DONOVAN v DFC of T

Judges:
Wilcox J

Court:
Federal Court

Judgment date: Judgment handed down 6 March 1992

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Wilcox J

This is an application under the Administrative Decisions (Judicial Review) Act 1977 whereby Deanne Shannon Donovan seeks review of a decision of the Deputy Commissioner of Taxation to serve a notice under s. 264 of the Income Tax Assessment Act 1936 requiring her to give evidence and to produce documents. The notice was given in the course of an investigation by taxation officers into the affairs of Sidelight Holdings Pty Ltd, a company by whom the applicant was once employed. The notice requires the applicant to attend at a particular time at the Australian Taxation Office in Perth ``and give evidence concerning the income or assessment of Sidelight Holdings Pty Ltd for the period 11 May 1989 to 18 June 1991 before either or both Mr D McLean and Mr RP Hornsby, officers

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employed in the Australian Taxation Office whom I hereby authorise in that behalf''.

The relevant notice was not the first s. 264 notice to be issued against the applicant. An earlier notice, in similar terms, had been the subject of proceedings which were compromised upon the basis of an agreement between the parties that, at any interview pursuant to a s. 264 notice, the applicant should be allowed ``to refer any question or request to produce a document that she objects to on the grounds that it may incriminate her'' to her solicitors. A procedure was agreed for written submissions in support of any objection and, if the respondent persisted with the questions, for a renewed reference to the Court.

The applicant attended for interview on 18 June 1991. She objected to 22 questions on the ground that the answer might incriminate her. Subsequently, she withdrew her objections to three questions and provided answers to them. But she has continued to maintain her objection to the remaining 19 questions.

The 19 questions all relate to the period January/February 1990 to 18 June 1991. They all concern the applicant's activities as an employee of Sidelight and, in particular, her association with the company's financial records and bank accounts. The questions include a number of questions regarding the applicant's knowledge of persons named ``J Hannah'' and ``Susan Jane Lim'', and the relationship of those people with the company and its business, and whether the applicant had ever used a name other than Deanne Donovan in connection with a bank account.

It is understandable that the applicant was concerned about the 19 questions, and particularly about the specific questions to which I have referred. On 28 May 1991 an officer of the Australian Federal Police had laid a complaint against the applicant under the Justices Act 1902 (WA) alleging five breaches of the Cash Transaction Reports Act 1988. The first count in the complaint had alleged that the applicant opened an account with Westpac Banking Corporation in the name of JD's Mobile Auto Mechanics - this was a business name used by Sidelight - ``using a name other than the name by which she is commonly known, namely the false name of Susan Jane Lim''. The second count made a similar allegation in respect of a different bank account, this time opened in the name of Sidelight. The third and fourth counts alleged dealings by the applicant on JD's Mobile Auto Mechanics' account under ``the false name of S. Lim''. The fifth count alleged a similar dealing by the applicant under ``the false name of J Hannah''.

The charges set out in the complaint are expected to be heard in the District Court later this year. The applicant has sworn that she intends to plead ``not guilty'' in respect of each of the charges, that she has hitherto declined to be interviewed by the Australian Federal Police in connection with the charges and that she wishes to maintain her right to silence. She expresses concern that any information she provides in compliance with the s. 264 notice ``will somehow be provided to the Federal Police or other Commonwealth prosecutorial officers or that the officers to whom I provide the information will be subpoenaed to give evidence against me at the criminal proceedings''.

At the commencement of the hearing before me, counsel for the respondent took a formal objection to competency, contending that the decision complained of was not vulnerable to challenge under the Administrative Decisions (Judicial Review) Act because it was a decision leading to the making of an assessment of tax pursuant to the Income Tax Assessment Act: see s. 3 and Schedule 1 of the Administrative Decisions (Judicial Review) Act. In putting this submission, counsel referred to
Industrial Equity Limited & Anor v DFC of T & Ors 90 ATC 5008; (1990) 170 CLR 649. However, they conceded that, notwithstanding that decision, I would be bound to reject their objection: see
DFC of T v Clarke and Kann 84 ATC 4273; (1984) 1 FCR 322. That concession was properly made. The objection to competency must be overruled. I therefore need not deal with the foreshadowed application of counsel for the applicant, if the objection to competence was upheld, to amend the application so as to rely alternatively upon s. 39B of the Judiciary Act 1903.

