Australia & New Zealand Banking Group Ltd v Deputy Commissioner of Taxation of the Commonwealth of Australia

Australia & New Zealand Banking Group Ltd v Deputy Commissioner of Taxation of the Commonwealth of Australia - [2001] FCA 314 - FCA 2001 case summary — Zoe

[4]

2 The applicants have sought an order of review under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and relief under s 39B of the Judiciary Act 1903 (Cth). They claim, amongst other things, a declaration that the notice is of no effect and an injunction restraining the respondent from requiring Mr Szabo to attend and give evidence pursuant to the notice. The applicants supported their claim to an interlocutory injunction restraining the Commissioner from requiring Mr Szabo to attend and give evidence pursuant to the notice to a date after the hearing and determination of their application for substantive relief, upon three main bases. 3 The first is that the notice does not notify either the relevant income or the relevant assessment about which Mr Szabo was to be asked questions. It was said that it is not enough for the notice to simply repeat the language of s 264(1)(b) ‑ "to attend and give evidence … concerning his or any other person's income or assessment". 4 The second basis is that the notice requires Mr Szabo to give evidence concerning matters that do not fall within the purpose for which the respondent issued it. It was said that whereas the respondent issued the notice for the purpose of obtaining evidence about the taxation consequences for the years of income ending 30 September 1992 and 30 September 1993 of the applicants' having entered into equitable lease assignments, the notice requires Mr Szabo to give evidence concerning, amongst other things, income or assessments during the period 1 October 1989 to 30 September 1991. It was said that the power conferred by s 264 is a power to enable the respondent to perform his functions under the Act, and that the power was thus circumscribed by reference to this purpose. See Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649 at 659‑660. The only function the respondent was purporting to exercise in relation to the applicants was dealing with the objections they had lodged to amended assessments in respect of the years ending 30 September 1992 and 30 September 1993. 5 The third basis is that investigations pursuant to s 264 are subject to claims for legal professional privilege, and the respondent is obliged to provide a mechanism to enable the applicants to assert a claim to privilege. 6 At the conclusion of argument on interlocutory relief I directed the respondent, pursuant to s 16(1)(d) of the Administrative Decisions (Judicial Review) Act, to defer the date upon which Mr Szabo is required by the notice to attend and give evidence to a date seven days after the date on which I rule on the claim to interlocutory relief. 7 Before dealing with the three grounds for relief, it is necessary to set out some facts relevant to the second and third grounds. In respect of the years ending 30 September 1992 and 1993 the respondent has issued notices of amended assessment to each of the applicants. The assessments were accompanied by determinations under s 177F(1) of the Act that the applicants have obtained tax benefits in connection with a scheme to which Part IVA applies. The determinations seek to cancel tax benefits stated to be referable to equitable lease assignments entered into by the applicants. Notices of objection have been lodged. They have not been determined. The applicants have given the respondent notices pursuant to s 14ZYA of the Taxation Administration Act 1953 (Cth). 8 In addition to the evidence summarised in par 7, Mr Neil Hurst, a Senior Manager Taxation of the first applicant, gave evidence that

[18]

