Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation

(1963) 113 CLR 475
37 ALJR 182

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(Judgment by: McTiernan J, Taylor J)

Between: Mobil Oil Australia Pty Ltd
And: Federal Commissioner of Taxation

Court:

Judges: Dixon CJ
McTiernan J
Kitto J
Taylor J
Windeyer J

Subject References:
Income Tax (Cth)

Hearing date:
Judgment date: 15 October 1963

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Judgment by:
McTiernan J
Taylor J

By s. 192 of the Income Tax and Social Services Contribution Assessment Act 1936-1958 a Board of Review is given power to review such decisions of the Commissioner of Taxation as are referred to it under the Act. For the purpose of reviewing such decisions the Board has "all the powers and functions of the Commissioner in making assessments, determinations and decisions under this Act, and such assessments, determinations and decisions of the Board, and its decisions upon review, shall for all purposes (except for the purpose of objections thereto and review thereof and appeals therefrom) be deemed to be assessments, determinations or decisions of the Commissioner" (s. 193). The Act clearly enough contemplates that there will be "sittings" of the Board, s. 195 requires that it shall give a "decision" in writing and that if requested by either party to a review it shall state in writing its findings of fact and its reasons in law for the decision. Sittings are to be held in such place or places and at such time or times as are fixed by the Chairman of the Board (reg. 37). Reviews are to be conducted "as the Chairman from time to time directs" and they are to take place in camera unless the taxpayer otherwise requires. Either party may nominate a person to represent him at the review (reg. 38) and under s. 194 of the Act two members of the Board constitute a quorum at any sitting. Following objections by the objector to assessments of income tax in respect of four successive income years the last of which ended on 30th June 1957 the assessments were referred to a Board of Review and the questions and further questions which we are asked to consider have been propounded in a case which purports to have been stated pursuant to s. 196 of the Act. (at p491)

Generally, the questions which have been asked are concerned with the manner in which the Board should, in the particular circumstances of the contest before it, conduct its proceedings particularly in relation to the reception of various items of evidence. We have italicized the word evidence because the Board is not a court and it is not bound by the rules which govern the admissibility of evidence before a judicial tribunal (see Sutton v. Commissioner of Taxation (1959) 100 CLR 518 , at pp 522, 523 . Indeed, the general declaration, already mentioned, that for the purposes of review the Board is to have all the powers and functions of the Commissioner in making assessments, determinations and decisions under the Act, clearly reveals it as an administrative tribunal with the like, though superior, authority to the Commissioner in the case of assessments which have been referred to it for review. In making his assessment the Commissioner is required to act upon the taxpayer's returns and upon "any other information in his possession" (s. 166) and, particularly in view of the fact that the Board's decisions upon review are deemed to be assessments, determinations or decisions of the Commissioner, it would be idle to suppose that its functions were intended to be exercised only upon the consideration of evidence in the strictly judicial sense. It is, we think, clear that within the limits of its statutory authority it is for the Board and for the Board alone to regulate the conduct of proceedings before it. Regulation 39 of the Regulations made under the Act makes some provision with respect to the form in which "evidence" may be adduced but no provision of the regulations operates to destroy the general authority of the Board to regulate the conduct of proceedings before it. (at p491)

With these observations in mind it is at once possible to say that, in the main, the questions raised by the case stated are not questions of law within the meaning of s. 196 (2). In general, they are questions concerned with the "duty" of the Board to receive evidence of a particular character in a particular manner or with the "propriety" of various proposed courses of procedure but unless what is said to be the relevant "duty" is defined by law or "propriety", in some way or other, be referable to some legal criterion the questions asked cannot be questions of law. (at p492)

A number of the further questions which were raised after the commencement of the argument are infected with the same vice but, additionally, they include questions which, however much they may have been debated before the Board, cannot be said to be questions of law "arising before the Board". We refer in particular to question 4 of the further questions which in its introductory matter postulates the receipt of evidence of a certain character in the absence of the taxpayer's representatives and then asks whether if that course be followed the decision of the Board will be a valid decision, or whether it will be liable to be set aside or quashed by an order of this Court or whether it will be subject to prohibition in this Court or subject to appeal to this Court. But when s. 196 (2) speaks of "any question of law arising before the Board" it is speaking of questions of law which arise for decision by the Board and it is obvious that questions such as those to which reference has been made did not arise for decision by the Board. Indeed, we are disposed to think that the category of questions which may be raised by case stated under the section in question may be limited to questions of law affecting the taxpayer's liability and that it does not extend to questions concerning the Board's procedural authority. But, however this may be, questions of the character referred to in this paragraph are not "questions of law arising before the Board" and, that being so, it is not open to this Court to consider them. (at p492)

However, some questions of law do seem to have arisen before the Board but they are overlaid by the form and multiplicity of the questions which have been formulated. Chief among these is the operation, in the circumstances, of certain of the provisions of s. 16 of the Act. It is, we are told, the desire of the Commissioner to support his case before the Board by evidence, both oral and documentary, concerning certain of the affairs of companies, other than the taxpayer, which are engaged in the marketing of petroleum products. This evidence, it is proposed, shall be given or produced by an officer of the Department and it consists of information within the meaning of s. 16 (1) which that officer has acquired by reason of or in the course of his employment and which has been disclosed to him under the provisions of the Act. In other words it consists of information gleaned from the returns of those companies and in the course of associated dealings between officers of the Department and officers of those companies. Apparently the Commissioner takes the view that, although his officer is at liberty pursuant to s. 16 (4) (a) and (b) of the Act to communicate this information to the Board, it would be a breach of s. 16 (2) if the communication were made to the Board in the presence of the taxpayer's representatives. It is in this connexion that it is asked whether it is the duty of the Board, or whether it would be proper for it, to receive such evidence in the absence of the taxpayer's representatives or whether the Board would be under a duty to exclude the taxpayer's representatives whilst such a communication was made. In our view, the only question of law which arises in these circumstances is concerned with the character and quality of the exception created by the terms of s. 16 (4) (b). (at p493)

