Constitutional Law - judicial power of Commonwealth - incidental power -incontestable tax - compulsory acquisition of property.

Administrative Law - who required to hold reasonable belief - statutory purpose of offshore information notice - abuse of process - ultra vires.

Income Tax Assessment Act 1936 Sections 23(q), 264, 264A

Leeth v. The Commonwealth [1992] HCA 29; (1992) 174 CLR 455

Chu Kheng Lim v. Minister for Immigration (1992) 176 CLR 1

Nationwide News Pty. Ltd. v. Wills [1992] HCA 46; (1992) 177 CLR 1

Australian Capital Television Pty. Ltd. v. The Commonwealth (1992) 177 CLR

Polyukhovich v. The Commonwealth [1991] HCA 32; (1991) 172 CLR 501

Australian Communist Party v. The Commonwealth [1951] HCA 5; (1951) 83 CLR 1

Actors and Announcers Equity Association v. Fontana Films Pty. Ltd. (1982)

[1982] HCA 23; 150 CLR 169

Deputy Commissioner of Taxation v. Brown [1958] HCA 2; (1958) 100 CLR 32

Deputy Commissioner of Taxation v. Hankin [1959] HCA 2; (1959) 100 CLR 566

Girdis Pty. Ltd. v. Federal Commissioner of Taxation [1969] HCA 5; (1969) 119 CLR 365

MacCormick v. Federal Commissioner of Taxation [1984] HCA 20; (1994) 158 CLR 622

The Commonwealth v. Tasmania [1983] HCA 21; (1983) 158 CLR 1

South Australia v. Tanner [1989] HCA 3; (1989) 166 CLR 161

Davis v. The Commonwealth [1988] HCA 63; (1988) 166 CLR 79

Harris v. Caladine [1991] HCA 9; (1991) 172 CLR 84

Re Ranger Uranium Mines Pty. Ltd.; Ex parte Federated Miscellaneous

Workers' Union of Australia [1987] HCA 63; (1987) 163 CLR 656

Precision Data Holdings Ltd. v. Wills (1991) 173 CLR 167

Pioneer Concrete (Vic.) Pty. Ltd. v. Trade Practices Commission (1982) 152

The Commonwealth v. Melbourne Harbour Trust Commissioners [1922] HCA 31; (1922) 31 CLR 1

Williamson v. Ah On [1926] HCA 46; (1926) 39 CLR 95

The Orient Steam Navigation Company Limited v. Gleeson [1931] HCA 2; (1931) 44 CLR 254

Milicevic v. Campbell [1975] HCA 20; (1975) 132 CLR 307

Federal Commissioner of Taxation v. Trautwein [1936] HCA 48; (1936) 56 CLR 211

Minister for Aboriginal Affairs v. Peko Wallsend Limited [1986] HCA 40; (1986) 162 CLR 24

Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993)

British Medical Association v. The Commonwealth [1949] HCA 44; (1949) 79 CLR 201

John Cooke and Co. Pty. Ltd. v. The Commonwealth [1924] UKPCHCA 2; (1924) 34 CLR 269

Poulton v. The Commonwealth (1952) 89 CLR 540

Trade Practices Commission v. Tooth and Co. Ltd. [1979] HCA 47; (1979) 142 CLR 397

Attorney-General (Cth) v. Schmidt [1961] HCA 21; (1961) 105 CLR 361

Mutual Pools and Staff Pty. Ltd. v. Commonwealth of Australia (1994) 179

CLR 155 Health Insurance Commission v. Peverill [1994] HCA 8; (1994) 179 CLR 226

Director of Public Prosecutions; Ex parte Lawler and Another (1994) 179

CLR 270 Georgiadis v. Australian and Overseas Telecommunications

Corporation (1994) 179 CLR 297

Pyneboard Pty. Ltd. v. Trade Practices Commission [1983] HCA 9; (1982) 57 FLR 368

Federal Commissioner of Taxation v. Australia and New Zealand Banking Group

Ltd. (1979) 143 CLR 499

Bannerman v. Mildura Fruit Juices [1984] FCA 156; (1984) 2 FCR 581

Perron Investments v. Deputy Commissioner of Taxation (WA) [1989] FCA 397; (1989) 90 ALR 1

Premier Automatic Ticket Issuers Ltd. v. Federal Commissioner of Taxation

[1933] HCA 51; (1933) 50 CLR 268

Commissioner of Taxation (NSW) v. Premier Automatic Ticket Issuers Ltd. [1933] HCA 55; (1933) 50 CLR 304

Tariff Reinsurances Ltd. v. Commissioner of Taxes (Victoria) (1938) 59

CLR 194 Esquire Nominees Ltd. v. Federal Commissioner of Taxation (1973)

[1973] HCA 67; 129 CLR 177

Gilder v. Federal Commissioner of Taxation (1991) 91 ATC 5062

O'Reilly v. The State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1

Counsel for the Applicant: Mr. Young QC and Mr. Pagone

Solicitor for the Respondent: Australian Government

Solicitor

The Court declares that:-

The notice of the applicant dated 19 October, 1992 under the

signature of Brian Francis Power is not a valid notice issued

under or for the purposes of section 264A of the Income Tax

Assessment Act 1936.

1. The said notice be set aside.

2. The respondent pay the applicant one-half of its costs of and

incidental to the application to be taxed if not agreed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

COOPER J The applicant is F.H. Faulding and Co. Ltd. On 19 October, 1992 Brian Francis Power, a Deputy Commissioner of Taxation, issued to the applicant a notice under section 264A of the Income Tax Assessment Act 1936 ("the Act") to furnish information and to produce documentation as listed in the notice. The information and documentation was required under the notice to be produced on or before 18 January, 1993. In issuing the notice Mr. Power was acting as delegate of the Commissioner of Taxation, such delegation being made under the provisions of the Taxation Administration Act 1953.

