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[2002] FCA 215
procedural. The Court dismissed the respondents' motions dated 29 November 2001. The respondents were given leave to amend their Defences to allege non-fulfilment of a condition precedent (lack of...
Kenny J held that the Commissioner did not have to plead that the officers who sought access to documents were authorised or delegated to do so. Under the Federal Court Rules a plaintiff need not plead fulfilment of a condition precedent; if respondents want to deny authorisation they must plead that denial. Delegation/authorisation is, at most, a condition precedent to an access claim under s 263(1) and, if put in issue by amendment, the Commissioner must prove it. The respondents were granted leave to amend to raise lack of authorisation, but immediate discovery of delegation instruments was refused because the pleadings did not specifically raise the issue. The respondents' motions to dismiss or strike out were dismissed.
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The Commissioner of Taxation commenced proceedings seeking a declaration that legal professional privilege did not attach to certain documents and, pursuant to s 263(1) of the Income Tax Assessment Act 1936 (the Act), that he was entitled to inspect those documents. The facts pleaded were that officers of the Commissioner attended the offices of the second respondent (PricewaterhouseCoopers) on 26 July 2001 to inspect documents and that access to a number of documents (71) was refused on the ground of legal professional privilege (see paras 4–11).
3 cited instruments linked from this judgment.
Pratt Holdings and PricewaterhouseCoopers responded by moving, on interlocutory applications dated 29 November 2001, for multiple orders: dismissal of the Commissioner’s proceeding (or dismissal of paragraph 2 of the application), discovery by the Commissioner of instruments of delegation under s 8 of the Taxation Administration Act 1953 and authorisations under s 263(1), and costs (para 1). Their central substantive contention was that the Commissioner’s Statement of Claim was defective because it did not expressly allege that the officers who sought access were authorised by the Commissioner or a delegate to exercise powers under s 263(1) (paras 7–9).
At the interlocutory hearing the Court had to decide procedural questions about pleading and discovery. The key issues were whether the existence of authorisations or delegations was a matter the Commissioner had to plead (and if so whether failure to plead it fatally undermined the claim), and whether discovery of any authorisations should be ordered at that stage.
Kenny J refused the respondents’ motions to dismiss or strike out, held that under Order 11 rule 6 of the Federal Court Rules (O 11 r 6) the Commissioner was not required to plead the fulfilment of a condition precedent (paras 27–29, 35), granted the respondents leave to amend their Defences to put the matter of authority in issue (para 36), and declined to order discovery of the delegation/authorisation instruments at that time on the ground that the pleadings did not specifically raise authority (paras 15–17, 37). The parties were left able to apply for practical orders if and when the respondents amended their pleadings (paras 36–37). Costs were reserved for later argument (para 38).
Three interlocking reasons explain the decision.
The pleading obligations under the Rules and the nature of a 'condition precedent' (paras 21–29, 29 specifically):
Statutory structure and authority: s 263 and delegation (paras 19, 24, 27, 32–34):
Appropriate interlocutory procedure and scope of discovery (paras 12–17, 37):
The result balances pleading economy (not forcing plaintiffs to anticipate every defence) with fairness (allowing defendants to put the matter in issue by explicit pleading and then requiring the plaintiff to prove delegation).
Before this decision:
After this decision (within the Federal Court at least):
This case therefore synthesised pleading rules, statutory interpretation of s 263, and established interlocutory practice into a coherent approach. It follows Citibank in recognising flexibility in the form of authorisation and stresses that the lack of a written authorisation is not necessarily a jurisdictional defect (paras 32–34).
Para 23: "I accept ... the Statement of Claim sufficiently raised the substantial issue ... whether the respondents' legal professional privilege claim precluded the Commissioner from having access to certain documents."
Para 27: "By reason of O 11, r 6 of the Rules, however, the Commissioner was not required in the present application to plead a delegation or authorisation in his Statement of Claim."
