The Strike Out Motions
18 The Commissioner in support of his strike out motion, identified as the issue for decision whether his exercise of statutory powers to recommence and progress the taxation audit represents a real risk of interference in the administration of justice, amounting to an improper use of statutory power. While he does not admit any of the allegations in the statement of claim, he submits that even if the access and disclosures there alleged could be made out, there is no arguable case for relief.
19 The point of departure which is uncontroversial is that the coercive investigative powers conferred by ss 263 and 264 must be exercised by the Commissioner for the purposes of the Act. This is a general constraint upon the exercise of any power conferred by statute. The Commissioner concedes that the exercise of his statutory powers for the purpose of collecting evidence for use in a criminal trial would not be for the purposes of the Act, would be an interference in the administration of justice and would constitute a use of his power for an improper purpose.
20 As is pointed out, however, in the Commissioner's submission, there is no allegation in the statement of claim that the taxation audits were commenced or the s 264 notices issued for an improper purpose. The Commissioner may conduct a taxation audit and may issue s 264 notices for the purposes of the Act notwithstanding the existence of pending criminal and civil proceedings on a subject matter on which the audit may touch provided there is no actual interference in the administration of justice. In Victoria v The Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25, the High Court was concerned with whether the establishment of the Royal Commission into the BLF constituted an unlawful interference with proceedings commenced in the Federal Court for cancellation of the registration of the Union under the Conciliation and Arbitration Act 1904. Gibbs CJ observed at 56:
"There is a contempt of court of the kind relevant to the present case only when then is an actual interference with the administration of justice, or "a real risk, as opposed to a remote possibility" that justice will be interfered with: cf Attorney-General v Times Newspapers Ltd [1974] AC at p 299. The essence of this kind of contempt is a "real and definite tendency to prejudice or embarrass pending proceedings": John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351, at p 372."
See also per Mason J at 95. Again in the context of a royal commission whose terms of reference covered issues the subject of pending proceedings in the County Court of Victoria, Gibbs CJ said:
"It would very seriously impede the conduct of executive inquiries into matters of public importance if no report could be made on a matter which touched and concerned a pending criminal charge. If a report could not be made in such a case, it is difficult to see any reason why the position would be different if the charge was merely contemplated and not pending. However, as I have said, the theoretical possibility that the trial of an accused person may be prejudiced cannot justify the courts in stultifying proper inquiries into matters of public interest simply because they relate in some way to the subject of a charge." - Hammond v The Commonwealth (1982) 152 CLR 188 at 199 (Mason and Murphy JJ agreeing)
Questions of improper purpose apart, it is also conceded by the Commissioner that ss 264 of the ITAA and ss 8C and 8D of the TAA do not authorise the compulsory interrogation of persons in circumstances where to do so might constitute an interference with the administration of civil or criminal justice. The Full Court of the Federal Court has held in Commissioner of Taxation v De Vonk (1995) 61 FCR 564, that s 264 of the ITAA abrogates the privilege against self incrimination. That is not to say, however, that it authorises the compulsory interrogation of persons in circumstances where to do so might constitute an interference with the administration of civil or criminal justice. In that case Hill and Lindgren JJ in their joint judgment, at 589, were of the view that circumstances might arise where questions put under the s 264 notice there in issue might constitute a real, or substantial risk of interference with the course of justice. However their Honours went on to say:
"The abstract nature of this conclusion inevitably raises difficulty in the framing of appropriate relief. If a declaration had to be formulated to give effect to the foregoing reasons, it could only be one to the general effect that the conduct of an interrogation prior to the hearing of the criminal charges and covering the same factual circumstances as those covered by the criminal charges could constitute a contempt of the court before which such charges are to be heard. A declaration in such terms being hypothetical and "advisory" and relating to a procedural question, should not be made."