Turning to the substance of the matter, counsel for the respondent proffered an unconditional undertaking in the following form:

``The respondent and his delegates Donald Duncan McLean and Robert Paul Hornsby each undertakes that except on seven days'

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notice in writing to the applicant he will not directly or indirectly-

• (a) disclose to any authorised law enforcement agency officer within the meaning in s 2 of the Taxation Administration Act 1953 any information, evidence, book, document or other paper furnished, given or produced by the applicant pursuant to the notice dated 13 June 1991 from the respondent under s 264 of the Income Tax Assessment Act 1936.
• (b) voluntarily divulge or communicate to a court hearing the charges against the applicant set out in the complaint dated 28 May 1991 of Terry Albert Buckingham any information, evidence, book, document or other paper referred to in paragraph (a) above.''

Counsel for the applicant indicated that this undertaking was insufficient to meet his client's concerns and pressed for the relief sought in the application. He explained that his client saw four defects in the undertaking: the seven-day notice exception leaves open the possibility of a revival of the problem; the undertaking does not preclude the disclosure of information by the interrogators to other taxation officers and their disclosure of it to prosecution officers; there remained the possibility that the officers' notes would be subpoenaed at the trial; and the answers might be used to obtain other incriminatory evidence.

Before turning to counsel's submissions, it is convenient to refer to the relevant statutory provisions. Section 264 of the Income Tax Assessment Act provides:

``264(1) The Commissioner may by notice in writing require any person, whether a taxpayer or not, including any officer employed in or in connexion with any department of a Government or by any public authority-

• (a) to furnish him with such information as he may require; and
• (b) to attend and give evidence before him or before any officer authorized by him in that behalf concerning his or any other person's income or assessment, and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto.

264(2) The Commissioner may require the information or evidence to be given on oath and either verbally or in writing, and for that purpose he or the officers so authorized by him may administer an oath.

264(3) The regulations may prescribe scales of expenses to be allowed to persons required under this section to attend.''

It will be noted that s. 264 itself neither commands compliance with a notice given under the section nor makes non-compliance an offence. However, s. 8C of the Taxation Administration Act 1953 makes it an offence, amongst other things, to refuse or fail, when and as required under or pursuant to a taxation law to do so, to produce a book, paper, record or other document to the Commissioner or another person or to attend before the Commissioner or another person, in each case ``to the extent that the person is capable of doing so''. Section 8D makes it an offence for a person to fail to answer a question asked of him or her or to produce a book, paper, record or other document when attending before the Commissioner or another person pursuant to a taxation law; once again ``to the extent that the person is capable of doing so''.

The term ``taxation law'', used in both these sections, is defined by s. 2 of the Taxation Administration Act so as to include the Income Tax Assessment Act. Accordingly, ss. 8C and 8D of the Taxation Administration Act apply to an interrogation pursuant to s. 264.

Against this background, counsel for the applicant argues two principal propositions: first, s. 264 does not abrogate the common law privilege against self-incrimination, so that, notwithstanding the terms of both that section and ss. 8C and 8D of the Taxation Administration Act, his client is entitled to refuse to answer the questions to which she has objected; and, secondly, in any event, the power conferred by s. 264 would not extend to authorise action constituting a contempt of court. The two propositions are conceptually discrete, although they tend to overlap in practice.

The issue whether the operation of s. 264 is subject to the common law privilege against self-incrimination was considered by a member of this Court (Hill J) in
Stergis & Ors v FC of T & Anor 89 ATC 4442; (1989) 86 ALR 174. His Honour concluded that it was not.