That sub-section excepts from the operation of the main provisions of the section, inter alia, the communication of any information to "any board exercising any function under any Act administered by the Commissioner of Taxation". It may be thought at first sight that the only relevant effect of this provision is to authorize the communication to a Board of Review of information respecting the affairs of the taxpayer whose assessment is under review. But to some extent, at least, the Commissioner is under a duty, within the meaning of s. 16 (2), to communicate to a Board information which he has received from an objecting taxpayer for he must upon request refer the decision upon the objection "or forward the objection" to the Board. Nevertheless, it may be difficult to see how this duty could be taken to comprehend the communication by officers of the department of all the information which they have obtained from the taxpayer in the course of investigating his affairs. Accordingly, as we have said, it may be thought that the excluding provision was merely intended to facilitate reviews by the Board by enabling the Commissioner and his officers to place before the Board all relevant information obtained from the taxpayer and concerning his affairs. But a consideration of the history of the provision is sufficient to dispose of this notion. The exception in favour of communications to the Board of Review was first introduced by the amending Act No. 46 of 1928 and the terms of the proviso which were then added to s. 12 (4) of the Income Tax Assessment Act 1922-1928 expressly made it clear that the Commissioner was free to communicate to a Board of Review information respecting the affairs of persons other than the objecting taxpayer. The present s. 16, though in some ways framed in a more comprehensive form, makes no such express reference, but consideration of the substance of the many excepting provisions makes it certain that the same result was intended. (at p494)

This view of s. 16 is in accordance with the Commissioner's contention but in relation to information of the character specified in s. 16 (1) obtained by him or his officers from other taxpayers it is further contended that the only form of excepted communication to the Board of Review is one which is made privately. Accordingly, he submits that it is permissible for him to make such a communication only in the absence of the objecting taxpayer and its representatives. But the character of the communication which is the subject of the exception must be the same whether the information communicated relates to the affairs of an objecting taxpayer or any other taxpayer and it would reduce the contemplated "sittings" of the Board to an absurdity if the excepting provision were to be taken to extend only to private communications of such information. When one comes to consider the character and functions of a Board of Review the fact that, although it is an administrative body, it is designed to proceed and, in fact, proceeds in a quasi-judicial manner it is, we think, obvious that the exclusion operates to protect all communications made to it in the normal course of its proceedings. That being so, there is nothing in s. 16 to require the Board to exclude the taxpayer's representatives if and when evidence of the character in question is submitted to it. On the other hand, there is no legal duty on the Board to receive such information. At the most, the communication of such information would constitute hearsay evidence and it would be open to the Board to take the view upon consideration that the communication of such information in the presence of the taxpayer's representatives would unduly prejudice the other companies concerned or, on the other hand, that the exclusion of the taxpayer's representatives whilst such hearsay evidence was being given would unduly prejudice the taxpayer in the proceedings before it. But whether it should receive the evidence in the presence of the objecting taxpayer's representatives, or, whether they should be excluded, or, whether the evidence should be received at all, are matters for the decision of the Board in the course of its proceedings and do not involve questions of law which it would be proper for us to consider. (at p494)

A further question has arisen in relation to s. 16 with respect to the situation which will arise if an officer of one of the companies in question be called to give direct evidence of the company's affairs and concerning matters upon which information has previously been disclosed to or obtained by the Commissioner or an officer of the Commissioner under the provisions of the Act and by reason of, or in the course of, the employment of either of them. The Commissioner seems to have taken the view that, in seeking to elicit information of this character from such a witness, he would, or his representative would, in some way, become involved in a breach of s. 16 (2). As we understand the suggestion it is that having become possessed of the material information pursuant to the provisions of the Act, the Commissioner or his representative, in seeking to elicit the same information directly from the company which had disclosed it to him under the provisions of the Act, would be indirectly disclosing the information contrary to the statutory provision. To our minds, there is no substance in the suggestion and such a course of procedure would not involve a breach of the sub-section in question. Nevertheless other objections to this course being pursued were based upon the allegation that the information in question is highly confidential, or that it relates to the secret manufacturing processes of one or other of the companies concerned. On one or other of these grounds the companies have objected to disclosing the information in the presence of the taxpayer who is one of their competitors in business. These objections do not raise any question of law though they may well be matters for the Chairman of the Board to take into consideration in determining whether he should require evidence to be given openly or in such a manner as to prevent injury to the companies concerned. (at p495)

The final question as we see it is concerned with reg. 35 of the Public Service Regulations. This regulation provides that "Except in the course of official duty, no information concerning public business or any matter of which an officer has knowledge officially shall be given, directly or indirectly, nor shall the contents of official papers be disclosed, by an officer without the express authority of the Chief Officer". This regulation was relied upon by way of objection to the production of a document by a senior scientific officer of the Defence Standard Laboratories. The document contained confidential information which had been supplied to the Defence Standard Laboratories by one of the companies concerned relating to the details of the composition of that company's products, the origin of its base stocks and the additives and the quantity of additives incorporated therein. In our view, the regulation in question does not operate to prevent the Chairman from requiring the production of the document although the confidential nature of the document may, again, well be a matter for consideration when the Chairman determines whether he should require the witness to produce the document. (at p496)

Having made these observations it is we think unnecessary to say more than that we think the case stated should be referred back to the Board of Review without specific answers to the questions appearing therein. (at p496)