Para 29: "A condition precedent is ... the fulfilment of which is necessary before a party becomes entitled to sue."
Para 35: "Having regard to O 11, r 6, I reject the respondents' submission that it was incumbent on the Commissioner to plead the existence of relevant delegations or authorisations."
Para 36: "The respondents should be given leave to amend their Defences ... to allege the non-fulfilment of a condition precedent ... lack of due authorisation or delegation."
Para 37: "If the amendments are made, the Commissioner has indicated a willingness to show a copy of each authorisation ... subject to appropriate undertakings and orders as to confidentiality."
The precedent is engaged in cases with the following characteristics:
In such cases this judgment indicates the correct procedure: the plaintiff need not plead authorisation; the defendant should plead non-fulfilment if it wishes to contest the point; discovery of delegation documents is not automatic but may follow if authority is put in issue.
(Within this source-limited deep dive we note only the primary internal treatment in the judgment itself and its reliance on earlier decisions. The Court relied on Christie to support the proposition that officials function through deputies (paras 25–26), and on the Full Court in Citibank for the proposition that written authorisation is not necessary and that authorisation need not be treated as a precondition to be pleaded unless put in issue (paras 32–34).)
Practitioners should read this decision as a workable application of established pleading rules: courts will not permit the technicality of a missing allegation about statutory authorisation to defeat a properly framed substantive claim unless the defect is incurable. Conversely, defendants retaining a genuine contest about authority should plead it expressly and can expect the plaintiff to produce evidence of delegation or authorisation once it is in issue (paras 35–37).
When does the form of authorisation become 'of the essence'?
What precisely will satisfy the Commissioner’s burden once non-fulfilment is pleaded?
Treatment of oral authorisations in contested trials:
Interaction with public interest immunity:
The timing and scope of discovery once authority is pleaded:
In sum, Deputy Commissioner of Taxation v Pratt Holdings clarifies that, in Federal Court practice, plaintiffs need not plead fulfilment of conditions precedent (like delegations under s 8 TAA) unless the statute or the nature of the cause of action makes the matter of the essence. Defendants who wish to challenge authority should plead that challenge; if they do so the plaintiff must prove delegation or authorisation, and the Court will manage discovery and confidentiality in a calibrated way.
REASONS FOR JUDGMENT 1 By notices of motion dated 29 November 2001 the respondents seek orders that: · the proceeding be dismissed; · alternatively, that paragraph 2 of the application be dismissed; · further or alternatively, the applicant make discovery of any instruments of delegation under s 8 of the Taxation Administration Act 1953 (Cth) and any authorisations by him or his delegates, for the purposes of s 236 of Income Tax Assessment Act 1936 ("the Act"); and · the applicant pay the respondents' costs. 2 A solicitor, who has the care and conduct of the matter on behalf of the first respondent, has sworn an affidavit in support of the first respondent's motion. A solicitor in the firm that is the second respondent has sworn an affidavit in support of the second respondent's motion. 3 The applicant, who is the Commissioner of Taxation of the Commonwealth of Australia ("the Commissioner") submits that each motion should be dismissed with costs. The Commissioner submits that the motions are misconceived, and that the respondents are fishing in the hope that they can divert attention from the sole issue which arises on the action, namely a dispute about the existence of legal professional privilege.
