ADMINISTRATIVE APPEALS TRIBUNAL - GENERAL ADMINISTRATIVE DIVISION

[2004] AATA 1060

Re Hart and Federal Commissioner of Taxation

K L Beddoe, Senior Member

12 October 2004 - Brisbane

K L Beddoe, Senior Member. On 6 May 2003, the solicitors for the applicant wrote to the respondent seeking access to the following documents, pursuant to the provisions of the Freedom of Information Act 1982 (Cth) (the FOI Act):

1. Memoranda, reports, correspondence, e-mails, file notes and working papers or any other documents authored by any officer or delegate of the Commissioner of the Australian Taxation Office as part of the decision-making process relating to the decision or [sic] any officer or delegate of the Commissioner or [sic] the Australian Taxation Office to write to any organisations or members set out on the Legal Resources Club list which was provided to the Commissioner (under the terms of settlement made on 11 December 2002 in the Federal Court of Australia at Brisbane) and in particular the correspondence with members of the club which is attached and marked "A".

2. Memoranda, reports, correspondence, e-mails, file notes and working papers or any other documents authored by any officer or delegate of the Commissioner or [sic] the Australian Taxation Office and given to Liama Hunter prior to the correspondence being forwarded from the Australian Taxation Office to members of the Legal Resources Club.

3. Memoranda, reports, correspondence, e-mails, file notes or any other documents received by the Commissioner evidencing any correspondence in response to the initial contact correspondence being sent by the Commissioner to the members of the Legal Resources Club (T3, folio 67).

2 The letter sent to the members of the Legal Resources Club, which was attached to the applicant's request and marked "A", is a letter dated 1 April 2003 from the Commissioner of Taxation (T3, folios 68-69). It purports to be an early warning letter advising of significant tax planning schemes/issues that the Australian Taxation Office were examining and providing an outline of some options for the recipient's consideration.

3 On 4 June 2003, the respondent wrote to the applicant advising that they considered some of the documents sought were exempt from production as set out in an attached schedule of exemptions and deletions. On 10 June 2003, pursuant to the FOI Act, the respondent released the documents or parts thereof that they did not consider were exempt from production to the applicant.

4 On 27 June 2003, the applicant sought an internal review of the respondent's decision of 4 June 2004. On 22 July 2003, the respondent reconsidered its earlier decision, and decided to amend the earlier decision and release further documents or parts thereof on the basis that some of the exemptions that had previously been claimed did not apply.

5 On 22 September 2003, the applicant sought a review of the respondent's decision by this tribunal. The application for review was heard by the tribunal on 15 March 2004. At the hearing, the applicant was represented by Mr Davis of counsel. Mr Belcher appeared for the respondent.

6 The tribunal had before it the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth), the written submissions prepared by the parties prior to the hearing, and the following documentary exhibits:

• affidavit of Damien Gregory Bourke, 11 March 2004 (exhibit A);

• affidavit of Jennifer Elizabeth Saultry, 8 March 2004 (exhibit 1);

• section 64 Documents (exhibit 2); and

• 3 further documents released under the Act (exhibit 3).

7 On 15 March 2004, the tribunal made an order, pursuant to s 35(2) of the Administrative Appeals Tribunal Act 1975 (Cth), prohibiting the publication of the documents contained in exhibit 2 to any person other than the respondent and the tribunal's staff.

Background

8 The background leading up to the applicant's request for access to documents under the Act is set out in some detail in the affidavit of Ms Saultry dated 8 March 2004 (exhibit 1). Briefly, the background to this application can be stated as follows:

• The applicant is a principal of Cleary and Hoare Solicitors.

• On 7 August 2001, the respondent gained access to the premises of Cleary and Hoare pursuant to a notice under s 263 of the Income Tax Assessment Act 1936 (Cth) (the ITAA 1936). As a result of information received and obtained during the visit, the respondent formed the view that Cleary and Hoare and/or associates of the firm were involved in the promotion of aggressive tax planning schemes. The respondent was concerned these arrangements may have been promoted or implemented through the membership of Cleary and Hoare's Legal Resource Club.

• The respondent sought access to the membership list of this club and eventually, on 16 November 2001, issued a notice to the applicant under s 264 of the ITAA 1936 requiring him to produce in writing a list of the names and addresses of all members of the Legal Resource Club.

• On 20 December 2001, the applicant commenced proceedings in the Federal Court seeking to quash or set aside the decision to issue the s 264 notice. Those proceedings were eventually settled, with the court issuing consent orders on 11 December 2002, requiring the applicant to deliver to the respondent a list of the members of the Legal Resource Club. The order was subject to the respondent undertaking to give the applicant at least 14 days notice of any intention to contact any person on the list in relation to any services from or communications from Cleary and Hoare and of the general nature of any such inquiry. (Further litigation was commenced in April 2003 seeking clarification of the proper construction of the respondent's undertaking - in relation to this: see Hart v DCT [2003] FCA 445.)

