Commonwealth of Australia v Kupang Resources Pty Ltd

Court of Appeal (NSW)|2022-05-03|Before: Macfarlan JA, Gleeson JA, Ball J, Mr P

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] The respondent Kupang Resources Pty Ltd (Kupang) brought proceedings against the Commonwealth seeking to recover moneys paid by Mr Phillip Grimaldi to satisfy his taxation debts. In earlier proceedings in the Federal Court, Mr Grimaldi had been held to have breached his fiduciary duties to Kupang, then known as Chameleon Mining NL. Kupang alleged that Mr Grimaldi paid the Commonwealth, to its knowledge, with funds obtained through breaches of fiduciary duty. Kupang issued a notice to produce to the Commonwealth requiring production to Kupang of "protected information" as defined in s 355-30 of Sch 1 to the Taxation Administration Act 1953 (Cth), relevantly, information that was "disclosed or obtained under or for the purposes of a taxation law … when it was disclosed or obtained" and "relates to the affairs of an entity", which includes an individual or body corporate. Pursuant to s 355-25, it is an offence for a taxation officer to disclose protected information to "another entity … or to a court or tribunal", subject to certain exceptions, including under s 355-50 where the disclosure by a taxation officer is made in performance of the taxation officer's duties. Pursuant to s 355-75, a taxation officer is not to be required to disclose "to a court or tribunal" protected information, subject to an exception where it is necessary to do so for the purpose of carrying into effect the provisions of, relevantly, a taxation law. The Commonwealth applied to set aside the notice to produce issued by Kupang. The primary judge dismissed the Commonwealth's application and held that UCPR, r 21.10 does not require production either directly or consequentially to the court and therefore the Commissioner of Taxation cannot rely on the prohibition on compulsory disclosure of protected information to a court or tribunal contained in s 355-75 of Sch 1 to the Taxation Administration Act (Cth). The primary judge also held that the prohibition on disclosure of protected information to any entity under s 355-25 did not apply because an exception in s 355-50 applied because the disclosure was in performance of the taxation officer's duties in defending proceedings brought by Kupang. The Commonwealth sought leave to appeal against the dismissal of its application to set aside the notice to produce. Leave was granted. The single issue raised on appeal was whether the Commonwealth is required to produce for inspection by a party to proceedings documents obtained by the Commonwealth for the purposes of administering taxation laws. Held (per Gleeson JA, Basten AJA; Macfarlan JA dissenting), allowing appeal: (Per Gleeson JA, Basten AJA):

Section 355-25 is a prohibition on disclosure of protected information to "another entity … or to a court or tribunal": [46].
It is artificial to treat the exception to s 355-25 in s 355-50(1) or item 1 in s 355-50 as satisfied in this case. The proposed disclosure, if made, would be in complying with an obligation imposed by some other statutory regime, not in performance of the taxation officer's duties, or for the purpose of administering any taxation law: [44].
Compulsory powers to disclose otherwise than to a court or tribunal provide no exception to the prohibition in s 355-25. Reading s 355-75 as the sole restraint on compulsory disclosure is erroneous: [46].
Although in some cases a taxation officer will have the power to disclose protected information for the purpose of administering a taxation law, such as under s 355-50, the only ability of a third party to obtain information by compulsion is that identified in, and limited to, the exception in s 355-75, which was not engaged in this case: [47]. Federal Commissioner of Taxation v Tamarama Fresh Juices Australia Pty Ltd (2017) 252 FCR 471; [2017] FCAFC 154; Javorsky v Federal Commissioner of Taxation [2005] NSWSC 167; (2005) 216 ALR 619 (Per Macfarlan JA, contra):
The requirement in the notice to produce documents to Kupang for inspection does not amount to a requirement to disclose the documents "to a court or tribunal" as described in s 355-75: [3]. The provision in its literal terms does not extend to disclosure to a person or entity which is not a court or tribunal, and therefore s 355-75 does not apply to Kupang's notice to produce: [6]. Although application of s 355-75 might produce arbitrary results, it is not for the Court to determine how best those objectives should be achieved when the legislature has chosen clear words to delineate the extent of the immunity granted: [8].