history of the proceeding 4 By application dated 3 August 2001, the Commissioner seeks, amongst other things: 1. A Declaration that: (a) legal professional privilege does not attach to any, alternatively some, of the communications constituted or disclosed by the documents listed in the Schedule to the Statement of Claim; and accordingly, (b) the applicant is entitled, pursuant to sub-section 263(1) of the Income Tax Assessment Act 1936, to have full and free access to those documents to which legal professional privilege does not attach for any purposes of the Act. 2. An Order requiring the second respondent to deliver to the Registry of the Court the documents listed in the Schedule to the Statement of Claim. The application is supported by a Statement of Claim and an affidavit sworn by Kevin John Dinsdale, a taxation officer, on 2 August 2001. 5 After alleging certain formal matters, the Statement of Claim pleaded that: (4) By sub-section 263(1) of the Income Tax Assessment Act 1936 ('the Act'), the applicant is authorised to have full and free access to all buildings, places, books, documents and other papers for any of the purposes of the Act, and for that purpose may make extracts from or copies of any documents and other papers. (5) By letter dated 22 October 1999, the Applicant sought to arrange a meeting with the second Respondent to discuss and agree on access by the Applicant to documents held by the second Respondent with respect to The Pratt Group and in relation to which the accountants' concession had been claimed under guidelines contained in the applicant's publication - 'Access to Professional Accounting Advisors' Papers: Guidelines for the Exercise of Access Powers' ('the Guidelines'). Pursuant to the accountant's concessions documents falling within the category of documents described as 'restricted source' and 'non-source' would not be accessed by the applicant except in the circumstances described in the Guidelines. … (6) Under cover of a letter dated 1 March 2000 from Mr Umberto Torresi of PricewaterhouseCoopers Legal ('PwC Legal'), the second Respondent provided to the Applicant three (3) lists detailing those documents which were the subject either of a claim for the accountants' concession under the Guidelines, as non-source or restricted source documents, or of a claim for legal professional privilege. … (7) By letter dated 12 July 2001 addressed to Mr Torresi, the Applicant advised the second Respondent that the accountants' concession in relation to those documents that were categorized as restricted source or non-source documents, as detailed in the lists provided by the Respondent in its letter of 1 March 2000, would not be allowed. The letter advised that Kevin Dinsdale and other officers of the Applicant would attend the Respondent's premises on 26 July 2001 and in exercise of the power of access pursuant to section 263 of the Act, would take access to those documents. … (8) Officers of the Applicant, namely, Mr Kevin Dinsdale, Mr John Edis, Mr Nicholas Seal and Mr David Drummond attended the offices of the second Respondent at 215 Spring Street Melbourne at approximately 10.00am on Thursday, 26 July 2001, for the purposes of inspecting the documents. (9) Access to documents was granted at the office of the second Respondent at 333 Collins Street Melbourne. Access to seventy-one (71) of the documents categorized under the Guidelines, by the first Respondent or alternatively the second Respondent, as either restricted source or non-source documents, was refused. (10)Of the documents listed in the list entitled 'The Pratt Group - Catalogue of Restricted Source Documents', the first Respondent, alternatively the second Respondent on behalf of the first Respondent, now seeks to claim legal professional privilege in relation to each of the seventy-one (71) documents, being the documents identified in the Schedule hereto. (11)None, alternatively only some, of the communications constituted or disclosed by the relevant documents were made for the dominant purpose of: (a) the provision of legal advice; or (b) the provision of legal advice related to actual or contemplated litigation, or anticipated or pending litigation. (12)Accordingly, (a) none, alternatively only some, of the communications and none, alternatively only some, of the relevant documents are privileged from disclosure on the ground of legal professional privilege; and (b) the Applicant is entitled pursuant to sub-section 263(1) of the Act to access to each of the relevant documents to which legal professional privilege does not attach. 6 By its Defence, the first respondent ("Pratt Holdings") said, amongst other things: 4. It admits the allegations contained in paragraph 4 [of the Statement of Claim] but says that s 263(1) of the Income Tax Assessment Act 1936 does not entitle the Applicant to have access to documents in respect of which legal professional privilege subsists. 5. Insofar as paragraph 5 makes any material allegation against the First Respondent, it denies each and every allegation. Otherwise it does not plead to paragraph 5. 6. To paragraph 6 the First Respondent says: 6.1 That subject to the production of the letter dated 1 March 2000 and reference to its full terms and effect at trial, it admits that the letter was provided to the Applicant enclosing the three lists; and 6.2 Further that its claim for legal professional privilege was not fully set out in the letter and lists. 