2. The applicant has sought under section 39B of the Judiciary Act 1903 and section 5 of the Administrative Decisions (Judicial Review) Act 1977 review of the decision to issue the notice. The applicant, inter alia, seeks the following relief:-

"1. A Declaration that each of:

(a) the decision;

(b) the notice;

(c) section 264A,

is unlawful;

2. A Declaration that section 264A of

the Act is unconstitutional;

3. An Order that the Respondent act

according to law;"

3. In support of the declaration that section 264A of the Act was unconstitutional, the applicant contended that:-

(a) The section purports to vest the judicial power of the

Commonwealth in a non-judicial body (the Commissioner) or

otherwise to interfere with the judicial power of the

Commonwealth by permitting the issue of admissibility of

evidence in judicial proceedings contesting any assessment

of tax to depend upon the consent of the Commissioner.

(b) The section operates in circumstances of non-compliance

with a notice issued under the section to render an

assessment of tax uncontestable.

(c) The provisions of sub-sections (10) to (20) of section 264A

are not reasonably and appropriately related to the process

of assessment and the imposition of taxation, and interfere

disproportionately with the taxpayer's right to challenge

any assessment.

(d) The issue of a notice under the section has the effect that

the law applicable to the applicant's tax liability is

unilaterally varied by the Commissioner from the general

law applicable to other taxpayers. In consequence the

section operates as a discriminatory and disproportionate

intrusion upon the right of equality before the law

protected by Chapter III of the Constitution and the

separation of powers.

(e) The power to exclude evidence makes the assessment an

arbitrary one and not a tax within section 51(xi) of the

Constitution.

(f) The section purports to authorise the Commissioner to

compel the applicant to create information and documents to

provide to the Commissioner without compensation. In

consequence it is a law dealing with the acquisition from

the applicant of property other than on just terms.

4. Each of the above circumstances had the consequence that section 264A was beyond the constitutional powers of the Parliament of the Commonwealth.

5. In support of the declaration that the decision to issue the notice and the notice itself are unlawful and to support an order that the Commissioner act according to law, the applicant contended that:-

(a) The decision to issue the notice is an abuse of power.

(b) The decision to issue the notice was not made bona fide and

was made for an improper purpose, namely to place the

Commissioner in the best position to defend an assessment

of the applicant and/or to foreclose the applicant from

being able to challenge such an assessment;

(c) The requirement of the notice to require the applicant to

provide a statement by an overseas party is beyond the

power conferred by section 264A(1) and section 264A(1)(c)

of the Act.

(d) The decision to issue the notice and the exercise of that

decision constituted by the notice itself was so

unreasonable that no reasonable person could have exercised

the power.

(e) The issue of the notice imposed a jeopardy upon the

applicant by force of section 264A which was unreasonable

in all the circumstances.

(f) The Commissioner by his delegate failed to take into

account relevant considerations in determining to issue

the notice.

(g) The giver of the notice did not personally hold the belief

required by section 264A(1) which is a statutory

precondition to the issue of a valid notice.

(h) As a matter of construction the notice was unclear and

uncertain as to the information and documents required and

operated harshly, unreasonably and oppressively.

6. On or about 5 January, 1988 the applicant lodged an income tax return for the financial year ended 30 June, 1987. The applicant claimed in that return that an amount of $1,164,324.90 was received by it as interest income from sources in the Cook Islands. The income was claimed to be exempt from Australian income tax, it being claimed that tax had been paid on the interest in the Cook Islands (section 23(q) of the Act as it then stood). The income tax assessment for the applicant for the relevant financial year issued on the basis that such income was exempt.

7. Subsequently, a taxation audit of the applicant was undertaken by the Australian Taxation Office. As part of that audit the applicant provided information and documentation relating to the interest income which the applicant had claimed as exempt income in the income tax return for the financial year ended 30 June, 1987. Pursuant to section 13 of the Administrative Decisions (Judicial Review) Act 1977, Desmond John Hennessy, an officer of the Australian Tax Office, gave written reasons dated 4 February, 1993 for the issuing of a notice to the applicant pursuant to section 264A of the Act on 19 October, 1992. In those reasons he contended that the information and documents produced by the applicant during the audit, if taken at face value, suggested that:-

"(a) On 9 June 1987, Finance Acceptances Ltd of the Cook

Islands issued a Letter of Offer to FH Faulding and Co.

Ltd to purchase a Non-negotiable Certificate of

Deposit for $A10million for a term of one year, with

interest of $A1,164,324.90 after payment of

withholding tax payable on the day of settlement and

credited to the account of FH Faulding and Co Ltd.

Security was to be by way of an Irrevocable

Non-Transferable Standby Letter of Credit to be issued by

a bank acceptable to the investor. At any time prior

to maturity of the Certificate of Deposit, Finance

Acceptances Ltd was able to issue a Non-recourse

notice in the prescribed form, and subsequent to which

the investor would have no claim against Finance

Acceptances Ltd, and repayment of the principal amount

would be by way of recourse against the issuer of the

Letter of Credit. Acceptance of the offer was to be

effected by arranging for a duly appointed Attorney to

present to Finance Acceptances Ltd in the Cook Islands

by not later than 3.30pm on Settlement Day (10 June

1988 Australian Time) the face value of the Deposit.

As regards transfer of funds, Finance Acceptances Ltd

had established correspondent banking arrangements

with Bankers Trust Australia Ltd.

(b) A Finance and Administration Report dated April May

1987 was presented to the Board of FH Faulding and Co

Ltd outlining amongst other things, the tax benefits,

consequences and implications of making a Cook Islands

Deposit, and recommending approval for the making of a

$10m deposit for up to one year.

(c) A Non-negotiable Certificate of Deposit No 87603 for

$A10million was issued by Finance Acceptances Ltd on

11 June 1987. Interest on the deposit for the full

term accrued on the Deposit date and was payable on

presentation of the certificate to Finance Acceptances

Ltd on or after the Deposit date. All interest paid

in connection with the deposit was to be subject to

Cook Islands withholding tax. If Finance Acceptances

Ltd issued a Non-recourse notice in accordance with

the specified terms, all recourse for payment of the

principal amount at maturity was to be made in

accordance with the terms of the Letter of Credit

issued by a Bank acceptable to the investor in

conjunction with the deposit.

(d) On 10 June 1987, FH Faulding and Co Ltd requested that

the ANZ Bank, Adelaide telegraphically transfer the

sum of $A10 million from Account number 7752 63498 on

12 June 1987 at 10am to Bankers Trust Company in

Singapore, to be credited to the account of Finance

Acceptances Ltd, for account of FH Faulding and Co Ltd.