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Understandably, counsel for the respondent rely on that decision and argue that I should follow it; a course which I would take as a matter of comity unless I reached the conclusion that it is plainly wrong. Counsel for the applicant argues that the decision is plainly wrong, because it is inconsistent with High Court authorities; and, anyway, that Hill J did not consider the matter of contempt of court, as distinct from self- incrimination. This latter submission would appear to be correct. There is no indication in the report of the case that contempt of court was argued. I shall return to Stergis after referring to the High Court decisions.

During recent years the High Court has dealt with a spate of cases in which the privilege against self-incrimination has been relied upon to justify non-compliance with an obligation to answer official inquiries: see
Mortimer & Anor v Brown & Anor (1969-1970) 122 CLR 493,
Sorby & Anor v Commonwealth of Australia & Ors (1983) 152 CLR 281,
Pyneboard Pty Limited v Trade Practices Commission & Anor (1982-1983) 152 CLR 328,
Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1984-1985) 156 CLR 385,
Police Service Board & Anor v Morris (1984-1985) 156 CLR 397 and
Hamilton v Oades (1988-1989) 166 CLR 486. In relation to contempt of court see also
The State of Victoria & Anor v The Australian Building Construction Employees' and Builders Labourers' Federation (``the BLF case'') (1982) 152 CLR 25.

The effect of these decisions may be sufficiently summarised, for present purposes, in the following way:

• a. The rule about self-incrimination applies not only to judicial proceedings, but also to administrative inquiries: see Sorby at 309, 311, Pyneboard at 337-343, Morris and Hamilton v Oades.
• b. The rule that a person is not obliged to answer self-incriminating questions may be excluded, in a particular case, by an express legislative stipulation to that effect - see Sorby at 289-290, 296, 305 and Hamilton v Oades - or by necessary implication: see Mortimer v Brown at 496 and Sorby at 289.
• c. In Mortimer v Brown the High Court mentioned some pointers as to legislative intention. Thus, in determining whether legislation impliedly abrogates the privilege against self-incrimination, it is relevant to consider the purpose of the legislation. If an obligation to answer questions is imposed in wide terms in relation to a subject-matter which may be expected often to involve criminality, this is an indication of a legislative intent to abrogate the privilege. The inference of intent will be strengthened if, in addition, the legislation provides for notes of the answers to be used in legal proceedings against the interrogated person or there is vested in a court a general discretion to disallow questions.
• d. In Pyneboard, Mason ACJ, Wilson and Dawson JJ at 341 (with the apparent agreement of Brennan J: see 354) restated the Mortimer v Brown factors in this way:

"In deciding whether a statute impliedly excludes the privilege much depends on the language and character of the provision and the purpose which it is designed to achieve. The privilege will be impliedly excluded if the obligation to answer, provide information or produce documents is expressed in general terms and it appears from the character and purpose of the provision that the obligation was not intended to be subject to any qualification. This is so when the object of imposing the obligation is to ensure the full investigation in the public interest of matters involving the possible commission of offences which lie peculiarly within the knowledge of persons who cannot reasonably be expected to make their knowledge available otherwise than under a statutory obligation. In such cases it will be so, notwithstanding that the answers given may be used in subsequent legal proceedings."

This formulation of principle was endorsed by the majority of the Court (Gibbs CJ, Mason and Dawson JJ) in Controlled Consultants at 394.

e. That the relevant legislation is structured so that either a witness' claim of privilege against self-incrimination has to be determined by a legally unqualified person, or there is some other difficulty in determining the claim (for example, because such a claim could only be determined by a court hearing a charge against the witness for refusal to answer questions, provide information or produce documents) is an

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indication that the legislature intended to abrogate the privilege: Pyneboard at 340, Morris at 405.