7. To paragraph 7 it says that subject to the production of the letter dated 12 July 2001 and reference to its full terms and effect at trial, it admits that the Applicant wrote to the Second Respondent to the effect alleged. 8. It admits the allegations made in paragraph 8 thereof. 9. It admits that access to certain documents as granted to officers of the Applicant at the offices of the Second Respondent and that access was not granted to certain documents disclosed on the grounds of legal professional privilege. Otherwise it does not admit the allegations made in paragraph 9 thereof. 10. Save and except to say that it does not admit the number of documents, the schedule to the Statement of Claim or its contents, it admits the allegations made in paragraph 10 thereof and says that it has always been the position of the First Respondent that the documents are privileged. 11. It denies the allegations made in paragraph 11 thereof and further says that the documents comprise some that were prepared for the dominant purpose of enabling the First Respondent to obtain legal advice, some that record instructions given by the First Respondent for the purpose of enabling it to obtain legal advice and that record the legal advice given to the First Respondent. … 12. Insofar as the second paragraph 11 contains any allegation of fact, it denies each and every allegation. For present purposes, the Defence of the second respondent was not materially different from the Defence of the first respondent, although the second respondent admitted the contents of the letter of 12 July 2001 but did not admit any other allegation contained in paragraph 7 of the Statement of Claim. 7 I accept that, as the pleadings stand, the sole issue between the parties concerns the validity of the claim, made by or on behalf of Pratt Holdings, that the documents to which the Commissioner seeks access are subject to legal professional privilege. The respondents submit, however, that the Commissioner's pleading is deficient because "the Commissioner has not alleged that the access to [the second respondent's] offices was sought by officers authorised by him (s 263(1)) or by his authorised delegates (s 8)". 8 Pratt Holdings, by a letter from its solicitors dated 27 September 2001, subsequently requested production of certain authorities and delegations. By a letter dated 11 October 2001, the Commissioner, by his solicitor, replied that "as none of the documents requested are relevant to the issues in the proceedings we will not provide them". Subsequently, by a letter dated 7 November 2001, Pratt Holdings, by its solicitors, informed the Commissioner that: In our view, those documents are relevant to establish that the members of the applicant's audit team identified in the statement of claim and Mr McKimmie, acting Assistant Commissioner were properly authorised or delegated to make the decision to access and to take access. By necessary implication paragraphs 7 and 8 of the statement of claim must be taken to allege that the officers were authorised so to do. The statement of claim as presently drawn is deficient in not expressly alleging that the officers were authorised by the applicant to make the decision under s 263 to access the documents and then to take access. Absent such authority then the decision and its purported implementation by these officers were and are invalid. 9 Pratt Holdings, by its solicitors, indicated that it proposed to put the question of authority in issue by filing and serving an amended Defence. In a letter dated 15 November 2001, the Commissioner, by his solicitor, recorded his dissatisfaction with this proposal but requested a copy of the proposed amendments. Pratt Holdings, by its solicitors, responded by a letter dated 23 November 2001 in the following terms: Our client's point is that the Applicant in the proceedings, the Commissioner, has never personally sought access. Rather, officers employed by the Commissioner have purported to seek access. In the absence of a delegation of power by the Commissioner in accordance with s 8 of the Taxation Administration Act 1953 and appropriate authorisations to the officers identified in paragraph 8 of the statement of claim, the Commissioner has no entitlement to obtain the relief sought. Further, our client contends that the Court would not have jurisdiction to hear and determine the Commissioner's application unless there had previously been a valid attempt to have access to the documents under s 263 which had been refused. … In view of the position taken in your letter that your client will oppose the proposed amendment to the Defence our client shall not do so. Rather, our client shall continue to maintain that your client's pleadings are defective and that discovery of the authorisations is required. 10 The respondents' motions came on for hearing on Monday, 4 March 2002. In the course of the hearing, counsel for the respondents made an additional application for leave to amend the respondents' Defences. At the conclusion of the hearing I stated that the parties might have the opportunity to draw to my attention any further authorities on the pleading point that arose in the course of argument. This was to be done by 4.30 pm on Tuesday, 5 March 2002. The matter was stood over to Thursday, 7 March 2002 for the delivery of the Court's decision. Within the time stipulated, the Commissioner referred the Court to Christie v Permewan Wright & Co Ltd (1904) 1 CLR 693 ("Christie"). After the time nominated although still on the evening of 5 March 2002, the respondents forwarded further written submissions (referring to authorities).