ANZ Bank (Sydney) was to deliver the warrant to

Bankers Trust Australia Ltd Sydney.

(e) On 12 June 1987 sums totalling $A10m were drawn from

ANZ Adelaide bank Account of FH Faulding and Co Ltd no

7752 63498.

(f) FH Faulding and Co Ltd were not aware of any

instructions or procedures relating to the putting in

place of the deposit in the Cook Islands other than

those referred to in the information and documents

provided.

(g) On 10 June 1987 a Letter of Request for the opening of

a Short Term Money Market Account with Finance

Acceptances Ltd was sealed by the Board of FH Faulding

and Co Ltd, with any two of the signatories (G. Carman,

G Pritchard and A. Phillis) to operate the account.

(h) FH Faulding and Co Ltd did not have a Statement of

Account or other documentary evidence of the actual

opening or usage of a short term money market account

with Finance Acceptances Ltd.

(i) On 10 June 1987 FH Faulding and Co Ltd granted a Power

of Attorney to Kenneth James Jensen and Michael Robert

Carr both of Peat Marwick Mitchell and Co to perform the

following acts in the Cook Islands:

(i) On 11 June 1987 (settlement day) to purchase

from Burns Philp Finance Acceptances Ltd on

behalf of FH Faulding and Co Ltd a Non Negotiable

Certificate of Deposit for $A10m for a term of

364 days at an interest rate as advised by fax

or telex on Settlement day.

(ii) For this purpose set out in (i) to request

and authorise Finance Acceptances Ltd on

Settlement Day to debit the face value of the

Certificate of Deposit to the Short Term Money

Market Account maintained by FH Faulding and Co

Ltd with Finance Acceptances Ltd.

(iii) To hold the Certificate of Deposit in safe

custody for the grantor in the Cook Islands and

to send to FH Faulding and Co Ltd by mail a

photocopy duly certified by the Attorney.

(iv) To Instruct Finance Acceptances to credit

the aforementioned Short Term Money Market

account with the interest payable less

withholding tax and remit the balance of this

account to ANZ Banking Group Ltd Adelaide

account no 7752 63498.

(v) To receive from the bank a receipt issued by

the Government of the Cook Islands for the

Withholding tax and forward the same to FH

Faulding and Co Ltd.

(vi) To receive on behalf of and forward to FH

Faulding and Co Ltd any non-recourse notice issued

by Finance Acceptances Ltd and to surrender the

Certificate of Deposit to the Bank in

consequence thereof.

(vii) In the event that Finance Acceptance Ltd

did not issue a non-recourse notice, to

surrender the Certificate of Deposit to Finance

Acceptances Ltd at Maturity and remit the

proceeds in accordance with the instructions

therein.

(j) FH Faulding and Co Ltd recently acknowledged that the

Power of Attorney contains an error in referring to

the purchasing of the Certificate of Deposit from

Burns Philp Finance Acceptances Ltd.

(k) FH Faulding and Co Ltd did not receive a report or

advice from the Attorneys advising of the carrying out

of any of the duties. No account was ever rendered to

FH Faulding and Co Ltd in respect of those services.

(l) A letter bearing an Inland Revenue Department, Cook

Islands letterhead acknowledging the receipt of the

sum of $NZ44011.30 (based on $A36010.05) paid by

Finance Acceptances Ltd being final tax on interest

paid to FH Faulding and Co Ltd was issued on 12 June

(m) Bankers Trust Australia Ltd, Melbourne advised FH

Faulding and Co Ltd by undated letter of the terms and

particulars of a Letter of Credit No SC733/87 for the

sum of $A10m in favour of FH Faulding and Co Ltd,

(issued in conjunction with the Certificate of Deposit

issued by Finance Acceptances Ltd) received by Bankers

Trust Australia Ltd Melbourne from Bankers Trust Co,

Singapore Branch by tested telex.

(n) On 12 June 1987 the sum of $A1,164,304.90 was received

in the Adelaide ANZ bank account of FH Faulding and Co

no 7752 63498.

(o) On 24 June 1987 a non-recourse notice was issued to FH

Faulding and Co Ltd by Finance Acceptances Ltd.

(p) On 31 May 1988 Bankers Trust Australia Ltd, Melbourne

advised details of the documents which were required

for settlement, and that they could be presented on

maturity date to Bankers Trust Australia Ltd,

Melbourne, upon which (if in order) Bankers Trust

Australia Ltd would present a bank warrant to ANZ in

favour of FH Faulding and Co Ltd.

(q) A declaration by the Secretary of FH Faulding and Co Ltd

was made pursuant to Letter Of Credit No SC733/87

claiming the amount of $A10m and certifying that a

Certificate of Deposit had not been issued in relation

to the deposit, after due request on 30th May 1988.

(r) A declaration by the Secretary of FH Faulding and Co Ltd

was made pursuant to Letter Of Credit No SC733/87

claiming the amount of $A10m and certifying that the

amount had not been received from Finance Acceptances

Ltd dated 1 June 1988.

(s) On 10 June 1988 a Draft drawn upon Letter of Credit

(No. SC733)/87 issued by Bankers Trust Company

Singapore dated 12 June 1987 was issued by the ANZ

Banking Group to Bankers Trust Australia Ltd,

Melbourne for the sum of $A10m, with charges to be on

account of drawee.

(t) On 10 June 1988, the amount of $A10m was deposited in

the ANZ Adelaide Bank account of FH Faulding and Co Ltd

No 7752 63498."

8. In his written reasons Mr. Hennessy identified in paragraph 9 the material to which he had regard and set out in paragraph 10 his reasons for issuing the notice under section 264A of the Act as follows :-

"10. My reasons for issuing the notice were as follows:

(a) I wanted to obtain all the information and documents

relevant to the issue of whether the exemption claim

was justified in view of the provisions of section

23(q) and the general anti-avoidance provisions of

Part IVA of the Act;

(b) the reasons set out in the submission of Claire Gill,

with whose submission I agreed.

(c) I formed the belief referred to in paragraph (8), and

my reasons for doing that were -

(i) the transactions and arrangements, to

which I have referred, were said to have

involved, in part, the participation of a

person or company located outside

Australia and, in part, the movement in,

or dealing with, funds to, from or in a

place outside Australia.