Judgment

MACFARLAN JA: I gratefully adopt the description in the judgment of Gleeson JA and Basten AJA ("the Majority Judgment") of the circumstances of this matter. Whilst I agree with their Honours that leave to appeal should be granted, I would dismiss the appeal with costs.
The sole issue on appeal is whether the immunity from production contained in s 355-75 of Sch 1 to the Taxation Administration Act 1953 (Cth) ("the Act") applies to the production of documents sought by the respondent from the appellant by way of a notice ("the Notice") issued in reliance on r 21.10 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). Rule 21.10 enables one party to civil litigation, by notice served on another party, to require that party to produce for inspection by the issuing party specific documents that are "clearly identified in the notice" and are "relevant to a fact in issue". The Notice relates to such documents.
Section 355-75 (set out in [15] below) states that a taxation officer is not to be required to disclose "to a court or tribunal" information of the type that is sought in the respondent's Notice. Like the primary judge, I do not however consider that the requirement in the Notice (which reflects the terms of r 21.10) to produce the documents to the respondent for inspection amounts to a requirement, as described in s 355-75, to disclose the documents "to a court or tribunal".
Section 355-75 falls within Division 355 of the Act which is concerned, as its heading indicates, with confidentiality of taxpayer information. The objects of the Division are stated in s 355-10 to be the following: "The objects of this Division are: (a) to protect the confidentiality of taxpayers' affairs by imposing strict obligations on *taxation officers (and others who acquire protected tax information), and so encourage taxpayers to provide correct information to the Commissioner; and (b) to facilitate efficient and effective government administration and law enforcement by allowing disclosures of protected tax information for specific, appropriate purposes."
Subdivision 355-B, in which s 355-75 appears, is concerned, as its heading also indicates, with the disclosure of protected information by taxation officers. A number of its provisions are referred to in the Majority Judgment on the present appeal. They are detailed provisions of which the language can be inferred to have been chosen by the legislature with care. Importantly, the words "disclose to a court or tribunal" in s 355-75 stand in contrast to the words "or an entity covered by subsection (2) or to a court or tribunal" used in s 355-25 and to three references in s 355-50 to disclosure "to… any entity, court or tribunal".
In these circumstances, there is not in my view any room for doubt that s 355-75, in referring to disclosure "to a court or tribunal", does not extend, according to its literal terms, to disclosure to a person or entity, such as the respondent, who or which is not a court or tribunal. That is, I do not consider that there is on that question any constructional choice available. It follows that s 355-75 is inapplicable to the respondent's Notice. I add that, for good reason, the appellant did not contend that the circumstances equated to those in Javorsky v Federal Commissioner of Taxation [2005] NSWSC 167; (2005) 216 ALR 619 where the effect of the applicable court rules was found to be that production of documents to a party would automatically enliven an obligation for production to the court.
I also add that, as the Majority Judgment recognises, the distinction between a "person" and a "court or tribunal" was recognised by the High Court in Canadian Pacific Tobacco Co Ltd v Stapleton (1952) 86 CLR 1 at 6 and on appeal at 10-11; [1952] HCA 32 (see also Commissioner of Taxation v Nestle Australia Ltd (1986) 12 FCR 257 at 262; 17 ATR 1130 and Federal Commissioner of Taxation v Tamarama Fresh Juices Australia Pty Ltd (2017) 252 FCR 471; [2017] FCAFC 154 at [23] referred to in [34]-[35] below).
In construing a statute, it is of course necessary to have regard to the purpose, as well as the context and text, of the legislative provision under consideration (SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14]; R v A2 (2019) 269 CLR 507; [2019] HCA 35 at [32]-[37], [148]). Such consideration does not however in my view produce any different outcome in the present case to that arrived at by the primary judge. Whilst application of the legislative provision in question (s 355-75) according to its express terms might, as with much if not most legislation, on occasions produce arbitrary results and in the views of some might provide inadequate protection of the confidentiality of taxpayers' affairs in accordance with the objects of Division 355 referred to in [4] above, it is not for this Court to determine how best those objects should be achieved when the legislature has chosen clear words to delineate the extent of immunity granted. As Gleeson CJ said in Carr v Western Australia (2007) 232 CLR 138 at 143; [2007] HCA 47 at [5]: "Legislation rarely pursues a single purpose at all costs. Where the problem is one of doubt about the extent to which the legislation pursues a purpose, stating the purpose is unlikely to solve the problem. For a court to construe the legislation as though it pursued the purpose to the fullest possible extent may be contrary to the manifest intention of the legislation and a purported exercise of judicial power for a legislative purpose."
Significantly, the legislature has chosen not to use in the subject provision (s 355-75) an expression used in allied provisions (ss 355-25 and 355-50) which would have given it the broader operation for which the appellant contends in these proceedings (see [5] above). That it, knowingly, and for good reason, chose to draw the line for protection of confidentiality of taxpayers' affairs at requirements for production to a court or tribunal rather than including production to a person or entity is also suggested by the Explanatory Memorandum to the Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010 at [4.17] which is in the following terms: "Under the new framework and consistent with the current law, a taxation officer or another recipient of taxpayer information cannot be compelled to provide information to a court or tribunal. This recognises the significant loss of privacy that would result in the release of a taxpayer's information in an open court." (Emphasis added.)
To borrow language used in Federal Commissioner of Taxation v Tamarama Fresh Juices at [23], the detailed provisions of Division 355, including s 355-75, can be assumed to "embod[y] the balance which the Parliament has struck, in the content of the provisions, between the competing interests identified in s 355-10". Moreover, those words do not give rise to absurdity or otherwise suggest that the legislature may have made a mistake in choosing to use them. Any possible arbitrariness in the operation of s 355-75 in my view falls well short of constituting relevant absurdity or obvious contradiction of the stated legislative policy.
For these reasons I would dismiss the appeal with costs.
GLEESON JA and BASTEN AJA: The respondent, Kupang Resources Pty Ltd (Kupang), has brought proceedings in the Equity Division seeking to recover from the Commonwealth moneys paid by Mr Phillip Grimaldi to satisfy his taxation debts. Mr Grimaldi had been held to have breached his fiduciary duties to Kupang and, Kupang alleges, paid the Commonwealth, to its knowledge, with funds obtained through the breach of fiduciary duties. The single issue raised on this appeal is whether the Commonwealth is required to produce for inspection by the respondent documents obtained by the Commonwealth for the purposes of administering taxation laws. On 7 December 2021, Ball J dismissed a motion filed by the Commonwealth seeking to set aside the notice to produce served by Kupang. [1]
Because the issue involves an interlocutory judgment, leave is required. [2] Kupang opposed a grant of leave on the basis that reliance on the statutory provision at the heart of the argument in this Court had been eschewed before the primary judge. [3] It is not necessary at this point to decide whether that is so: if there is a point of principle to be determined, it is a point of law and the failure to rely upon it below may be dealt with by an appropriate costs order if the applicant is successful. As Kupang properly conceded, the application raises an important issue of principle relating to the operation of a Commonwealth statute. There should be a grant of leave to appeal.