application under order 20 rule 2 11 According to the respondents, the Commissioner's Statement of Claim was defective because it failed to state all the material facts which were necessary to constitute a complete cause of action. That is, in the circumstances of the case, the Commissioner could not establish an entitlement to access to documents under s 263(1) of the Act unless he first established that his officers were duly authorised by him (or his delegate) in that behalf. 12 Even if the Statement of Claim were defective in the way the respondents say, the defect would not justify an order for dismissal under O 20, r 2 of the Federal Court Rules ("the Rules") at this stage of the proceeding. The appropriate course would be to permit the Commissioner to amend his Statement of Claim to cure the defect. I do not accept that the respondents have shown that the Commissioner's cause of action is so untenable that it cannot possibly succeed: see General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129; Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; and Burton v Shire of Bairnsdale (1908) 7 CLR 76 at 92. At this stage of the proceedings, the defect (if any) would appear to be capable of cure: see, e.g., Mr Dinsdale's affidavit at par 2. 13 For the reasons stated below, however, it was not incumbent on the Commissioner to plead matters of authority and delegation. Accordingly, I reject the respondents' submission that the Commissioner's Statement of Claim is defective on this account. application under order 11 rule 16 14 The respondents also made application, pursuant to O 11, r 16 of the Rules, for an order that the Statement of Claim be struck out. For much the same reasons as those just mentioned, this application fails. application under order 15 rule 8 15 Application was also made pursuant to O 15, r 8 for an order that the Commissioner make discovery of the delegations and authorisations given by him for the purposes of s 263 of the Act to each of the officers referred to in par 8 of the Statement of Claim. 16 Discovery of a particular document or class of documents may be ordered under O 15, r 8 where there are grounds for believing that there is a document or a class of documents that relates to a matter in question in the proceeding which is in the possession, custody or power of a party. 17 The difficulty with the respondent's application under O 15, r 8 is that the pleadings do not presently raise in any specific way the matter of authority. Apart from an oblique reference in par 7 of the Statement of Claim, the Statement of Claim is silent on the authority of the officers, who on behalf of the Commissioner, have sought to exercise power under s 263 of the Act. Similarly, apart from the general denials of the Commissioner's entitlement to access to the documents in dispute contained in the respondents' Defences, the respondents have not specifically raised any issue of authority. Accordingly, in the present state of pleadings, I would not grant the application for discovery since the documents the subject of the application do not relate to any matter in question in the proceeding.