Legislative framework

9 A person has an enforceable right of access to documents held by a minister or agency (such as the respondent) pursuant to s 11(1) of the FOI Act. The right of access is not affected by the applicant's motive for seeking access (s 11(2)).

10 The respondent may invoke certain exemptions provided for in Pt IV of the FOI Act to deny access to a document, or to provide a document with exempt material deleted.

11 In this case, the respondent has claimed a number of exemptions in relation to the documents the subject of the applicant's request. In the affidavit of Ms Saultry (exhibit 1) at para 36, further exemptions are claimed in relation to the documents which were not claimed as part of the respondent's earlier decisions of 4 June and 22 July 2003. The tribunal notes that the further exemptions claimed in Ms Saultry's affidavit relate to material for which alternative exemptions have already been claimed.

12 The schedule prepared and annexed to Ms Saulty's affidavit (JES1) sets out all exemptions claimed in relation to the documents which fall within the scope of the applicant's request.

Exemption - Irrelevant material

13 Pursuant to s 22, the respondent is not required to disclose material that is irrelevant. Section 22(1) relevantly provides:

Where
(a) an agency or Minister decides: …
…

(ii) that to grant a request for access to a document would disclose information that would reasonably be regarded as irrelevant to that request; and

(b) it is possible for the agency of Minister to make a copy of the document with such deletions that the copy: …
…

(ii) would not disclose such information; and

(c) it is reasonably practicable for the agency or Minister, having regard to the nature and extent of the work involved in deciding on and making those deletions and the resources available for that work, to make such a copy;

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

14 In determining whether an exemption has properly been claimed under s 22, it is necessary to consider whether the document contains information that "would reasonably be regarded as irrelevant to that request". The tribunal discussed the meaning of that expression in Re Russell Island Development Association Inc and Department of Primary Industries and Energy (1994) 33 ALD 683. After referring to the decision in Attorney-General's Department v Cockcroft (1986) 10 FCR 180; 12 ALD 468, Forgie DP said (at ALD 691) the expression "would reasonably be regarded" requires the decision-maker to:

… consider whether disclosure of certain information might reasonably, as opposed to irrationally or absurdly, be considered or looked on as irrelevant to the request for access made under the Act.

Exemption - Deliberative process

15 The respondent also claims exemptions under s 36(1), which provides:

Subject to this section, a document is an exempt document if it is a document the disclosure of which under this Act:
(a) would disclose matter in the nature of, or relating to, opinion, advice or recommendation obtained, prepared or 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 or Minister or of the Government of the Commonwealth; and

(b) would be contrary to the public interest. …

16 The tribunal has interpreted the expression "deliberative processes" as the decision-maker's "thinking processes": see Re Waterford and Department of the Treasury (No 2) (1984) 5 ALD 588 at 606; see also Re Zacek and Australian Postal Corporation [2002] AATA 473 at [55]-[61]. Deliberative processes extend beyond the business of making policy to the design and operation of administrative systems (Waterford), but it does not extend to every document that is prepared by the minister or agency in the course of discharging its functions: see Re Hart and DCT (2002) 51 ATR 1086 at 1092 [25]. Documents that are merely descriptive or which deal with procedural issues might fall short of forming part of the deliberative process (see Waterford (at ALD 606) and s 36(5)) which provides that the section does not protect documents containing purely factual material.

17 The full Federal Court, in Harris v Australian Broadcasting Corporation (1984) 1 FCR 150; 51 ALR 581, found that, when considering whether a document was prepared for or in the course of a department's deliberative process, it not simply a matter of examining the form of words used in the document - the tribunal must look to the essence of the statements to determine their character for the purposes of the section.

18 Opinions, advice and recommendations are protected because they agitate the thinking of the minister or agency concerned. They are "a part of the agency give-and-take - of the deliberative process - by which the decision itself is made …": Vaugh v Rosen (1975) 523 F (2d) 1136 at 1144, cited in Harris (at FCR 154; ALR 585). And see Hart (at ATR 1093 [28]).