f. There has been a division of opinion on the High Court as to whether the inference of abrogation should be drawn from the circumstance that the relevant legislation forbids the use of the evidence in subsequent proceedings against the witness. In Sorby, at 310-311, Mason, Wilson and Dawson JJ thought so, arguing that such a provision could have no purpose other than to protect the witness from the consequences of abrogation of the privilege. Gibbs CJ, at 294-295, and Murphy J, at 313, took the opposite view. Gibbs CJ pointed out that such a provision would still leave open the possibility of a witness being forced to provide information which set in train an inquiry leading to the discovery of incriminating evidence.

g. A problem of possible contempt of court arises only in cases where legal proceedings have already been commenced. The essence of the type of contempt which may then arise is interference with the course of justice. To establish an inquiry with the purpose of thereby interfering with the course of justice is to commit a contempt of court. But, even where there is no such purpose, the establishment or continuation of an administrative inquiry will constitute a contempt of court if there is an actual interference with the administration of justice or ``a real risk, as opposed to a remote possibility'' of such an interference: BLF case at 53-56, 69, 94-99, 130-132 and 161-164.

h. The questioning of a person charged with a criminal offence about matters germane to that charge creates a real risk of interference with the course of justice, even if that questioning is effected in private:
Hammond v The Commonwealth of Australia & Ors (1982) 152 CLR 188. The principle was expressed in that case by Gibbs CJ (with whom Mason and Murphy JJ agreed) at 198:

"Once it is accepted that the plaintiff will be bound, on pain of punishment, to answer questions designed to establish that he is guilty of the offence with which he is charged, it seems to me inescapably to follow, in the circumstances of this case, that there is a real risk that the administration of justice will be interfered with. It is clear that the questions will be put and pressed. It is true that the examination will take place in private, and that the answers may not be used at the criminal trial. Nevertheless, the fact that the plaintiff has been examined, in detail, as to the circumstances of the alleged offence, is very likely to prejudice him in his defence."

See also Brennan J at 202-203. At 206 Deane J said:

"On the other hand, it is fundamental to the administration of criminal justice that a person who is the subject of pending criminal proceedings in a court of law should not be subjected to having his part in the matters involved in those criminal proceedings made the subject of a parallel inquisitorial inquiry by an administrative tribunal with powers to compel the giving of evidence and the production of documents which largely correspond (and, to some extent, exceed) the powers of the criminal court. Such an extracurial inquisitorial investigation of the involvement of a person who has been committed for trial in the matters which form the basis of the criminal proceedings against him constitutes, in my view, an improper interference with the due administration of justice in the proceedings against him in the criminal court and contempt of court."

i. However, the principle that the establishment or continuance of an inquiry may constitute a contempt of court is subject to legislative abrogation, either by express words - see
Lockwood v Commonwealth (1954) 90 CLR 177, referred to in BLF - or by necessary implication: Hamilton v Oades at 494, 509 and 515-516.

j. In a case where it appears that the legislature intended that questioning should ensue notwithstanding the pendency of charges, the court retains power to regulate the questioning so as to prevent the pursuit of an improper purpose or avoidable publicity. It may even be necessary to disallow a particular prejudicial question. See Hamilton v Oades at 498-499, 510, 516-517.

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Against the above background I return to the decision of Hill J in Stergis. In that case the argument about self-incrimination under s. 264 arose in the context of a complaint of denial of natural justice. But I do not think that this matters. Hill J examined the issue in broad terms. At 186 he stated the common law principle that ``no man could be compelled to answer questions the answer to which might tend to incriminate him''. He then referred to most of the High Court decisions listed above. His Honour mentioned the history of s. 264, pointing out that, until 1984, s. 224 of the Income Tax Assessment Act provided the sanction for failure to comply with a s. 264 notice. It did so by making it an offence for a person to refuse or neglect to attend and give evidence when so required or to truly and fully answer questions or to produce any required book or paper ``unless just cause or excuse for the refusal or neglect is shown by him''. Hill J commented, at ATC 4454; ALR 188-189:

``As the law then stood it was no doubt arguable whether the privilege against self- incrimination was abrogated. On the one hand, there were clearly no express words requiring such an abrogation either in sec. 264 or in sec. 224. However, in support of the view that privilege was not abrogated, the words `just cause or excuse' in sec. 224 could be pointed to. Those words when coupled with the complete generality of the wording in sec. 264 might have been said to imply that the legislature did not intend to abrogate the privilege.