leave to amend pleadings 18 The Commissioner initially contended that the respondents should not be permitted to amend their Defences because they had already declined an opportunity to do so and, in any event, they had not sought to raise the authority issue prior to 27 September 2001. Moreover, the respondents had not, the Commissioner noted, chosen to file a cross-claim despite being given an opportunity to do so. The Commissioner conceded, however, that whether leave should be granted was a matter for the Court in the exercise of its discretion. Bearing in mind that the Court will, generally speaking, permit an amendment to be made to allow all issues in dispute to be determined, it is appropriate that the respondents have leave to amend their Defences should such an amendment prove appropriate. 19 The contest at the hearing on Monday morning ultimately turned on whether it was incumbent on the Commissioner or the respondents to plead the issue of authority. The answer depends in part on s 263 of the Act. It provides: (1) The Commissioner, or any officer authorized by him in that behalf, shall at all times have full and free access to all buildings, places, books, documents and other papers for any of the purposes of this Act, and for that purpose may take extracts from or copies of any such books, documents or papers. (2) An officer is not entitled to enter or remain on or in any building or place under this section if, on being requested by the occupier of the building or place for proof of authority, the officer does not produce an authority in writing signed by the Commissioner stating that the officer is authorized to exercise powers under this section. (3) The occupier of a building or place entered or proposed to be entered by the Commissioner, or by an officer, under subsection (1) shall provide the Commissioner or the officer with all reasonable facilities and assistance for the effective exercise of powers under this section. 20 The respondents submitted that, unless the relevant taxation officers had been duly authorised by the Commissioner as s 263(1) required, then the Commissioner's claim for declaratory relief as set out in par 1(a) of his application must fail. In other words, leaving aside the validity of the respondents' legal professional privilege claim, due authorisation was a condition precedent to the Commissioner's entitlement to access under s 263(1) of the Act. (I note that the declaration sought in par 1(b) of the application is no longer pursued since it was unnecessary to make an urgent application to protect and preserve the documents.) 21 It is doubtless true that by his Statement of Claim the Commissioner is obliged to plead the material facts on which his claim of right depends: see the Rules, O 11, r 2. That is, he must plead any fact necessary to complete his claim of right. 22 In relation to the present application, whether or not a particular fact is material in this sense depends on s 263 of the Act, as well as on the facts of the case. The observation in Odgers on Civil Court Actions (twenty-fourth edition) at par 7.12 is correct. The pleader must apply his knowledge of the law, and his common sense, to the facts stated in his instructions, and decide for himself which he must plead and which he may safely omit. Precedents may afford him some assistance; but in the end he must rely on his own judgment. No general rule can be laid down. 23 I accept, as counsel for the Commissioner submitted, that the Statement of Claim sufficiently raised the substantial issue with which the Commissioner was concerned, namely, whether the respondents' legal professional privilege claim precluded the Commissioner from having access to certain documents. Thus viewed (and leaving aside the matter of authority) there was no defect in the Commissioner's pleading. The Commissioner's pleading essentially depended on assertions that s 263 of the Act conferred on him an entitlement to have access to documents for a purpose of the Act (which in terms the provision did); that the Commissioner (by his officers) sought to exercise this entitlement; that the respondents sought to prevent this exercise by a claim of legal professional privilege; and that the respondents' claim was invalid. In this circumstance, it was unnecessary for the pleader of the Statement of Claim to anticipate a possible answer of his opponent, namely, that the Commissioner had not validly sought to exercise his right since his officers were not duly authorised: cf Odgers at 7.24. 24 In this connection, I note that the respondents made much of the fact that the Commissioner was not seeking to exercise the right personally. Rather, as the Statement of Claim showed, the Commissioner was seeking to exercise the right by his officers, in the sense that his officers discussed and sought to arrange access with, and obtain access from, the second respondent's representatives. I do not think much turns on this: plainly enough, the Act does not intend that the Commissioner personally seek and obtain access under s 263. Rather, access will ordinarily be sought and obtained by his delegate or authorised officer. 