(ii) the persons or companies located overseas

appeared to have been involved in

commercial or business relationships and

therefore would, in the ordinary course of

things, keep records of business

transactions and arrangements and have

knowledge of them.

(iii) the original documents referred to in

items 22 to 34 of the notice were

apparently the subject of a fax or telex

transmission from a place outside

Australia, or were sent to a place outside

Australia."

9. He additionally took into account the following matters specified in paragraph 11 of his reasons:-

"11. In issuing the notice I took into account, in addition

to the matters mentioned above, the following:

(i) that it would be likely that the company would

have considerable difficulty in obtaining all

the information and documents;

(ii) that the Australian Taxation Office had been

provided, by the company with copies of some of

the original documents requested in paras 22 to

31 of the notice;

(iii) that the company had advised the Australian

Taxation Office that it had provided all

relevant information and documents that were

available to it;

(iv) the terms of section 264A;

(v) that some or all of the information and

documents requested was, or was likely to be,

held by persons or companies over which the

company has no control or power.

(vi) that the Commissioner could attempt to seek the

information and documents, or some of them, from

persons or companies overseas, but that such

attempts might be unsuccessful."

10. Attached to Mr. Hennessy's reasons was a submission from Claire Gill (an officer of the Australian Taxation Office) to Mr. Hennessy seeking the issue of a notice to the applicant under section 264A of the Act. Mr. Hennessy agreed with the submission of Ms. Gill and adopted it as part of his reasoning. As appears from Ms. Gill's submission, the applicant's investment was one of a number entered into by various parties to take advantage of section 23(q) of the Act prior to its repeal on 1 July, 1987. The Australian Taxation Office, as part of its investigations, has not been able to satisfy itself that the funds invested by the applicant and others ever reached the Cook Islands, or that interest was earned in the Cook Islands. Ms. Gill said, in part, in her submission:-

"As has been noted, it is seen as crucial to determine the

exact means by which the funds arrived in the Cook Islands;

and full details of the movement of the funds/value from the

time of settlement until the time of unwinding of these

arrangements. Until this information is obtained, it is not

possible to fully address the issues relevant to determining

the source of the interest. Given that:

. the taxpayer claims to have no knowledge of these

matters;

. the Commissioner has no double tax treaty with the

Cook Islands, and therefore no powers to access any

information there;

. Bankers Trust were not cooperative in providing

information in another such case involving a deposit

with Finance Acceptances,

the Commissioners prospects of obtaining any further

information on these matters by conventional means are slim.

Although a Melbourne case is proceeding as a 'test case' in

relation to the proper legal interpretation of the 'source'

of interest, it will still be necessary to determine the

factual situation in this case in as far as

confirming/attacking the effectiveness of the transactions

in achieving their purpose.

......

Intentionally or otherwise, this is the situation here. FHF

has provided certain documentation which, if taken alone,

could lead to the presumption that a sum of money was sent

to the Cook Islands and deposited in an account in the name

of FHF and then subsequently drawn upon to purchase a CD

(Certificate of Deposit) in the Cook Islands. The company

claims to have no other information or evidence to prove

that the actual funds reached the Cook Islands, other than

the CD itself, the application to open the account and the

Power of Attorney.

It can be seen from the other cases however, that the

existence of these documents does not necessarily mean that

the funds ever reached the Cook Islands or came under the

control of Finance Acceptances Ltd, or that the true nature

of the transactions was such as the documentation purported

them to be. Such conclusions, which are all relevant to the

'source' of the interest derived, can only be drawn after

all of the details of the way in which the transactions were

effected are known. Consequently the existing documents

provided may be misleading in isolation.

I have therefore come to the conclusion that we should use

section 264A in this case to endeavour to obtain access to

all of the relevant documents to this issue that are held

overseas. This appears to be the only option open to the

Commissioner to ensure that all relevant information is

obtained. The evidentiary sanction is such that if some of

these documents/information are withheld, the Commissioner

is empowered to preclude the use of all of the

documents/information in any dispute proceedings. Although

we have already been provided with some copies of documents

(and copies of copies), many of the original documents

(which, under the rules of evidence would be required to be

produced in any court proceedings) are believed to be

overseas. I propose to request these originals. (Note that

secondary evidence, such as copies of the requested

documents, are also subject to the evidentiary sanction).

The fact that copies of some documents are available in

Australia does not preclude the Commissioner from including

the originals in the request.

A draft request is attached. Covered is all information

believed to be held overseas (including documents containing

that information) neccessary (sic) to reconstruct all

aspects of the funds movement and accounts transfers, as

well as all original documentation believed to be overseas

which would be necessary to evidence the transactions, as

well as to understand the tax status of Finance Acceptances

in the Cook Islands. The following paragraphs deal with

each item in the request and address my reasons for

believing the information or documents are overseas.

The request is fairly lengthy and detailed, and is likely to

cause some concern to the taxpayer. I have confined myself

solely to matters that I consider to be relevant to the

issue in question, whilst at the same time endeavouring to

be thorough, giving that the effectiveness of the notice and

the sanction depend upon this. I feel, however, in order to

minimise the impact of the notice on the taxpayer, that the

taxpayer should be forewarned that it is coming, and it

should be explained to them that this course of action is

being taken solely because the Commissioner has no other

avenues open to him to obtain vital evidence relating to

this matter. This could be done at the meeting to be

arranged with the taxpayer to discuss the progress of the

audit and the audit plan."

11. Having regard to the numerous objections taken to the notice it is necessary that it be set out in full:-

"INCOME TAX ASSESSMENT ACT 1936

SECTION 264A

NOTICE TO FURNISH OFFSHORE INFORMATION

TAKE NOTICE that, in the exercise of the powers and

functions conferred upon me as Deputy Commissioner by

delegation from the Commissioner of Taxation under the

provisions of the Taxation Administration Act 1953, I, BRIAN

FRANCIS POWER, do by this notice pursuant to paragraph

264A(1)(c) and (d), require you to provide me, on or before

18 January 1993, with information and documents relevant to

the assessment of FH Faulding and Co Ltd for the year ended 30

June 1987 as specified in the following paragraphs.

