of the contents of one or more of the four notices to which I have just referred, with a view to making plain to what extent it is actually necessary for me to consider a section 38 exemption claim with respect to each notice. First, each notice contains the name and telephone number of an ATO officer. Secondly, each notice contains the name of a taxpayer. Thirdly, three notices (excluding TN NSW060 only) contain a taxpayer's file number. Fourthly, one notice (TN NSW040 only) contains the names of two representatives of a taxpayer. As to all of the information just described, Mr Grant, as I have earlier mentioned, denied at the outset of the hearing any interest on Fallon's part in obtaining access to it, so that there is no need for me to consider section 38 with respect to it, even if it were otherwise appropriate to do so. Further, TN NSW039 contains the sentence which I have already held to be exempt under subsection 42(1) of the Act, so that there is likewise no need for me to consider section 38 with respect to that sentence, even if it were otherwise appropriate to do so. As to all of the information in each of the four notices other than that to which I have referred above in this paragraph, the Commissioner claims that it is exempt matter by reason of section 38, a claim which Fallon denies.

88. Subsection 38(1) of the Act, read together with Schedule 3 of the Act, relevantly provides that a document is an exempt document if disclosure of the document or information contained in the document is prohibited under subsection 110(2) of the Sales Tax Assessment Act 1992.

89. Section 110 of the latter Act appears in Part 10, Division 2 thereof, the Division being entitled ``Information gathering''. The Division has in it only three sections, 108-110. The nature of sections 108 and 109 is sufficiently described for present purposes simply by mentioning that section 108 is headed ``Commissioner may direct a person to provide information'' and section 109 is headed ``Access to premises etc.'' As to section 110, it relevantly provides as follows:

``(1) This section restricts what a person ( `the entrusted person' ) may do with protected information... that the person has obtained in the course of official employment.

(2) The entrusted person must not make a record of protected information and must not disclose it to anyone else.

Penalty: Imprisonment for 2 years.

...

(6) In this section:

`disclose' means divulge or communicate;

`official employment' means:

  • (a) appointment or employment by the Commonwealth, or the performance of services for the Commonwealth; or
  • (b) the exercise of powers or performance of functions under a delegation by the Commissioner;

...

`protected information' means information that meets all of the following conditions:

  • (a) it relates to the affairs of a person other than the entrusted person;
  • (b) it was obtained by the entrusted person, or by any other person, in the course of official employment;
  • (c) it was disclosed or obtained under the sales tax law.''

The term ``sales tax law'', as used in the definition of ``protected information'', is itself defined in section 5 of the Sales Tax Assessment Act 1992, but it unnecessary for present purposes to set out that definition.

90. It will be apparent from the terms of section 110 that the question which formally arises for my consideration in this part of the case is whether the information in the four notices, which information I have identified above, meets the three conditions set out in the definition of ``protected information'' in subsection 110(6) of the Sales Tax Assessment


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Act 1992. There was, however, no dispute between the parties at the hearing as to whether that information had been obtained in the course of official employment, although there was dispute between them as to whether the other two conditions set out in the definition had been met with respect to it; the consequence is that there are really only two issues for me to consider: one is whether the information relates to the affairs of a person other than the entrusted person and the other is whether the information was disclosed or obtained under the sales tax law.

91. I will deal first with the issue whether the information was disclosed or obtained under the sales tax law.

92. It was Mr Grant's submission that information could not be said to have been disclosed or obtained under the sales tax law within the meaning of the relevant condition in the definition unless it had been disclosed or obtained as a result of the exercise of one of the powers contained in sections 108 and 109 of the Sales Tax Assessment Act 1992. He had earlier laid the foundation for such a submission by extracting from Mr McCarthy in cross- examination the concession that probably no information contained in (relevantly) the notices presently under consideration had been obtained by the use of either such power.

93. Mr Robertson's answer to the submission just referred to was to rely on the decision of the Tribunal (RK Todd (Deputy President), RA Sinclair and WA De Maria (Members)) under the Act in
Re Mann and FC of T 87 ATC 2010. (The case is also reported, but only in part, in (1987) 12 ALD 738.)