Identifying the issues

The Commonwealth contends that the notice to produce should have been set aside on the basis that it infringed a prohibition on compulsory disclosure of information and documentation contained in s 355-75 of Sch 1 to the Taxation Administration Act 1953 (Cth). That provision reads as follows: 355‑75 Limits on disclosure to courts and tribunals An entity who is or was a *taxation officer is not to be required to disclose to a court or tribunal *protected information that was acquired by the entity as a taxation officer except where it is necessary to do so for the purpose of carrying into effect the provisions of: (a) a *taxation law; or (b) the Foreign Acquisitions and Takeovers Act 1975, if the entity acquired the information because of a request under subsection 138(4) of that Act.
The provision is a qualified prohibition on the disclosure of "protected information". Relevantly for present purposes, the term "protected information" is defined as information that was "disclosed or obtained under or for the purposes of a law that was a *taxation law … when the information was disclosed or obtained" and relates to "the affairs of an entity": s 355-30. There is no dispute in the present case that the documents sought by Kupang contained protected information.
The term "entity" is defined in the Income Tax Assessment Act 1997 (Cth) to include all kinds of legal person. In particular, it includes an individual, a body corporate, and a body politic: s 960-100(1)(a)-(c). This term has the same meaning in Sch 1 to the Taxation Administration Act: s 3AA(2).
The term "taxation officer" is also defined and means, relevantly, the Commissioner or a person appointed or engaged under the Public Service Act 1999 (Cth) and performing duties in the Australian Taxation Office: s 355-30(2). Before Ball J, Kupang argued that the documents were in the possession of the Commonwealth, which was not a taxation officer. Ball J held that, although the Commonwealth was not a taxation officer, that did not mean that the documents were no longer held by a taxation officer, or that, if they were produced, production would not be made by such an officer: at [12]. Ball J therefore rejected the submission, a decision which was challenged in this Court by a notice of contention. However, the contention was abandoned immediately following the luncheon adjournment on the hearing of the appeal. [4] Accordingly, the issue does not presently arise.
Pursuant to s 355-25, it would be an offence for a taxation officer to disclose protected information, subject to certain exceptions. Before Ball J, the Commonwealth argued that compliance with a notice to produce would constitute an offence under that provision, because none of the exceptions applied. The judge rejected that argument, [5] and the effect of those provisions is not directly in issue on the appeal. However, there is a significant difference in the language employed to identify relevant exceptions with respect to s 355-25 and s 355-75. Accordingly, it is convenient to set out the relevant offence provision and the relevant exceptions: 355-25 Offence - disclosure of protected information by taxation officers (1) An entity commits an offence if: (a) the entity is or was a taxation officer; and (b) the entity: (i) makes a record of information; or (ii) discloses information to another entity (other than the entity to whom the information relates or an entity covered by subsection (2)) or to a court or tribunal; and (c) the information is protected information; and (d) the information was acquired by the first-mentioned entity as a taxation officer. … 355‑50 Exception - disclosure in performing duties (1) Section 355-25 does not apply if: (a) the entity is a taxation officer; and (b) the record or disclosure is made in performing the entity's duties as a taxation officer. Note 1: A defendant bears an evidential burden in relation to the matters in this subsection: see subsection 13.3(3) of the Criminal Code. Note 2: An example of a duty mentioned in paragraph (b) is the duty to make available information under sections 3C, 3E and 3H. (2) Without limiting subsection (1), records or disclosures made in performing duties as a *taxation officer include those mentioned in the following table: Records or disclosures in performing duties Item The record is made for or the disclosure is to ... and the record or disclosure ... 1 any entity, court or tribunal is for the purpose of administering any *taxation law. … 3 any entity, court or tribunal is for the purpose of criminal, civil or administrative proceedings (including merits review or judicial review) that are related to a *taxation law.