Against this argument could be put the context in which sec. 264 appears in the Act. The Commissioner of Taxation is obliged by the Act to cause assessments to be made of the taxable income and the tax payable by all taxpayers and, if necessary, to take steps to recover that tax. To protect the revenue the legislature has provided for a number of offences including the making of false statements, the irregular keeping of records and the like. For the purposes of the Act the Commissioner is given full and free access to all buildings, places, books, documents and other papers under sec. 263, and is empowered to obtain information or evidence under sec. 264. Material which a taxpayer has in his possession and in respect of which the Commissioner may require access under sec. 263 may reveal to the Commissioner the participation of a taxpayer in an offence against the general law or it may reveal that the taxpayer has not kept proper records in accordance with sec. 262A(1) or that an income tax offence or offence under some other law administered by the Commissioner has been committed. Similarly, information or evidence which a taxpayer or other person may be required to furnish or give under sec. 264 may tend to incriminate the person required to furnish such information or give such evidence in the same ways. The legislative policy of giving wide power to the Commissioner and those authorised by him under sec. 263 and 264, the subject of comment in
O'Reilly & Ors v. Commrs of the State Bank of Victoria & Ors 82 ATC 4671; 83 ATC 4156; (1982-1983) 153 C.L.R. 1 and
F.C. of T. v. ANZ Banking Group Ltd. (Smorgon's case) 77 ATC 4522; 79 ATC 4039; (1977-1979) 143 C.L.R. 499;
Smorgon & Ors v. F.C. of T. & Ors 76 ATC 4364; (1976) 134 C.L.R. 475 and
Southwestern Indemnities Ltd. v. Bank of N.S.W. and F.C. of T. 73 ATC 4171; (1973) 129 C.L.R. 512, would be frustrated if the privilege were found not to be abrogated.''

After discussing some other cases, Hill J returned to the 1984 amendment, noting that ss. 8C and 8D had then been inserted into the Taxation Administration Act. He commented at ATC 4455-4456; ALR 190-191 on the significance of the difference of language between those sections and the old s. 224:

``It would seem that the omission of the defence of `just cause and excuse' in sec. 8C and 8D and the use of the words `to the extent that the person is capable of doing so' represented a deliberate attempt on the part of the legislature to make it clear that the privilege of self-incrimination was in fact abrogated whatever may have been the situation beforehand. Cf. the Explanatory Memorandum to the Taxation Laws Amendment Bill 1984 circulated by authority of the Minister Assisting the Treasurer, the Hon. Chris Hurford M.P., where in the note to sec. 8C it is said:

`Further it requires compliance to the extent that the subject person is capable of complying with the particular requirement. Thus, self-incrimination

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would not be a defence to a charge under s. 8C.'

Similar comment is made in respect of sec. 8D.''

Hill J proceeded to consider the principle stated in Pyneboard, quoted above, before concluding at ATC 4457; ALR 192:

``Having regard to the purpose for which the powers under sec. 264 are conferred, the context in which that section applies in the Act and the language now enshrined in sec. 8C and 8D of the Taxation Administration Act I am of the view that where an officer of the Australian Taxation Office acting properly and in accordance with sec. 264 of the Act requires a person to furnish information or to answer any question, that person will not be entitled to refuse to furnish that information or answer that question on the grounds that to do so might tend to incriminate him.''