94. As is apparent from the date of that decision, it could not have been concerned with ``protected information'' under section 110 of the Sales Tax Assessment Act 1992; it was concerned instead with information said to have been acquired under the Income Tax Assessment Act 1936. However, it appears from the report of the case that an argument had been made in the case similar to the argument made by Mr Grant in the present case, because, at 2013 of the report, the following appears:

``8. We agree with the respondent's... submissions that-

  • ...
  • (ii) the concept of information disclosed or obtained under the provisions of the ITAA is not limited to information derived as a result of the exercise of the Commissioner's powers under sec. 264 of the ITAA or by reference to what may be contained in a taxation return;
  • (iii) it is sufficient that information is contained in documents that are obtained in the course of officers' employment and that the officers' employment duties are to carry into effect the provisions of the ITAA: See Canadian Pacific Tobacco Ltd. & Anor v. Stapleton (1952) 86 C.L.R. 1.''

(Section 264 of the Income Tax Assessment Act 1936, referred to in the passage just quoted, is a provision comparable to section 108 of the Sales Tax Assessment Act 1992.)

95. I should add at this point that in The Canadian Pacific Tobacco Case, referred to in the passage quoted above, Dixon CJ had said (at 6) that a ``very wide meaning should be given'' to the words ``obtained under the provisions of this [viz, the Income Tax Assessment] Act'', as those words appeared in subsection 16(1) of that Act, section 16 being the section in the income tax legislation comparable to section 110 in the Sales Tax Assessment Act 1992. The expressed reason of Dixon CJ for so concluding was the policy of the provision concerned.

96. Mr Grant sought to distinguish Mann's Case on two bases.

97. One was that that case had arisen in the context of income tax, rather than sales tax, and that the different nature of the two taxes concerned justified distinguishing Mann's Case in the present case. I must confess that I am unable to see how the different nature of the two taxes concerned is a relevant distinction, at least for the purpose of determining the question of statutory construction presently under consideration. What appears to me to be important is not the nature of the taxes imposed by the two laws concerned, but rather the policy of the comparable provisions in the two laws concerned, and I can see no reason to think that the policy of section 110 of the Sales Tax Assessment Act is any different than the policy of section 16 of the Income Tax Assessment Act 1936, which latter policy led Dixon CJ to conclude that a very wide meaning should be given to the notion of information's having been obtained ``under the provisions of'' that Act.


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98. Mr Grant's other basis for seeking to distinguish Mann's Case was that the placement of section 110 in the Sales Tax Assessment Act 1992 was unlike the placement of section 16 in the Income Tax Assessment Act 1936. The argument was in essence that because section 110 appeared in a Division of the Sales Tax Assessment Act called ``Information gathering'' and because the only other two sections in that Division conferred powers to gather information by the use of compulsion, it followed that section 110 itself was concerned only with protecting the confidentiality of information gathered by the use of those compulsory powers. However, the conclusion does not follow from the premises. One would hardly have expected to find another provision in the Division conferring power on ATO officers to gather information voluntarily!

99. In the result, I accept the applicability in the present circumstances of the approach taken by the Tribunal in Mann's Case (and by Dixon CJ in The Canadian Pacific Tobacco Case) and therefore conclude that the information presently in dispute was disclosed or obtained under the sales tax law within the meaning of the definition of ``protected information'' in section 110 of the Sales Tax Assessment Act 1992.

100. I come now to the question whether the information presently in dispute relates to the affairs of a person other than an entrusted person.

101. On this aspect of the matter Mr Robertson again sought to rely on Mann's Case as laying down the applicable principle.

102. Mann's Case relevantly concerned a number of documents containing information, not about a particular individual, but about a particular class containing a number of individuals. A question which the Tribunal posed for itself (at 2012) was:

``... whether the information contained in the documents claimed to be exempt is `information respecting the affairs of another person' within the meaning of sec. 16(2) ITAA.''

(The words quoted by the Tribunal in the passage just set out are not identical to those which appear in the definition of ``protected information'' in section 110 of the Sales Tax Assessment Act 1992. The latter words are instead ``information that... relates to the affairs of a person other than the entrusted person''. However, I can see no relevant distinction between the two formulations for present purposes.)

103. Mann had expressly informed the Tribunal that he did not seek access to any information about the affairs of other persons and it was in that connection that the Tribunal said (at 2012-2013):

``No doubt there are cases where information could be released without offending sec. 16(2). The long history of the publication of decisions by Taxation Boards of Review, now followed by this Tribunal, shows how, by the use of anonyms and obscurities, a transaction can be described without revealing who participated in it. Difficulty however arises where, even though a class of persons is involved and even though that class varies slightly in membership over a relevant period, the membership of the class in question is known to persons beyond the confines of the class.