Because the proceedings brought by Kupang sought to recover from the Commonwealth moneys paid to it to settle tax assessments, Ball J concluded that defending proceedings brought by Kupang would be undertaken in performing the taxation officer's duties for the purposes of s 355-50(1)(b). Accordingly, the prohibition in s 355-25 did not apply. [6] The judge then continued: "20 The question in this case is whether the relevant tax officer is relieved of any obligation to disclose information by s 355-75. That question itself raises two questions. The first is whether the notice to produce requires disclosure to the Court of the protected information. The second is whether, if it does, the exception contained in s 335-75 (that disclosure is necessary to carry into effect the provisions of a taxation law) applies."
In this Court, it is only the first question which requires determination: Kupang conceded that the exception within s 355-75 was more limited than the exception in s 355-50 and was not engaged in the present case. Thus, Kupang's defence of its notice to produce relied entirely upon the proposition that the immunity from production found in s 355-75 did not apply. That was so because, it was submitted, the notice, in reliance on r 21.10 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), sought production to another party in the proceedings (namely Kupang) and not "to a court or tribunal" within the terms of s 355-75.

Procedural context

In greatly simplified terms, the background of these proceedings involved a case brought in the Federal Court by Kupang, then known as Chameleon Mining NL against Mr Phillip Grimaldi, Murchison Metals Ltd and others. Mr Grimaldi was said to have been a de facto or shadow director of Chameleon and to have "syphoned" shares and cash from Chameleon for his own benefit and the benefit of Murchison Metals of which he was a director. On 20 October 2010, the Federal Court (Jacobson J) found that Mr Grimaldi was in breach of fiduciary duties owed to Chameleon. [7] Mr Grimaldi lodged an appeal to the Full Court of the Federal Court which, on 21 February 2012, dismissed the appeal. [8]
The Commissioner of Taxation was, in a similar period, seeking to recover from Mr Grimaldi a large sum for non-payment of tax. In 2008, proceedings were brought in the Supreme Court by the New South Wales Crime Commission seeking forfeiture of funds held by Mr Grimaldi and others as proceeds of crime. In July 2009, a proceeds assessment order was made by consent, resulting in a payment to the New South Wales Treasurer of an amount in excess of $19 million. Pursuant to a deed of settlement between the Commissioner of Taxation and Mr Grimaldi, an amount of $4.4 million was paid to the Commissioner.
In July 2015 an administrator was appointed to Chameleon, which subsequently entered into a deed of company arrangement. On 8 April 2020, the deed administrator commenced the present proceedings alleging that amounts received by the Commissioner of Taxation were the proceeds of the sale of allotments of shares and options in Murchison Metals to Mr Grimaldi in breach of his fiduciary duty to Chameleon. The proceedings alleged that the moneys were received by the Commissioner with knowledge that the funds were obtained from breaches of Mr Grimaldi's fiduciary duty to Chameleon, now Kupang. Kupang seeks to recover those monies.
In order to succeed in the current litigation (putting to one side procedural issues, including Anshun estoppel), Kupang must establish that the funds derived from breaches of fiduciary duty by Mr Grimaldi and others, and that the Commissioner had the relevant knowledge at the time he obtained the payment.
Kupang issued three notices to produce addressed to the Commonwealth on 7 and 24 September 2020 and 17 September 2021. Negotiations between the parties led to some variations in the scope of the notices, which are of no present consequence. On 13 October 2021, the Commonwealth sought to set aside the relevant notice to produce, being that issued by Kupang on 17 September 2021. It was that motion which was dismissed by Ball J.