25 The same kind of circumstance was discussed by the High Court in Christie in relation to a prosecution under the Customs Act 1901 (Cth) which provided for prosecutions to be brought by the Collector. The Court held that an information might be laid by a duly authorised agent of the Collector (providing the information stated that the information was in the name and laid on behalf of the Collector). The Chief Justice observed at 698: On reference to the Statute, it will be seen that the word 'Collector' is used throughout it in connection with acts to be done in relation to the administration of the law, which cannot be performed in person by the Collector for the State, and which must, therefore, be performed by deputy. The extent of the deputation may vary in different cases. Such acts may be done by the officer doing duty in a particular matter. 26 He added at 701: If the provisions of sec 18 of the Victorian Justices Act 1890 were to be interpreted literally, those proceedings would be impossible, except by the Collector himself laying the information. … . For the purposes of the Customs Act the informant will be the Collector for Victoria, and any difficulty in applying the ordinary rules may be avoided by the person who acts for the Collector stating that the information is laid by him in the name of and on behalf of the Collector. 27 There must of course be a valid delegation from the Commissioner to his delegate under s 8 of the Taxation Administration Act 1953 and, if appropriate, an authorisation to an officer, as s 263(1) of the Act contemplates. By reason of O 11, r 6 of the Rules, however, the Commissioner was not required in the present application to plead a delegation or authorisation in his Statement of Claim. 28 At the hearing, counsel for the Commissioner relied to O 11, r 6, which provides: (1) It shall not in any pleading be necessary to make a general allegation of fulfilment of a condition precedent to a right of action. (2) Any party wishing to deny the fulfilment of such condition precedent shall plead such denial. Thus, even if the existence of due authorisation was a condition precedent to the Commissioner's claim of right, it was not incumbent on the Commissioner to make any general allegation concerning the matter. 29 According to Bullen & Leake and Jacob's Precedent of Pleadings (twelfth edition) at 42: A condition precedent is a condition, agreed between the parties or imposed by statute, the fulfilment of which is necessary before a party becomes entitled to sue. It is not of the essence of the cause of action, but it has been made essential to it; it is not a substantive or constituent element of a cause of action, but it has been, as it were, superimposed upon it as an additional formality which must be fulfilled so as to give rise to the entitlement to sue. I accept this definition for present purposes, since it accords with Australian authorities: see Jolly v The District Council of Yorketown (1968) 119 CLR 347 at 350-51; Vines v Djordjevitch (1955) 91 CLR 512 at 519-21; and Zuk v Miller (1957) SASR 25 at 27-8 ("Zuk v Miller"). On this view, a delegation or authorisation on the Commissioner's part was, at the most, a condition precedent to his right to the declaratory relief sought by him in par 1(a) of his application. 30 The respondents contended that O 11, r 6 did not relieve the Commissioner from the obligation to plead due authorisation because authorisation was of the essence of the cause of action. At the hearing, counsel for the respondents referred to May v Chidley [1894] 1 QB 451 and Roberts v Plant [1895] 1 QB 597 and, in written submissions, to Zuk v Miller. I accept that, if a matter is of the essence of a cause of action, then it must be pleaded. In effect, the matter is not then a condition precedent to suit but a part of the cause of action itself. 31 In circumstances removed from the present, the courts have held that matters such as want of authority should be specifically pleaded by a defendant, if the defendant wishes to rely on such a point: see Byrd v Nunn (1877) 7 Ch D 284, R v Hay [1924] VLR 97, and Lea v Smith [1923] SASR 560; cf. also Teague v Jones [1925] VLR 205. 32 The decision of the Full Court of this Court in Federal Commissioner of Taxation v Citibank Limited (1989) 85 ALR 588 ("Citibank") makes plain, however, that written authorisation is not of the essence of the entitlement conferred by s 263 of the Act. The Court held, in that case, that the authorisation referred to in s 263(1) of the Act need not take any particular form, and might be given orally. Further, the existence of written authorisation is not, as a matter of law, a condition precedent to the exercise of the right of access under s 263(1). Bowen CJ and Fisher J stated at 594-95: Subsections (2) and (3) of sec.263 were inserted in this section in 1987 following the decision of the High Court in O'Reilly's case [(1983) 153 CLR 1]. The court there held that sec.263, as it then stood, did not oblige a person to take positive steps to enable the Commissioner more easily or effectively to enjoy his right of access. The addition of sub-s.