ISSUE TO WHICH THIS REQUEST RELATES

This request relates to your claim for exemption from tax

pursuant to section 23(q) of the Income Tax Assessment Act

of interest of $1,164,304.90 derived from an investment of

$A10m in the Cook Islands in the Income Year ended 30 June

The Commissioner has reason to believe that the information

requested in this notice is within the knowledge (whether

exclusive or otherwise) of a person outside Australia; or

recorded (whether exclusively or otherwise) in a document

outside of Australia, or kept (whether exclusively or

otherwise) by means of mechanical, electronic or other

device outside Australia.

INFORMATION TO BE PROVIDED

(A) IN RELATION TO THE TRANSFER BY YOU OF $A10M TO FINANCE

ACCEPTANCES LTD IN THE COOK ISLANDS TO PURCHASE A

NON-NEGOTIABLE CERTIFICATE OF DEPOSIT IN JUNE 1987:

(Note that a reference to 'the funds' includes 'value' for

the funds)

1. Provide the following information regarding the means

by which the funds were sent to the Cook Islands from

Australia (i.e. the trail of the funds through the banking

system) and then invested/utilised by Finance Acceptances

Ltd:

(a) the names of all overseas institutions/parties who

received and held or passed on the funds, the capacity

in which they held the funds, and the date of each

transaction.

(b) the methods by which each leg of the funds transfer

took place (e.g. Telegraphic Transfer, Journal entry

etc)

(c) the accounting entries reflecting the transfers in the

books of account of each party identified in request

1(a).

(d) details of all account transactions for the month of

June 1987 that were posted to all of the accounts

affected by the accounting entries referred to in

request 1(c) above (as would appear in an account

statement or ledger)

(e) details of all advices, telexes, memos, faxes,

telephone conversations, notifications, confirmations

or other communications which issued or took place in

effecting the transfers.

In responding to this request, you are asked to cover all

transactions comprising the flow of these funds from the

time they left Australia up until the point where they were

received by the party with whom they were invested by

Finance Acceptances Ltd. If, however, the party with whom

the funds were invested by Finance Acceptances Ltd was a

member, associate or affiliate of either Finance Acceptances

Ltd or the Bankers Trust Group, provide such information up

to the point where the funds were invested with a party not

associated with Finance Acceptances Ltd or the Bankers Trust

Group (such party being referred to as the 'Investee' in

subsequent requests).

2. Advise what actions were performed by Kenneth James

Jensen and Michael Robert Carr on behalf of FH Faulding and

Co Ltd pursuant to the Power of Attorney granted by FH

Faulding and Co Ltd to those persons to perform specified

Acts, sealed on 10 June 1987, in relation to these

transactions (sch E(i) and E(ii) of Power of Attorney).

Provide an explanation if these actions deviated in any way

from the instructions.

3. Provide the following details relating to the

account(s) rendered by the persons specified in request 2.

in respect of those services:

(a) To whom the account(s) were rendered

(b) Details of the services charged for and the amount

charged

(c) The date the account(s) were rendered.

4. Provide an explanation from Finance Acceptances Ltd as

to why a Power of Attorney which was defective (e.g. the

wrong bank was specified), was accepted as authorising the

withdrawal from the Short Term Money Market account in the

name of FH Faulding and Co Ltd.

5. Provide the following details in relation to all

agreements (written or oral) that were entered into between

Finance Acceptances Ltd and Bankers Trust Company, Singapore

or Bankers Trust Australia Ltd or any other financial

institution in relation to the investment of the funds or

the pledging of same, or any other aspect of the

transactions:

(a) The Parties to the agreement(s) and the date entered

into

(b) The full wording of the agreement(s).

6. All information in respect of these transactions and

the investment of the funds that has not already been

requested, that is within the knowledge of or possession of

(a) G.T. Brown of the Cook Islands;

(b) South Pacific Trust Corporation of the Cook Islands;

(c) Finance Acceptances Ltd of the Cook Islands;

(d) Bankers Trust Company, Singapore.

(B) IN RELATION TO THE INTEREST PAYMENT OF $1,164,304.90

RECEIVED BY YOU ON 12 JUNE 1987

7. Provide the following information regarding the means

by which interest was sent from Finance Acceptances Ltd, to

you in Australia (i.e. the trail of the funds through the

banking system):

(a) the names of all overseas institutions/parties who

received and held or passed on the interest funds, the

capacity in which they held the funds, and the date of

each transaction.

(b) the methods by which each leg of the funds transfer

took place (e.g. Telegraphic Transfer, Journal entry

etc)

(c) the accounting entries reflecting the transfers in the

books of each party identified in request 7(a)

(d) details of all account transactions for the month of

June 1987 that were posted to all of the accounts

affected by the accounting entries referred to in

request 7(c) above, if not already provided in

response to request 1(d) (as would appear in account

statements or ledgers)

(e) details of all advices, telexes, memos, faxes,

telephone conversations, notifications, confirmations

or other communications which issued or took place in

effecting the transfers.

8. Advise what actions were performed by Kenneth James

Jensen and Michael Robert Carr on behalf of FH Faulding and

Co Ltd pursuant to the Power of Attorney granted by FH

Faulding and Co Ltd to those persons to perform specified

Acts, sealed on 10 June 1987, in relation to these

transactions (Sch E(iv) of Power of Attorney). Provide an

explanation if these actions deviated in any way from the

instructions.

9. Provide the following details relating to the

account(s) rendered by the persons specified in request (8)

in respect of those services:

(a) To whom the account(s) were rendered

(b) Details of the services charged for and the amount

charged

(c) The date the account(s) were rendered

10. Provide an explanation from Finance Acceptances Ltd as

to why a Power of Attorney which was defective (e.g., the

wrong bank was specified) was accepted as authorising

operations on the Short Term Money Market account in the

name of FH Faulding and Co Ltd.

11. Provide the following information in respect of the

Withholding Tax paid to the Inland Revenue Department, Cook

Islands of $A36,010.05:

(a) The name of the party who made the payment and date

the payment was made

(b) the means of payment

(c) the accounting entries in the books of the payer

reflecting the payment

12. All information in respect of these transactions that

has not already been requested, that is within the knowledge

or possession of:

(a) G.T. Brown of the Cook Islands;

(b) South Pacific Trust Corporation of the Cook Islands;

(c) Finance Acceptances Ltd of the Cook Islands;

(d) Bankers Trust Company, Singapore.