Nature of jurisdiction

There is no doubt that, the Commonwealth being a party, this Court is exercising federal jurisdiction, as was the primary judge. [9] However, it did not necessarily follow, as suggested in some of the submissions, that there was a Constitutional issue involved. The basis of the assumption that a matter arose under the Constitution, requiring the service of notices under s 78B of the Judiciary Act 1903 (Cth), was that, if the Commonwealth's submissions were correct, there was inconsistency between the operation of a Commonwealth taxation law and the provisions of the State UCPR. The inconsistency required the application of s 109 of the Constitution.
That assumption overlooked the provision made by the UCPR for exclusion of the obligation to disclose which was arguably engaged in the present circumstances. Thus, the obligation to produce documents for inspection in response to a notice to produce served under r 21.10 excluded a "privileged document": r 21.11(1)(b)(i). The term "privileged document" is defined in the Dictionary to the UCPR as one containing privileged information. The term "privileged information" is turn defined to mean, amongst other things, in par (h): "Information - (i) the disclosure of the contents of which, or (ii) the production of which, or (iii) the admission or use of which, in the proceedings would be contrary to any Act (other than the Evidence Act 1995) or any Commonwealth Act…, but does not include information that the court declares not to be privileged information for the purposes of those proceedings."
Thus, if the Commonwealth's submissions are correct, the UCPR themselves exclude the obligation to produce the documents, because of the immunity from production under a Commonwealth Act, namely, the Taxation Administration Act.
Assuming that approach to be correct, it must still be borne in mind that the application of the Commonwealth law depends upon the proper construction of that law; the Commonwealth law does not become part of the State law, nor is it to be interpreted as if it were a State law. That is, there is no reason to seek a meaning which would give a harmonious operation to s 355-75 and UCPR, r 21.10, as if they were laws of the one legislature.