21 The present position is that John Caratti has been convicted of conspiracy to defraud the Commonwealth. He has instituted an appeal. Whether he will succeed on that appeal is a matter of speculation. The possibility of a retrial is open. The s 264 notices previously issued by the Commissioner are to be withdrawn, as appears from the affidavit of Julie Coates sworn on 3 September 1999. Further notices will be issued if considered necessary. The challenge made by John Caratti and the Caratti companies to the issue and pursuit of the s 264 notices and associated requisitions relies, inter alia, on the proposition that he may be compelled to provide answers to questions relevant to issues of fact in the trial. The requirement for compliance, it is said, is likely to reverse the onus of proof, compel the giving of evidence that may be used in any retrial and confer an unfair advantage on the prosecution. This is, however, speculative. The s 264 notices are to be withdrawn. There is no suggestion that they were issued for an improper purpose. The mere fact that new s 264 notices may be issued which could touch upon matters that might be relevant in a subsequent criminal proceeding, does not of itself involve any purpose on the part of the Commissioner or any effect of his action which constitutes an interference with the trial process. In respect of the continuation of the audit process generally, the proceedings are speculative. There is no cause of action to support the claim made by the applicants for a permanent injunction restraining the Commissioner from conducting or continuing with the audit of the income tax and/or PAYE tax affairs of Mr Caratti or his former co-accused or the other applicants. Nor is there any basis for an order setting aside each of the s 264 notices or a permanent injunction restraining the Commissioner from taking any steps to issue further s 264 notices until the completion of any retrial. In so far as the application and the statement of claim seek relief of the character I have just referred to, there is no tenable cause of action.
22 Mr Caratti also claims injunctive orders against the DPP in relation to the continuation of the tax audit and the issue of s 264 notices (pars 50 and 52 of the statement of claim). Such relief is misconceived as the DPP has no relevant statutory power in relation to those matters.
23 The remaining relief claimed relates to alleged breaches by the Commissioner and the DPP of s 16 of the ITAA, the Information Privacy Principles of the Privacy Act and ss 8XA and 8XB of the TAA. The Commissioner maintains that on the face of the pleadings, no breaches are disclosed. Section 16(2) of the ITAA provides:
"Subject to this section, an officer shall not either directly or indirectly, except in the performance of any duty as an officer, and 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)."
The term "officer" is defined in subs 16(1) as follows:
""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;"
Section 16(1A) includes in the classes of persons employed by the Commonwealth, a person who "although not appointed or employed by the Commonwealth, performs services for the Commonwealth".
24 The Commissioner points out that the statement of claim does not allege that any disclosure made by him and his officers and Ms Rajan was made outside the performance of their duties as officers. Notwithstanding that Ms Rajan had ceased employment with the Australian Taxation Office on 30 September 1998, that cessation of itself would not make a subsequent disclosure a breach of s 16(2) if done in the performance of an ongoing duty as an officer. And it is not in dispute that from 7 December 1998 she was hired as a consultant to the DPP for the purposes of the trial. In that capacity she was providing services to the Commonwealth and was within the definition of an "officer" under s 16.
25 The communication of information by the Commissioner, through his officer Yeats, and subsequently Rajan, was said to constitute a breach of s 16(2). The communication if made for the purpose of assisting the DPP in the preparation for or conduct of a tax related prosecution is not outside the duty of the officer concerned. In order for the pleading of the breaches of s 16(2) in this case to be sustainable, it would have to be established that communication of information covered by the section to the DPP is, without more, not in the performance by the Commissioner's officers of any of their duties. Absent any improper purpose in the information gathering process that is not, in my opinion, a tenable proposition. Although the DPP is not specified as an authorised recipient of information under s 16(4), except via a Royal Commission, Northrop J has held the DPP may be instructed in connection with recovery proceedings - Saunders v Federal Commissioner of Taxation 88 ATC 4349. In my opinion there is no basis for excluding from the scope of the duty of an officer of the Commissioner the provision of information to the DPP relevant to possible court proceedings for offences related to defrauding of the revenue. It is a separate issue whether, in the circumstances of a particular case, the collection of such information by the Commissioner would constitute an interference with the criminal justice process and whether the use of such information by the DPP would be unfair or oppressive or furthering an improper purpose. But this application, so far as it is based upon alleged communications between the officers of the Commissioner and the DPP in breach of s 16, is not tenable on the facts pleaded. The same comment applies to Ms Rajan in her capacity as a consultant to the DPP.