Exemption - Frustrates enforcement of law/discloses investigative methods

19 Section 37(1)(a) creates an exemption for documents where disclosure of those documents, or parts thereof, would frustrate the enforcement of the law. The subsection provides:

(1) A document is an exempt document if its disclosure under this Act would, or could reasonably be expected to:
(a) prejudice the conduct of an investigation of a breach, or possible breach, of the law, or a failure, or possible failure, to comply with a law relating to taxation or prejudice the enforcement or proper administration of the law in a particular instance. …

20 In order to succeed in relation to a claim for exemption under s 37(1), the respondent must establish a reasonable expectation that disclosure will prejudice the conduct of the investigation. As Woodward J explained in the full Federal Court decision of News Corporation Ltd v National Companies and Securities Commission (1984) 5 FCR 88 at 101-102:

… the words "would, or could reasonably be expected to … prejudice" mean more than "would or might prejudice". A reasonable expectation of an event requires more than a possibility, risk or chance of the event occurring. … In my view it is reasonable to expect an event to occur if there is about an even chance of it happening. …

21 Fox J agreed (at FCR 95), stating "that it is not sufficient that there be a mere risk of prejudice to the conduct of an investigation": see also Bartlett v Secretary, Department of Social Security (1997) 49 ALD 380 at 381 per Heerey J.

Exemption - Secrecy provisions

22 Section 38 provides exemption for documents subject to secrecy provisions in an Act. The section provides:

(1) Subject to subsection (1A), a document is an exempt document if:
(a) disclosure of the document, or information contained in the document, is prohibited under a provision of an enactment; and

(b) either:
(i) that provision is specified in Schedule 3; or

(ii) this section is expressly applied to the document, or information, by that provision, or by another provision of that or any other enactment.

(1A) A person's right of access to a document under section 11 or 22 is not affected merely because the document is an exempt document under subsection (1) of this section if disclosure of the document, or information contained in the document, to that person is not prohibited by the enactment concerned or any other enactment.

(2) Where a person requests access to a document, this section does not apply in relation to the document so far as it contains personal information about the person.

23 In this case, the respondent claims that many of the documents sought by the applicant are exempt from production by virtue of s 16(2) of the ITAA 1936, a provision which is listed in Sch 3 of the Act. Section 16(2) provides:

Subject to this section, an officer shall not either directly or indirectly, either while he is, or after he ceases to be an officer, make a record of, or divulge or communicate to any person any information respecting the affairs of another person acquired by the officer as mentioned in the definition of "officer" in subsection (1).

Subsection (2A) goes on to say:

Subsection (2) does not apply to the extent that the person makes the record of the information, or divulges or communicates the information, in the performance of the person's duties as an officer.

24 Section 16(1) provides:

Officer means a person who is or has been appointed or employed by the Commonwealth or by a State, and who by reason of that appointment or employment, or in the course of that employment, may acquire or has acquired information respecting the affairs of any other person, disclosed or obtained under the provisions of this Act or of any previous law of the Commonwealth relating to income tax.

25 The expression "affairs of another person" in s 16(2), therefore, would not be limited to information about a person's tax affairs, it would also include any information about that person that is held by the respondent: see Re Mann and FCT (1987) 18 ATR 3671 at 3673; 87 ATC 2010 at 2012; see also Re Corrs Chambers Westgarth and FCT (1998) 22 AAR 126 at 132 [13]-[14] and Hart (at ATR 1098 [65]).

26 Section 16(2) has the purpose of protecting a person's privacy in relation to their taxation affairs: see Re Mann and FCT (1987) 18 ATR 3671 at 3675; 87 ATC 2010 at 2014. A question therefore arises as to whether information in documents can be released if it has been "sanitised" so that the information becomes anonymous. In Corrs Chambers Westgarth, Senior Member Dwyer found that the operation of s 16 could not be avoided just by removing the identity of that taxpayer. Even if the identifying information was removed, the information still related to a taxpayer - albeit an unnamed one (at [22]): see also Re Collie and Deputy Commissioner of Taxation (1997) 35 ATR 1204 at 1211-1212; 97 ATC 2058 at 2064-2065; 45 ALD 556 at 564 and Hart (at ATR 1099 [75]).

27 The tribunal agrees with the approach in Corrs, Collie and Hart. Section 38 of the FOI Act has the effect of denying access to information rather than merely suppressing the identity of the person with respect to whom the information relates.

Exemption - Legal professional privilege

28 Section 42(1) provides an exemption where a document would be privileged from production in legal proceedings on the ground of legal professional privilege.

29 The rule as to the existence of legal professional privilege was concisely explained by the High Court in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543. The majority said (at CLR 552 at [9] and [10]):

It is now settled that legal professional privilege is a rule of substantive law [Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 490 per Deane J] which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. …

Being a rule of substantive law and not merely a rule of evidence, legal professional privilege is not confined to the processes of discovery and inspection. … Rather, and in the absence of provision to the contrary, legal professional privilege may be availed of to resist the giving of information or the production of documents in accordance with investigatory procedures. …

30 In order to succeed in a claim for legal professional privilege it must be shown that there was, at the relevant time, a relationship of client and legal adviser, and that the document in question was made for the dominant purpose of giving or obtaining legal advice: see also, Re Wallace and Director of Public Prosecutions [2003] AATA 119 at [77]-[78].