11 I am not satisfied that the first basis of attack raises a serious question to be tried. A notice under s 264 is required to do no more than make it clear that the evidence to be given concerns the income or assessment of a person or persons. It is not necessary that the notice specify particular topics. Nor is it necessary that it explicitly limits the period of time as to which evidence is required, though that has been done in the present case. See Smorgon v Australia and New Zealand Banking Group Ltd (1976) 134 CLR 475 at 491‑492, Federal Commissioner of Taxation v Australia and New Zealand Banking Group Ltd (1979) 143 CLR 499 at 524, Daihatsu Australia Pty Ltd v Deputy Commissioner of Taxation (2000) ATC 4763 at 4774, Eighth Oupan Pty Ltd v Federal Commissioner of Taxation (1986) 10 FCR 559 at 565 and May v Commissioner of Taxation (1999) 92 FCR 152 at 159. 12 In relation to the second basis of the application, it was submitted that in order to determine whether a notice purporting to be issued under s 264 is valid, it is necessary to identify the function that is being exercised by the Commissioner. If the notice has nothing to do with that function, or is more extensive than the function, the power in s 264 is not being exercised to enable the respondent to perform his functions under the Act. In my view there is a serious question to be tried on this issue. On the evidence, the only presently relevant matters before the Commissioner in respect of which he is exercising functions under the Act are the notices of objection in relation to the 1992 and 1993 years. The Commissioner did not go into evidence, though he could easily have disputed Mr Hurst's evidence to that effect if it was not correct. The Commissioner's correspondence provides some support for the applicants' case in this respect. Since I will in all probability have to determine the substantive application, I will say no more than that the approach to the application of s 264 propounded by the applicants as outlined in this paragraph is supported by May v Deputy Commissioner of Taxation (1998) 98 ATC 4960 at 4975. 13 The applicants have not satisfied me that the third basis for relief gives rise to a serious question to be tried. In the course of the exercise of search and seizure powers under s 263 the Commissioner is obliged to ensure that the person whose premises are being searched has an adequate opportunity to make claims of privilege: Commissioner of Taxation v Citibank Ltd (1989) 20 FCR 403 at 417. On the assumption that a comparable obligation applies on an examination under s 264, the Commissioner has not in my view failed to afford that opportunity. What amounts to an adequate opportunity will depend on the facts of the particular case. Mr Szabo is a solicitor who acted for the applicants in relation to the matters under investigation. He will be familiar with the concept of legal professional privilege. He will recall the transactions in question. He will readily be able to determine whether a document put to him or a question asked of him invites a claim to privilege. Furthermore, I have no doubt that the applicants will ensure that Mr Szabo is accompanied by a lawyer who will advise him to assert privilege as appropriate. I do not accept that an adequate opportunity requires the respondent to provide the applicants with a list of all the documents that may be put to Mr Szabo in the course of the examination so as to enable the applicants to determine in advance which of them are privileged. That course would be capable of depriving the examination of much of its point. 14 The case was argued on the assumption that legal professional privilege applies to a notice under s 264. After I had reserved my decision the respondent drew my attention to the decision of the Full Court in Australian Competition and Consumer Commission v The Daniels Corporation International Pty Ltd [2001] FCA 244 ("Daniels"), handed down during the hearing of the present case. Daniels decided that legal professional privilege does not apply to a notice issued under s 155 of the Trade Practices Act 1974 (Cth). The reasoning in Daniels leads to the conclusion that the privilege does not apply to a notice issued under s 264. The Court held that the privilege was excluded by the provision in s 155(5)(a) that a person must not "refuse or fail to comply with a notice under this section to the extent that the person is capable of complying with it". Wilcox J said (par 56):

[36]

The respondent did not comply with the notice, and moved to have it set aside on the grounds that the applicants were attempting to achieve discovery by an indirect means which is impermissible and an abuse of the process of the Court, and that they should abide by the rules of court which prescribe the method by which parties can obtain discovery. 19 In Pasini v Vanstone [1999] FCA 1271 Finn J dealt with an application to set aside subpoenae requiring production of all documents that were before any officer in the Minister's department who was dealing with any request for the extradition of the applicant Pasini at the time the Minister made the decision to issue a notice under s 16(1) of the Extradition Act 1988 (Cth), and which related to various listed matters. His Honour set the subpoenae aside as an abuse of process. Under the heading "Discovery" he said (par 30): "(i) A party does not have an unqualified right to discovery under the Federal Court Rules: see Cameron v Rural Press Ltd (Burchett, Gummow and Hill JJ, 20 July 1990, unreported); Federal Court Rules O 10 r 2. (ii) As Practice Note 14 makes plain, general discovery will not be ordered as of course, discovery commonly being ordered only in relation to particular issues or defined categories of documents. (iii) 'The rules of court do not place on judges the responsibility of determining for the parties which of their respective documents are required to be discovered. Judges have not traditionally assumed such a role': Diddams v Commonwealth Bank of Australia[1998] FCA 497, Branson J. (iv) Where a proceeding is one for judicial review, discovery in that proceeding is not to be treated otherwise than according to the normal principles applicable in civil proceedings: Australian Securities Commission v Somerville(1994) 51 FCR 38 at 53. Nonetheless, the nature of judicial review proceedings is commonly such either that the occasion for making an order will not arise or that discovery will only be ordered in relation to a particular issue or issues. (v) Whether or when discovery will be ordered 'depends upon the nature of the case and the stage of the proceedings at which the discovery is sought': Australian Securities Commission v Somerville, above, 50. (vi) With the rules of court having prescribed the method by which parties can obtain discovery or further discovery, and having regard to the constraints imposed on discovery, it is impermissible to attempt to achieve discovery through resort to the subpoena process: Australian Competition and Consumer Commission v Shell Co of Australia Ltd(1999) 161 ALR 686; Kizon v Palmer(1997) 75 FCR 261." 20 Then, under the heading "Subpoenae" (par 31), his Honour collected a number of propositions. They included:

At a glance

Court

Decision date

Before

Source

Judgment (44 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (13)

Cited By (3)