26 Reference should also be made in this connection to s 3E of the TAA which authorises the Commissioner "Notwithstanding any taxation secrecy provision" to disclose information acquired by the Commissioner under the provisions of a tax law to an authorised law enforcement agency officer if the Commissioner is satisfied that the information is relevant to establishing whether a serious offence has been, or is being committed. So far as the application alleges a breach of s 3C of the TAA, it faces the same difficulties as in relation to s 16(2) which saves the disclosure of information "in the performance of a person's duties as an officer".
27 And in so far as ss 8XA and 8XB of the TAA are concerned, I accept the Commissioner's submissions that they cannot apply to the Commissioner in this case as access was not taken by the Commissioner and his officers within the terms of s 8XA, that is for the purpose of obtaining information about another person's affairs contained in records in the possession of the Commissioner. If such access was taken, it was in the course of exercising powers or performing functions under and in relation to a taxation law. I accept the Commissioner's submissions that on the face of the pleading any disclosures made by the Commissioner, his officers or Ms Rajan to the DPP of information obtained in the course of the taxation audits or otherwise under the Act, the TAA or the Fringe Benefit Tax Assessment Act 1986, which contains similar provisions, were permitted by the statutory provisions and were not made in contravention of them. In so far as the Privacy Act is concerned, Principles 10 and 11, except from the limitations on the use and disclosure of personal information, use and disclosure required or authorised by or under law. They also except the use of information reasonably necessary for enforcement of the criminal law or of a law imposing a pecuniary penalty, or for the protection of the public revenue (Principles 10(1) (c) and (d) and 11(1)(d) and (e)).
28 In addition to the issues of unlawful disclosure of information to which I have already referred, the statement of claim also asserted the misuse of information at the criminal trial (par 26A). But if information put to Mr Caratti by way of cross examination was thought to have been improperly used in that context, the appropriate time for taking that point was at the trial and in the forum of the Supreme Court. No relevant objections were taken.
29 This consideration is also relevant to the case against the DPP. As the DPP submits, questions regarding the admissibility of evidence and whether by reason of allegedly unlawful access to information by the prosecution the trial process was unfair, are matters properly to be determined by the Supreme Court of Western Australia. If the claims had merit they ought to have been raised at the original trial. In any event the appropriate forum now would be the Court of Criminal Appeal or the trial judge on any retrial. The trial judge would have a discretion to exclude evidence unlawfully or unfairly obtained. The judge would also have inherent jurisdiction to grant a permanent stay if it were established that the retrial would be irremediably unfair and constitute an abuse of process - Jago v District Court (NSW) (1989) 168 CLR 23; Williams v Spautz (1992) 174 CLR 509. As is submitted for the DPP, there are adequate safeguards available to Mr Caratti in the Supreme Court of Western Australia to protect him from the potential injustices which he asserts. In my opinion it is unnecessary to go beyond these considerations in dealing with the claim so far as it relates to the DPP. Other elements of disclosure to the DPP and alleged breaches by the DPP of various secrecy provisions of the ITAA, the TAA and the Privacy Act are covered by the conclusions already reached in relation to the Commissioner. It is to be recalled that the previous proceedings raising identical allegations against the DPP were dismissed by consent on 5 November 1998. There was no reservation of a right to lodge a fresh application on identical bases in that case. The application as a whole is unsustainable on the ground that no reasonable basis for it is disclosed in so far as it seeks to raise matters in this Court which are properly raised in the context of any criminal proceedings that might ensue in the Supreme Court of Western Australia, it is frivolous and vexatious. The application as a whole should be dismissed.
I certify that the preceding twenty nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.