(C) IN RELATION TO ANY OTHER INTEREST DERIVED ON THE $10M

IN FUNDS

13. Provide the following information regarding the means

by which any interest in respect of the $10m in funds

payable by the 'Investee' identified in request (1), flowed

back to Finance Acceptances Ltd in the Cook Islands (i.e.

the trail of the funds through the banking system):

(a) the names of all overseas institutions/parties who

received and held or passed on the interest funds, the

capacity in which they held the funds and the date of

each transaction.

(b) the methods by which each leg of the funds transfer

took place (e.g. Telegraphic Transfer, Journal entry

etc)

(c) the accounting entries reflecting the transfers in the

books of each party identified in request 13(a)

(d) details of all account transactions which occurred in

the same month as these transfers, that were posted to

all of the accounts affected by the accounting entries

referred to in request 13(c) above, (as would appear

in account statements or ledgers)

(e) details of all advices, telexes, memos, faxes,

telephone conversations, notifications, confirmations

or other communications which issued or took place in

effecting the transfers.

(D) IN RELATION TO THE REDEMPTION OF THE $10M DEPOSIT IN

JUNE 1988

14. Provide the following information regarding the means

by which the $10m in funds flowed back from the 'Investee'

identified in request (1) to Australia (i.e. the trail of

the funds through the banking system):

(a) the names of all overseas institutions/parties who

received and held or passed on the funds, the capacity

in which they held the funds and the date of each

transaction

(b) the methods by which each overseas leg of the funds

transfer took place (e.g. Telegraphic Transfer,

Journal entry etc)

(c) the accounting entries reflecting the transfers in the

books of each party identified in request 14(a).

(d) details of all account transactions for the month of

June 1988 that were posted to all of the accounts

affected by the accounting entries referred to in

request 14(c) above (as would appear on account

statements or ledgers)

(e) details of all advices, telexes, memos, faxes,

telephone conversations, notifications, confirmations

or other communications which issued or took place in

effecting the transfers.

15. Details of all actions performed by Kenneth James

Jensen and Michael Robert Carr on behalf of FH Faulding and

Co Ltd pursuant to the Power of Attorney granted by FH

Faulding and Co Ltd to those persons to perform specified

Acts, sealed on 10 June 1987, in relation to the holding and

copying of the Certificate of Deposit (Sch E(iii) of Power

of Attorney), the withholding tax receipt (Sch E(v) of Power

of Attorney) and the non-recourse notice received from

Finance Acceptances Ltd (Sch E(vi) of Power of Attorney).

Provide an explanation if these actions deviated in any way

from the instructions.

16. Provide the following details of the account rendered

by the persons specified in request (15) in respect of those

services:

(a) To whom the account(s) were rendered

(b) Details of the services charged for and the amount

charged

(c) The date the account(s) were rendered

17. All information in respect of these transactions that

has not already been requested, that is within the knowledge

or possession of:

(a) G.T. Brown of the Cook Islands;

(b) South Pacific Trust Corporation;

(c) Finance Acceptances Ltd;

(d) Bankers Trust Company, Singapore.

(E) IN RELATION TO LETTER OF CREDIT NO SC 733/87 ISSUED BY

BANKERS TRUST COMPANY, SINGAPORE

18. Provide the following information in relation to the

issue of the Letter of Credit to Finance Acceptances Ltd in

favour of FH Faulding and Co Ltd:

(a) Details of all matters taken into account and

considered by Bankers Trust company, Singapore in

reaching the decision to issue the Letter of Credit.

(b) Details of all communications entered into by Bankers

Trust Company, Singapore with any other party in

relation to the issue or prospective issue of the

Letter of Credit.

(F) IN RELATION TO THE ISSUE OF THE NON-RECOURSE NOTICE

DATED 24 JUNE 1987 BY FINANCE ACCEPTANCES LTD TO KENNETH

JAMES JENSEN AND MICHAEL ROBERT CARR OF PEAT MARWICK

RARATONGA (ATTORNEYS FOR FH FAULDING and CO LTD)

19. Provide the following information in respect of the

issue by Finance Acceptances Ltd of this notice:

(a) Details of the reasons and considerations behind the

decision to issue the notice

(b) Details of all communications entered into by Finance

Acceptances Ltd with any other party in relation to

the issue or prospective issue of the notice.

(c) Details as follows of any transfer of funds which

occurred as a consequence of the issue of this notice

(i.e. the trail of the funds through the banking

system):

(i) the parties to the transfer,

(ii) the date of the transfer

(iii) the method of the transfer

(iv) the accounting entries giving effect to the

transfer in the books of each party

(v) details of all account transactions which took

place in the same month as the transfer that

were posted to the accounts affected by the

accounting entries (as would appear on account

statements or ledgers)

(vi) details of all advices, telexes, memos, faxes,

telephone conversations, notifications,

confirmations or other communications which

issued or took place in effecting the transfers.

(vii) the reasons for the transfer

(G) IN RELATION TO ALL MATTERS COVERED IN SECTIONS (A) TO

(F) ABOVE

20. Provide the following details of any payment made to

or by any Bankers Trust Group member or affiliate, Finance

Acceptances Ltd or affiliates, or any other party (excluding

the parties identified in request (3)), other than the

payments covered under sections A, B and C of this request,

that was paid in relation to any aspect of the whole of

these arrangements (including any commission, fee, or

reward):

(a) the amount of the payment

(b) the reason for the payment

(c) the party making and the party receiving the payment

(d) the method used to make the payment

(e) details of all advices, telexes, memos, faxes,

telephone conversations, notifications, confirmations

or other communications which took place in effecting

the payment.

(H) IN RELATION TO FINANCE ACCEPTANCES LTD

21. Provide the following information:

(a) When and where Finance Acceptances Ltd was

incorporated, and the names of the shareholders of the

company.

(b) Details of all communications between Finance

Acceptances Ltd and Bankers Trust Company, Singapore

or Bankers Trust Australia Ltd with regard to this

type of investment arrangement in general or to any

aspect of this particular investment arrangement.

(c) Details of the type of Banking Licence issued by the

Cook Islands Government to Finance Acceptances Ltd,

the date of issue, and details of any conditions

placed upon the issue.