7. The fact is that the class of persons here in question, namely the salaried specialists employed by the Capital Territory Health Commission (`the CTHC') and who were involved in the operation of the Private Practice Trust Fund (`the Fund'), would inevitably be well known to a number of persons involved in, or knowledgeable of, the public health area in the A.C.T., and the names of the members of the class would be equally well known. It follows that where information in the documents relates to the affairs of members of that class, disclosure of it would breach the provisions of sec. 16(2) of the ITAA. Any suppression, in the grant of access, of the names of the members of the class would be a gap that would be filled quite readily by reason of knowledge held by a section of the public, namely the involved persons mentioned above, about the existence of the class, about its activities, and about how it fitted in to health administration in the A.C.T. It is nothing to the point that that section of the public may not be large in relative terms. The fact is that it exists. Documents before us concerning the affairs of participating specialists include documents which name individual specialists or refer to them in such a way as to make them readily


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identifiable. Other documents identify the specialists concerned by reference to membership of the relatively small group (no more than 45-50) who participated in the Fund during its existence. Given that the names of the members of the class are known to some, the matter can then be tested by asking, as the respondent's submission said, the question: `Would a person know more about another person or another person's affairs if the information was disclosed?' Such increase in knowledge would for instance flow if the information included what the `other' person earns, how he, she or it makes money, what are the person's relations with other persons or corporations, and what are the relations of such a corporation with its employees and the public.''

104. Mr Robertson argued that the approach of the Tribunal in Mann's Case as just set out justified the suppression of all of the information presently under consideration on the basis that it related to the affairs of persons other than entrusted persons. Mr Grant, on the other hand, argued that, once deletions had been made from the documents of the names and file numbers of taxpayers and of the names of taxpayers' representatives, in accordance with his announcement at the outset of the hearing, then none of the remaining information could be said to relate to the affairs of persons other than entrusted persons.

105. In my view, the true position (perhaps not surprisingly) lies somewhere in between the two extremes urged upon me.

106. I accept, of course, that even though a person is not named in a document, that document's disclosure may disclose information which relates to the affairs of that person and, what is obviously essential for present purposes (although not actually expressed in the legislation), may also disclose that person's identity. Mann's Case provides an example of that phenomenon. However, directing myself to the terms of the specific documents presently under consideration and keeping in mind the obligation under which, as I have already said, I consider myself to be as a result of the terms of section 22 of the Act, I am satisfied that it is possible for me to give to Fallon access to copies of those documents with such deletions therefrom that those copies will not permit readers thereof to identify the persons to whose affairs the information contained in them relates.

107. I set out below the conclusions which I have reached as to the deletions which would achieve that outcome in respect of each document.

108. As to TN NSW039, Fallon should be given access to a copy thereof with the deletion of the material to which Mr Grant has said Fallon does not wish access, the deletion of the material which I have held exempt under section 42 of the Act and the deletion as well of the following: (a) from the box called ``Type'', all material; (b) from the box called ``Summary of facts'', the words in the first line modifying the word ``taxpayer'', the words in the first and second lines describing the type of goods with which the taxpayer is involved and the words in the second line naming a company; (c) from the box called ``Issues for decision'', the name of the company referred to on the second last line; (d) from the box called ``Current status/ progress'', the first sentence; and (e) from the box called ``Future taxation ruling'', all material.

109. As to TN NSW040, Fallon should be given access to a copy thereof with the deletion of the material to which Mr Grant has said Fallon does not wish access and the deletion as well of the following: (a) from the boxes called ``Keywords law & policy'' and ``Issues for decision'', the word in the first line in each box describing the type of goods involved; and (b) from the box called ``Answers to issues'', the dates appearing in the first two lines of the second paragraph and the names of the companies also appearing on those lines.

110. As to TN NSW041, Fallon should be given access to a copy thereof with the deletion of the material to which Mr Grant has said Fallon does not wish access and the deletion as well of the following: from the boxes called ``Type'', ``Current status/progress'' and ``Future taxation ruling'', all material.

111. As to TN NSW060, Fallon should be given access to a copy thereof with the deletion of the material to which Mr Grant has said Fallon does not wish access and the deletion as well of the following: (a) from the box called ``Summary of facts'', the first paragraph; (b) from the boxes called ``Issues for decision'' and ``Answers to issues'', the second and third numbered items; and (c) from the box called ``Current status/progress'', all material.


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112. I am satisfied that disclosure of copies of the notices with the deletions therefrom to which I have referred above will not permit readers to identify the persons to whose affairs the information contained in them relates; at the same time, such disclosure will satisfy Fallon's desire with regard to each of the notices to discover, so far as it is revealed thereby, the Commissioner's approach to the issues of sales tax construction and application involved therein.


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