Counsel for the present applicant criticises Hill J's conclusion at ATC 4455; ALR 190 that the omission of the defence of ``just cause and excuse'' in ss. 8C and 8D and the use of the words ``to the extent that the person is capable of doing so'' represented a deliberate attempt to abrogate the privilege of self-incrimination. He says that, if this had been the intention, nothing would have been easier than for the legislature to say so in clear words. Referring to the explanatory memorandum quoted by Hill J, counsel concedes that abrogation might have been the Government's intention. But he makes two replies: the relevant intent is that of the Parliament, not that of the Government; and, anyway, it does not matter what subjective intent was held, the critical question is the intent conveyed by the words used.

I think that there is force in the comment that Parliament might have chosen clearer words to convey its intention to abrogate the privilege. But this comment does not cause me to doubt the correctness of the conclusion reached by Hill J. In addition to the reasons which he expressed, and which I respectfully adopt, I note that the phrase ``to the extent that the person is capable of complying with it'' was used in s. 155(5) of the Trade Practices Act 1978, considered in Pyneboard. At 343 Mason ACJ, Wilson and Dawson JJ commented:

``It is significant that sub-s. (5) makes it an offence for a person to refuse or fail to comply with a notice under sub-s. (1) `to the extent that the person is capable of complying with it' for these words in themselves are quite inconsistent with the existence of a privilege entitling the recipient of a notice to refuse to comply, whether on the ground that compliance might involve self-incrimination or otherwise.''

The High Court gave judgment in Pyneboard in March 1983. As already indicated, ss. 8C and 8D were inserted in the Taxation Administration Act in the following year. It seems extremely likely that the drafter of the amendment treated their Honours' comment as authority for the proposition that the formula ``to the extent that the person is capable of complying with it'' evidenced an intention to exclude the privilege against self-incrimination.

During the course of the argument, I felt that the applicant might be on firmer ground in relation to her contempt of court argument. If they were to be applied to this case, the statements of principle of Gibbs CJ and Deane J in Hammond, both quoted above, would lead to the conclusion that the questioning of the applicant under s. 264 on matters directly touching the pending criminal proceedings would constitute a contempt of court, notwithstanding that the s. 264 interrogation is conducted in private.

I leave aside the questions whether the principle was expressed too widely in Hammond, as to which see the comment of Dawson J in Hamilton v Oades at 509, and whether the statement of Gibbs CJ is to be read as dependent on the intention lying behind the questions, as to which see Toohey J in the same case at 515-516. These are matters for the High Court, not for me. It is sufficient for me to say that, upon reflection, I believe that the contempt of court submission must share the fate of its predecessor. It is now clear that the contempt of court doctrine is also subject to legislative intent. The reasons which impel the conclusion that Parliament intended s. 264 to operate notwithstanding the possibility of self- incrimination apply equally to contempt of court. If it is predictable that taxation investigations will often delve into areas of criminal conduct, it is equally predictable that, on some occasions, charges will already be pending against persons sought to be

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questioned. The rationale of Hamilton v Oades applies to this case.

It is consistent with Hamilton v Oades that this Court should have the power to give any directions necessary to ensure that there will be no abuse of the authority conferred upon the Commissioner and his officers by s. 264. No such directions are presently sought, nor is there any present reason for concern. It is true that, as counsel for the applicant says, the undertaking which has been offered by the respondent - and which I treat as having continuing application notwithstanding the course and result of this case - does not preclude the disclosure of information by one taxation officer to another. But the undertaking binds the Deputy Commissioner himself. Any disclosure by an officer under the supervision of the Deputy Commissioner to a law enforcement officer not under his supervision would contravene para. (a) of the undertaking; and, of course, the non-disclosure provisions of s. 16 of the Income Tax Assessment Act apply. As counsel observes, the undertaking does not protect the applicant against the possibility that the prosecutor in the District Court will use compulsory process to compel the disclosure, at the trial, of information gained at the s. 264 interrogation. I find it difficult to believe that any prosecutor would contemplate taking that course, supposing he or she somehow learned of the information, or that any trial judge would allow this to happen. But the applicant need not depend upon that reaction; s. 3C(3) of the Taxation Administration Act clearly prohibits the use of compulsory process in such a case.

The application should be dismissed with costs.