Consideration

31 Having regard to the principles set out above, the tribunal has considered each document in turn to determine whether the exemptions claimed by the respondent are properly available under the FOI Act.

32 The tribunal is satisfied that the exemptions claimed by the respondent, in relation to the various documents contained in exhibit 2, are appropriate with the exception of the claims in respect of the following documents to the extent noted in the explanation column:

Document No	Explanation
1 (page 1)	This document contains e-mail correspondence between 2 ATO officers. In the e-mail from Rod Edmunds, the first line and the information contained in the 3 dot points should be released, as this information is merely the stating of factual information and does not agitate the deliberative processes of the ATO. Therefore, s 36(1) does not apply. Further, the release of this information will not prejudice nor is it likely to prejudice an ATO investigation and s 37(1)(a) does not apply. Further, the second sentence in the second paragraph of Michael O'Neill's e-mail should be released, in that the information does not relate to the affairs of a particular person such that the secrecy provisions would apply to it. A member of the public would be unable to identify any individual taxpayer through the release of this information.
2 (pages 2-3)	Page 2 is an internal e-mail which refers to classes of members of the Legal Resource Club. The class information is subject to a claim for exemption under s 38. The release of the classes does not breach the secrecy provisions - the information not identifying the affairs of any individual tax payers. Section 38 does not apply and the information the subject of the s 38 claim should be released.
3 (pages 4-6)	This document is an internal e-mail annexing a draft letter. The e-mail (page 4) refers to classes of members of the Legal Resource Club. As indicated above, the exemption in s 38 does not apply to this particular information, and the information should be released. Similarly, the reference in para 3 of the e-mail to a class of people is not properly the subject of a claim under s 38 and should be released.
4 (pages 7-9)	This document is another internal e-mail annexing a draft letter. In relation to the first e-mail on the page (from Rod Edmunds to Lesley Ziukelis), the claimed exemption under s 38 is not appropriate. The information contained in the e-mail does not relate to a particular taxpayer or a person that can be identified by that information. The information is, however, properly the subject of an exemption under ss 36(1) and 37(1)(a). The second e-mail on the page (from Rod Edmunds to Michael O'Neill) is identical to document 3 at page 4. For the same reasons as given in relation to document 3, the claimed exemption under s 38 to the class of members of the Legal Resource Club is not available and the information should be released. In relation to third paragraph in that e-mail, the first 4 words in that paragraph have been released previously (see document 3) and therefore the s 37(1)(a) exemption is not properly claimed. In relation to the second claimed exemption in that paragraph, I am not satisfied that the release of the information the subject to a claim under s 37(1)(a) would in any way prejudice an investigation by the respondent, and this information should be released.
5 (pages 10-20)	Attachment 5 (pages 17-19): This is a duplicate of document 4 (page 7), but an additional exemption has been claimed under s 38 in the first sentence of the second paragraph of the e-mail of Rod Edmunds to Lesley Ziukelis. This information has previously been released (see document 4 (page 7)) and, in any event, the tribunal is satisfied that information is not properly the subject of a claim under s 38 as the information does not identify a taxpayer. Similarly, for the reasons given in relation to document 4 (page 7), in relation to the claimed exemption under s 38 to the remainder of that e-mail, I am satisfied that s 38 does not apply, but that the other exemptions claimed in relation to that material do apply. In relation to the e-mail from Rod Edmunds to Michael O'Neill, this is a duplicate of document 3 (page 4) and for the reasons given in relation to that document, the claimed exemption under s 38 does not apply to the classes of persons referred to in that e-mail. That information should be released.
7 (pages 23-29g)	Attachment 2 (page 29): Exemption under s 38 does not apply as the information does not relate to information about a taxpayer obtained during the performance of a tax officer's duties. That information should be released.
16 (pages 65-69)	On page 66, an exemption is claimed under s 38 in relation to part of the third line of the second paragraph on the page. This claim is not properly made as the release of the information would not breach s 38 as it does not contain information about a taxpayer. In any event, the material is exempt from release pursuant to the other claimed exemptions.
20 (pages 78-80)	Page 78 contains e-mail correspondence between ATO officers regarding the issue of the alert letter. Exemptions are claimed in relation to certain sentences in those e-mails pursuant to ss 36(1) and 37(1)(a) of the FOI Act. I am satisfied that the release of the information in those e-mails would not prejudice any tax office investigation, nor does the information agitate the thinking of the ATO officers - it is merely the stating of expected workloads. As such the claimed exemptions do not apply and page 78 should be released in full.

Decision

33 The tribunal will set aside the decision under review and remit the matter to the respondent for re-consideration with a direction to give effect to the tribunal's reasons for decision.

34 The operation of the tribunal's decision will be stayed for 28 days, liberty to apply will be reserved to both parties and I will certify that these proceedings have terminated in favour of the applicant.