(d) Details of any arrangements entered into between

Finance Acceptances Ltd and the Government (or its

agents) of the Cook Islands as to the exemption or

removal of the exemption of Finance Acceptances Ltd

from liability to pay interest withholding tax in

relation to interest payments to offshore deposit

holders; and/or rates of interest withholding tax

payable.

MANNER IN WHICH INFORMATION TO BE PROVIDED:

Where such information exists in original documentary form

overseas (regardless of whatever other form it may exist

in), then the original documents are to be provided to Mr

Desmond J Hennessy, Case Manager, Complex Audit in Adelaide.

Where such information does not exist in original

documentary form overseas, but does exist in copied

documentary form overseas, (regardless of whatever other

form it may exist in), then the copies are to be provided to

Mr Desmond J Hennessy, Case Manager, Complex Audit in

Adelaide.

Where such information does not exist in documentary form,

(regardless of whatever other form it may exist in), but is

kept by means of mechanical, electronic or other device

outside of Australia, then printed output of the information

from such device is to be provided to Mr Desmond J Hennessy,

Case Manager, Complex Audit in Adelaide.

Where such information does not exist in any of the above

forms, it is to be provided to Mr Desmond J Hennessy, Case

Manager, Complex Audit in Adelaide in the form of a

statement made by the overseas party who has first-hand

knowledge of the information.

Further, the Commissioner has reason to believe that the

original documents listed in this request are held outside

of Australia (whether or not copies are available in

Australia).

DOCUMENTS TO BE PROVIDED

22. Letter of Offer for Australian Dollar Investment by

Way of Non-Negotiable Certificate of Deposit for $A10m,

faxed to FH Faulding and Co Ltd and dated 9 June, 1987.

23. Letter of Request for the Opening of a Short Term

Money Market Account with Finance Acceptances Ltd ('the

Bank'), sealed by FH Faulding and Co Ltd on the 10 June 1987,

received by Finance Acceptances Ltd from FH Faulding and Co

Ltd.

24. Power of Attorney dated 10 June 1987 granted by FH

Faulding and Co Ltd to Kenneth James Jensen (Chartered

Accountant), Peat Marwick, Mitchell and Co. and Michael

Robert Carr (Chartered Accountant), Peat, Marwick, Mitchell

and Co. to perform certain specified acts in the Cook

Islands, as received by those persons.

25. Withdrawal slip(s) or advice(s) lodged with Finance

Acceptances Ltd, Cook Islands on 11 June 1987 (Cook Island

time) against Short Term Money Market Account in the name of

FH Faulding and Co Ltd for the withdrawal of sums of $A10m and

$A1,164,324.90 or $A1,164,304.90.

26. Instruction issued by Attorneys for FH Faulding and Co

Ltd to Finance Acceptances Ltd on or before 11 June 1987

relating to the crediting and dealing with of the interest

payable on Non-negotiable Certificate of Deposit No 87603.

27. Non-Negotiable Certificate of Deposit No 87603 dated

11 June 1987 issued by Finance Acceptances Ltd.

28. Official Receipt issued comtemporaneously (sic) with

the making of Payment of Withholding Tax under the Income

Tax Act 1972 of the Cook Islands issued in respect of a

payment of $A36,010.05 ($NZ44,011.30) made on behalf of FH

Faulding and Co Ltd on or around 11-12 June 1987 (Cook Islands

time).

29. Non-Recourse Notice dated 24 July 1987 issued by

Finance Acceptances Ltd, Cook Islands to Kenneth James

Jensen and Michael Robert Carr, Attorneys for FH Faulding and

Co Ltd.

30. All documents received by Bankers Trust Company,

Singapore in June 1988 to effect negotiation of $A10m under

Letter of Credit No SC733/87.

31. Tested Telex issued by Bankers Trust Company,

Singapore Branch, to Bankers Trust Australia Ltd, regarding

the issuing by Bankers Trust Company, Singapore of

Irrevocable Non-negotiable Standby Letter of Credit No

SC733/87 in favour of FH Faulding and Co Ltd, effective on and

from 12 June 1987 (as produced by the Bankers Trust Company,

Singapore Telex machine on transmission of the telex).

32. Banking Licence issued to Finance Acceptances Ltd as

was valid during the currency of the deposit.

33. Sections of the published legislation of the

Government of the Cook Islands pursuant to which the

liability to pay Interest Withholding Tax of AUD36,010.05 to

the Cook Islands Internal Revenue Department in respect of

the interest payment made to FH Faulding and Co Ltd on 12 June

1987 arose.

34. Letter of Credit No SC733/87 issued by Bankers Trust

Company, Singapore to Finance Acceptances in June 1987.

MANNER IN WHICH TO BE PROVIDED

The originals of these documents are to be produced to

Mr Desmond J Hennessy, Case Manager, Complex Audit in

Adelaide.

TAKE NOTICE that Sub-section 264A(10) provides for the

imposition of an evidentiary sanction on a taxpayer who

refuses to or fails to fully comply with this request. That

is, where a taxpayer fails to provide all of the information

or documents requested in this notice in the time specified,

the documents will not be admissible in proceedings

disputing your assessment, without the consent of the

Commissioner."

12. In her submission to Mr. Hennessy, Ms. Gill set out her reasons for each request. The reference in the reasons to "TD" is to identify Taxpayer Documents supplied by the applicant.

13. The reasons of Ms. Gill as set out in the submissions were:-

"REASONS FOR BELIEVING THE INFORMATION AND DOCUMENTS

REQUESTED EXIST OVERSEAS.

Request No. Reason

(1),(7),(14) . The information provided by the

company to date establishes that the

$A10m to be invested with Finance

Acceptances Ltd, Cook Islands, was

requested to be telegraphically

transferred to Bankers Trust Company

Singapore (TD6/5). Exactly the

means by which this was achieved is

not known. Further information

provided suggests that the funds

were to somehow be transferred to

the Cook Islands to FH Fauldings

account with Finance Acceptances,

then withdrawn by the Attorneys

appointed by FH Faulding and the

proceeds used by those Attorneys to

acquire the NCD. (TD6/4 and 6/3). The

exact means of the transfer from

Singapore to Cook Islands was not

advised by FHF.