Case before primary judge and authorities

Kupang's case turned on the only constraint on compulsory disclosure being that contained in s 355-75. That section is limited to compulsory disclosure "to a court or tribunal". This language, Kupang submitted, may properly be contrasted with that of s 355-25 which prohibits taxation officers disclosing information "to another entity … or to a court or tribunal". Consistently with that phraseology, the relevant exceptions in s 355-50 in relation to the administration of a taxation law apply to disclosure to "any entity, court or tribunal". Kupang contended that a taxation officer is not prohibited from disclosing protected information to it and s 355-75 does not apply to a compulsory disclosure to another entity, including Kupang.
The distinction in this context between "person" and "court or tribunal" was established in Canadian Pacific Tobacco Co Ltd v Stapleton. [10] Thus, an earlier emanation of s 355-25, s 16(2) of the Act now known as the Income Tax Assessment Act 1936 (Cth) (the 1936 Act), prohibited divulging or communicating information "to any person", but not to a court. Dixon CJ stated that "the section probably cannot apply to courts, which would hardly be called persons". [11] Although somewhat diffidently expressed, that reasoning was accepted by the Full Court on appeal, [12] and has not since been doubted. In Stapleton, the relevant information had been provided by an officer and the question arose as to its admissibility. The equivalent of the present s 355-75 was s 16(3). Dixon CJ held that "this provision gives only a protection to the officer against compulsion and does not make inadmissible evidence which the officer is prepared to give under instructions from his superiors or the Commissioner." [13] To similar effect on appeal, Williams J stated that the subsection, [14] "… only protects an officer from being required to do these things, it does not forbid his doing them. The difference between compellability and competency to give evidence is well known and the subsection is concerned only with compellability and not with competency".
In Commissioner of Taxation v Nestle Australia Ltd [15] the Full Court of the Federal Court determined an appeal by the Commissioner from interlocutory orders for discovery and inspection of documents in judicial review proceedings challenging a decision of the Commissioner to refuse an extension of time for payment of income tax. The Court accepted that the exception in s 16(2) with respect to "the performance of any duty as an officer" extended to steps required by the judicial process to produce documents and give evidence "where the proceedings are referrable to the imposition, assessment or collection of revenue". [16] The Court also noted that s 16(2) provided no bar to discovery and inspection, because it did not apply to the communication of information to a court. [17] Importantly, in dealing with cases dealing with s 16, the legislation is now different: subject to the relevant exceptions, s 355-25 does prohibit disclosure of information to a court or tribunal, as well as to another person.
Some of the earlier cases considering s 16(3) were addressed by the Full Court of the Federal Court in Federal Commissioner of Taxation v Tamarama Fresh Juices Australia Pty Ltd. [18] The Commissioner had disclosed information to liquidators of various companies to assist in the recovery of assets, the Commissioner being the sole creditor of the companies. Those entities against which the liquidator brought proceedings sought to obtain documents from the Commissioner by the issue of a subpoena. In circumstances where the Commissioner had voluntarily disclosed material to the liquidators, the question was whether the respondents could compel the Commissioner to disclose the information to them. Being satisfied that the exception to s 355-75 was not engaged, the Court set aside the subpoena to the Commissioner. In a passage cited by the primary judge in the present matter, [19] the Full Court noted that the permissive exceptions to the prohibition in s 355-25 were significantly broader than the limited exception with respect to compulsory disclosure under s 355-75. The Court stated that s 355-75 "involves a relatively confined subset of s 355-50". The Full Court further stated: "23. From these provisions it is apparent that the statutory scheme does not treat voluntary and compulsory disclosures in the same manner. In each case, whether the relevant person is a taxation officer or not, the scope of disclosures that a taxation officer may make is wider than those which such an officer may be required to make to a court or tribunal. It follows that there may be cases, such as the present in our view, in which a taxation officer may make a disclosure of protected information to a person (for example under s 355-50(2)) but may not be required to disclose the same information to a court or tribunal under s 355-75. As a result, application of the provisions of this scheme may well involve a "one sided" situation … (that is, disclosure of protected information by the Commissioner to the liquidators which the Commissioner cannot also be required to disclose to a court or tribunal), but that one-sidedness results from the asymmetry of the statutory provisions. It embodies the balance which the Parliament has struck, in the content of the provisions, between the competing interests identified in s 355-10."
The importance of the distinction led the Full Court to reconsider some decisions of single judges in relation to s 16(2) and (3) of the 1936 Act. The Court was critical of decisions which failed to reflect the distinction between provisions permitting voluntary disclosure and the exception in s 16(3) lifting the prohibition on compulsory disclosure. [20]
It is also convenient to note the legislation the subject of consideration by this Court in Foley v Tectran Corporation Pty Ltd, [21] namely the Industrial Research and Development Incentives Act 1976 (Cth), s 22. Section 22(2) and (5) were in similar terms to s 16(2) and (3) of the 1936 Act. However, the term "court" was defined to include "any tribunal, authority or person having power to require the production of documents or the answering of questions". [22] The issue in Foley is not of present concern; the significance of the definition of "court" lies in the recognition that authorities other than courts may have power to compel disclosure of information. We return to this point below.
Recent cases have tended to analyse the requirements of court rules for disclosure of documents in the course of litigation to determine whether specific rules require disclosure "to" the court, as opposed to disclosure to another party to the litigation. Thus, in Javorsky v Federal Commissioner of Taxation, [23] White J considered whether a predecessor to s 355-75 precluded an application for discovery sought by a liquidator seeking to recover, as a preference, tax paid to the Commissioner. Although an order for discovery required, in the first instance, disclosure to the other party, White J concluded that because the party seeking discovery, on whom a list of documents was served in response, was deemed by Pt 18, r 4(3) of the Supreme Court Rules 1970 (NSW) to have given a notice to produce requiring production at the trial, it followed that where the Commissioner was served with a notice for discovery he would become subject to an obligation to produce documents to the court. [24] Accordingly, unless the exception applied, the Commissioner could not be required to give discovery.
Ball J noted that the present case was not governed by Javorsky, because the notice to produce under r 21.10 did not require production either directly or consequentially to the court. [25] Accordingly, Ball J concluded that, because Kupang had relied upon a notice to produce under r 21.10, not requiring production to the court, the Commissioner could not rely upon the immunity granted by s 355-75.