(3) did no more than impose such an obligation on the occupier. Subsection (2) may well have been added in aid of this obligation as a form of protection to the person obliged to render assistance. It provides that, if requested, an officer must produce an authorisation in writing, failing which he is not entitled to enter or remain in the building. The sub-section is silent as to the form or content of the authorisation. The fact that this written authorisation is only required to be produced on request tends to indicate that its existence is not, as a matter of law, a condition precedent to the exercise of the right of access. 33 Their Honours also observed at 594: The Commissioner is also entitled to delegate his power of entry to any person in accordance with his power of delegation under s 8 of the Taxation Administration Act 1953 (Cth). A delegate would not require any authorisation from the Commissioner, whether in writing or otherwise, to enter. He would merely require a written delegation of, inter alia, the relevant statutory power of the Commissioner. The amending subsections would not appear to place any obligation on a delegate of the Commissioner to produce his delegation and in default to leave the premises. French J reached similar conclusions: see 611-12. 34 Although Citibank does not actually hold that authorisation (of some form) is not of the essence of a claim of right under s 263, it provides no support for this proposition. On the contrary, the Court's analysis proceeds on the basis that, whilst an authorisation or delegation of some kind would be a condition precedent to suit, the existence of such authorisation or delegation would not be in issue in an application of the present kind until put in issue by the respondent. It seems clear enough that the point of pleading raised in this case is different from that raised in Zuk v Miller where the Court held that the legislative history of the "due inquiry and search" requirement in the legislation under consideration showed that the requirement was of the essence of the action. 35 Having regard to O 11, r 6, I reject the respondents' submission that it was incumbent on the Commissioner to plead the existence of relevant delegations or authorisations. Let it be assumed that the Commissioner is not entitled to declaratory relief in this case unless an officer, who was duly authorised by the Commissioner, has first sought to exercise the right conferred by s 263(1) of the Act. By virtue of O 11, r 6, in so far as due authorisation is a condition precedent, its fulfilment is to be implied from the Commissioner's pleading, and need not be specifically alleged by the Commissioner. The respondents may, however, put the matter in issue by contesting it in their Defences, as O 11, r 10 would require. If they do, then the burden of proving valid delegation or due authorisation rests with the Commissioner: see Bank of New South Wales v Laing [1954] AC 135. 36 The respondents should be given leave to amend their Defences in order to allege the non-fulfilment of a condition precedent to suit, namely, lack of due authorisation or delegation. 37 If the amendments are made, the Commissioner has indicated a willingness to show a copy of each authorisation to the Court and the parties' legal advisers subject to appropriate undertakings and orders as to confidentiality. If orders for inspection were made consequent upon orders for discovery, the Commissioner has indicated that he would claim public interest immunity. In these circumstances, I would make no order for discovery and inspection at this stage. The parties will have leave to approach the Court for any orders they may need to deal in a practical manner with this aspect of the proceeding. 38 For the reasons stated I would dismiss the motions brought by notices dated 29 November 2001. I would hear the parties on the question of costs. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.
Associate: Dated: 7 March 2002 Counsel for the Applicant: Mr B Zichy-Woinarski QC with Ms M Gordon
Solicitor for the Applicant: Australian Government Solicitor
Counsel for the First Respondent: Ms A Richards QC with Mr R Peters
Solicitor for the First Respondent: Arnold Bloch Leibler
Counsel for the Second Respondent: Ms A Richards QC with Mr R Peters
Solicitor for the Second Respondent: Pricewaterhouse Coopers Legal
Deputy Commissioner of Taxation
Pratt Holdings Pty Ltd
(1964) 112 CLR 125
(1949) 78 CLR 62
(1908) 7 CLR 76
(1968) 119 CLR 347
(1955) 91 CLR 512
(1989) 85 ALR 588
(1904) 1 CLR 693
(1983) 153 CLR 1
The Court dismissed the respondents' motions dated 29 November 2001. The respondents were given leave to amend their Defences to allege non-fulfilment of a condition precedent (lack of delegation/authorisation). No order for discovery of delegations or authorisations was made at this stage; the Commissioner indicated willingness to produce authorisations to the Court and parties' advisers subject to confidentiality undertakings and reserved any public interest immunity claim. Costs to be argued (paras 36-38).