Scope of provision read in context

The understanding of the operation of s 355-75 accepted in Javorsky and supported by Kupang results in anomalous outcomes. If the immunity only extends to disclosure to courts or tribunals, there is no protection from disclosure by compulsion to an individual (or "entity", in the language of the Act). Rule 21.10, providing for a form of pre-trial production, is but one of a class of laws providing for compulsory disclosure of information. Numerous authorities, which would not constitute courts or tribunals in the ordinary meaning of those terms, have powers to require disclosure of information. For example, the Independent Commission Against Corruption in New South Wales has power to summon a witness to appear before the Commission and to produce documents. [26] The diversity of boards, panels, licensing authorities and other regulatory agencies, both at state, territory and federal levels, is extensive. Many may, on occasion, have reason to seek taxation records.
Further, the immunity provided in terms by s 355-75 will apply to all forms of compulsory disclosure under the UCPR except r 21.10, with one possible qualification. That means it will apply if the Commissioner or the Commonwealth is not a party and, subject to a procedural exception derived from a singular provision of State law, where it is a party. The possible qualification concerns preliminary discovery under UCPR r 5.2, which is treated for some purposes as subject to Pt 21, Div 1 and thus arguably covered by the ruling in Javorsky. [27] In any event, the result is arbitrary in terms of the policy effected by Sch 1, Div 355 of the Taxation Administration Act.
The underlying purpose of Div 355 is the protection of confidentiality of taxpayers' affairs "by imposing strict obligations on *taxation officers (and others who acquire protected tax information), and so encourage taxpayers to provide correct information to the Commissioner". [28] The most obvious case in which, consistently with that purpose, disclosure might be permitted is the case where a court is in control of the disclosure process. Yet even in the case of a court or tribunal, the circumstances in which the protection does not apply are quite limited. On the other hand, if that is the extent of the protection, and it does not apply with respect to legal compulsion in any other circumstance, confidential information may be liable to disclosure to any entity in a significant range of circumstances: the value of the protection would be significantly undermined and its purpose effectively negated. Because the limited exception with respect to disclosure to a court or tribunal would not arise where disclosure could be required to be made to any person or entity, the constraints on voluntary disclosure would be by-passed.
There is something curious about s 355-75 if viewed as a self-contained grant of immunity from compulsory disclosure. What appears not to have been fully considered in the cases is the scope and operation of the language of the immunity, namely "is not to be required to disclose". The use of the passive form of the verb conceals the source of the requirement. However, the source may be important: the fact that disclosure is "to a court" suggests that the source of the obligation is either a court order or, perhaps, a rule of court over which the court has control. On that reading, the clause has nothing to say about requirements found in other legislative sources. It is clear from the limited exception to the immunity in s 355-75 that other statutory requirements to disclose information could not be intended to operate unabated and unqualified. Such an understanding would, as already noted, render the objective of the Division, namely, to protect the confidentiality of taxpayer information, nugatory. Accordingly, s 355-75 should be understood to operate only with respect to that which it expressly identifies, namely requirements to disclose documents or information to a court or tribunal.
That understanding is consistent with the general prohibition in s 355-25 prohibiting disclosure by a taxation officer to a court or tribunal. Nor does it matter that there may be an exception to the prohibition within s 355-50. The fact that the prohibition may be lifted in a particular case does not mean that compulsory disclosure is permitted.
Indeed, there is a degree of artificiality in treating s 355-50(1) or item 1 in s 355-50(2) as satisfied. The proposed disclosure is not being made in the performance of the officer's duties, nor for the purpose of administering any taxation law. It will be made, if it is made at all, in complying with an obligation which is imposed by some other statutory regime.
The primary judge held that disclosure "could be made" because the taxation officer would be performing his or her duties in defending proceedings brought by Kupang. In a general sense, that would be true; however, at the particular level of supplying information, it does not apply. Indeed, the disclosure of information is not a step which is aptly described as taken in defending proceedings. Rather, the refusal to disclose documents which contain protected information, on the basis that there is no obligation to do so, is properly identified as the carrying out of the duties or functions of a taxation officer, but that does not attract the exceptions in s 355-50. Accordingly, there was no power to disclose the protected information to Kupang on its demand.
The inference to be drawn from this structure is that s 355-25 is not, as it has sometimes been labelled, merely a prohibition on "voluntary" disclosure. Rather, it is, as the section itself states, a prohibition on disclosure to "another entity… or to a court or tribunal". It is true that there are express exceptions permitting disclosure to an entity or a court or a tribunal in circumstances identified in s 355-50, but it remains the case that the right to invoke a compulsory power which would result in disclosure to a court or tribunal is further limited. Because, as explained above, it would be inconsistent with the legislative scheme for there to be other sources of compulsion to reveal information which could override the purpose of the legislation, there is a compelling inference that compulsory powers to disclose otherwise than to a court or tribunal provide no exception to the prohibition in s 355-25. Reading s 355-75 as the sole constraint on compulsory disclosure must be erroneous.
The result is that, while in some cases a taxation officer will have power to disclose for the purpose of administering a taxation law, the only ability of a third party to obtain information by compulsion is that identified in, and limited to, the exception in s 355-75.
It follows that the constraint on compulsory disclosure is not to be found in s 355-75, or not in that provision alone. There is merit in the view that the Commissioner was at least partly correct in conducting his case in the way he did before Ball J, which did not identify s 355-75 as the primary source of the protective purpose. Further, it is not necessary, nor appropriate, to read the constraint imposed by s 355-75 as implicitly referring to disclosure to an entity. Rather, there is a different explanation (set out above) for the omission from that provision of any reference to compulsory disclosure other than to a court or tribunal.

Conclusion

It follows that the Commissioner's notice of motion should not have been dismissed. The appeal should be allowed with costs and the notice to produce set aside. The costs order below should not be disturbed, given that the Commissioner's success on appeal is a consequence of an argument not squarely raised below.

Orders

The Court proposes the following orders: 1. Grant leave to appeal. 2. Appellant to file a notice of appeal in accordance with the draft notice of appeal in the White Book within 7 days. 3. Set aside order (1) made by Ball J on 7 December 2021 and in lieu order that the notice to produce issued by the plaintiff on 17 September 2021 be set aside. 4. The respondent to pay the appellant's costs in this Court.

Endnotes

Kupang Resources Pty Ltd v Commonwealth of Australia [2021] NSWSC 1580 ("Kupang").
Supreme Court Act 1970 (NSW), s 101(2)(e).
CA transcript, 3 May 2022, p 22(15).
CA transcript, p 34(46).
Kupang at [19].
Kupang at [19].
Chameleon Mining NL v Murchison Metals Ltd [2010] FCA 1129.
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 (Finn, Stone and Perram JJ).
Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; [2001] HCA 1 at [54] (Gleeson CJ, Gaudron and Gummow JJ).
(1952) 86 CLR 1 (Dixon CJ); [1952] HCA 32 ("Stapleton").
Stapleton at 6.
Stapleton at 10-11.
Stapleton at 7.
Stapleton at 11.
(1986) 12 FCR 257 (Bowen CJ, Lockhart and Sheppard JJ) ("Nestle").
Nestle at p 262.
Ibid.
(2017) 252 FCR 471; [2017] FCAFC 154 (Middleton, Gilmour and Jagot JJ) ("Tamarama").
Tamarama at [20]; Kupang at [23].
The Court disapproved the reasoning in Re Confitt Constructions Pty Ltd (in liq) [1999] 2 Qd R 490 (Williams J), approving the reasoning of Branson J in Donnelly v Davison (2000) 105 FCR 1; [2000] FCA 1396.
[1984] 3 NSWLR 156 (Kirby P, Glass and Priestley JJA).
Foley at 159-160.
[2005] NSWSC 167; 216 ALR 619.
Javorsky at [38].
Kupang at [28]-[31].
Independent Commission Against Corruption Act 1988 (NSW) s 35(1); in relation to the absence of entitlement to refuse to answer or produce documents, see s 37.
UCPR, r 5.5 and UCPR r 17.5(4): the doubt arises because in the case of preliminary discovery the "trial" referred to in the latter rule may never occur.
Taxation Administration Act, s 355-10.

Amendments 31 May 2022 - Addition of junior counsel for the appellant DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 May 2022

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