. Given that Finance Acceptances had

undertaken to pay a pre-determined rate of

interest (in fact paid in advance), it

must have invested these funds in some way

to produce a return exceeding this rate of

interest, probably also fixed.

It is known that the interest payment was

returned to the short term money market

account of FH Faulding and Co Ltd on 12 June

1987, but the place of origin, the path

the interest payment took, and the means

of transfer from the Cook Islands to

Australia are not known.

. On redemption of the deposit in June

1988, the funds were returned to the

account of FHF with the ANZ Bank in

Adelaide (TD 13/6), apparently on the last

leg coming from Bankers Trust Australia

Ltd in Melbourne (TD4/4). Details of how

the funds were transferred from the Cook

Islands to Australia have not been

provided.

Consequently, given that most of the above

transfers took place within the banking

system, and therefore would have resulted

in an 'accounting trail' of entries posted

to accounts, as well as a series of

communications between the banks to put

into place and confirm the transactions, I

believe that persons, documents or stored

data within each of the overseas

institutions who took value for the funds

should be in possession of/contain the

requested information.

(2),(8),(15) A Power of Attorney was issued to

the persons detailed, who reside in

the Cook Islands, to perform certain

acts in the Cook Islands and which

are purported to have been

performed. (TD4/3). Consequently,

details of the information specified

in this request should be available

from these persons or their records

in the Cook Islands.

(3),(9),(16) As these persons specified in this

request are in the business of

providing such services, they must

have been remunerated for them, and

would consequently have details of

such remuneration.

(4),(10) FHF have conceded that an error was made

in the preparation of the Power of

Attorney in that the name of the wrong

bank was inserted thereon. Also, it is

noted that two of the required signatories

did not sign the Power of Attorney, and

therefore at face value it appears the

withdrawal from the account was

unauthorised. The reasons as to why the

Power of Attorney was accepted as

authorising the transactions on the

account would be within the knowledge or

possession of officers of Finance

Acceptances in the Cook Islands.

(5) If any such agreements were entered into

by the specified parties, as occurred in

similar transactions entered into by other

taxpayers, details of same will be within

the knowledge or possession of those

parties overseas.

(6),(12),(17) The overseas parties specified in

this request were involved in the

transactions, as per TD 5/1;

4/2,3,17,18 (signatory and fax

headings) and 5/5. Consequently

they may be in possession of further

information in respect of these

transactions which has not been

requested, which will further

clarify the way in which the deposit

was effected.

(11) A letter evidencing the receipt of payment

of withholding taxes by the Cook Islands

Government has been provided by FHF.

Consequently the requested details

concerning who and how the payment was

made should be available in the Cook

Islands. The Power of Attorney indicates

that the receipt was to come from Finance

Acceptances, therefore it is likely that

the payment was made by an officer of this

Bank.

(13) This information as to the path followed

by the interest from the external party

with which the funds were invested till

the time it was paid to Finance Acceptance

should be available from those overseas

parties involved.

(18) As Banker's Trust Company Ltd Singapore

operates a commercial banking operation,

it will have reviewed all of the relevant

circumstances prior to granting the Letter

of Credit to FA, favour FHF, including

communicating with any other party as was

necessary to gather information,

assurances, etc. Consequently, the

information requested should be available

in Singapore.

(19) This notice was issued by Finance

Acceptances Ltd, pursuant to the

discretion granted to the Bank to do so in

the CD. Consequently, information as to

why and how it was decided to use this

discretion should be available from

parties or documents within FA in the Cook

Islands.

(20) As each of the overseas institutions

involved in transactions are in the

business of providing financial and

related services, some form of

remuneration would have been received by

them for their part in the transactions,

and this information would be available

from these parties, as would details of

any other payments which passed between

the parties to these transactions.

(21)(a) This information regarding the

incorporation and ownership of Finance

Acceptances should be available from the

place of incorporation, namely the Cook

Islands.

(21)(b) As Finance Acceptances have entered into

several such types of transaction (namely

Cook Island deposits for Australian

residents), it is probable that

considerable correspondence and other

communications were entered into between

these parties in setting up the framework

for the arrangements, as well as these

specific transactions. Evidence of the

overseas 'side' of these communications

should be available in either Singapore or

the Cook Islands.

(21)(c),(d) The information sought here relates to

dealings between the Cook Islands

Government and Finance Acceptances, and

therefore should be available in the Cook

Islands.

(22) The copy of this Letter of Offer provided

to us by FHF was notated at the top as

being 'faxed' from the South Pacific

Trust, a resident of the Cook Islands.

Consequently the original of this document

which passed through the fax machine

should be available in the Cook Islands.

(23) FHF claim to have sent this document to

Finance Acceptances in the Cook Islands in

order to open a short term money market

account with FA. Consequently it should

(or a fax thereof) should be in the Cook

Islands.

(24) This Power of Attorney was to be sent to

the nominated parties in this document,

and as they are resident in the Cook

Islands, should be available from there.

(25) These slips would have been lodged with

Finance Acceptances to enable the banking

transactions to be effected, and therefore

should be available from FA in the Cook

Islands.

(26) The Power of Attorney, Sch E(iv), directs

the Attorneys to instruct FA as to how the

interest credit is to be dealt with. It

would be expected in a banking environment

that such instructions would be given in

writing, and therefore should be available

from Finance Acceptances.

(27) This certificate was required to be

surrendered to Finance Acceptances in the

Cook Islands by the Attorneys on receipt

of the Non-recourse notice (Sch E(vi) of

Power of Attorney). It should therefore

be available from the Cook Islands.

(28) As the withholding tax was purportedly

paid into the Cook Islands Inland Revenue

Department, the actual receipt issued at

the time of payment (as opposed to the

letter of receipt subsequently issued and

sent to FHF) should be still in the

possession of the party in the Cook

Islands who physically paid in the tax.

(29) This notice was issued to the Attorneys in

the Cook Islands (Sch E(vi) of Power of

Attorney), and should therefore be

available in the Cook Islands.

(30) As these documents were sent by FHF to

either ANZ Adelaide or Bankers Trust Aust,

Melbourne (or both) for on-forwarding to

Bankers Trust Singapore in order to

negotiate the CD, these documents should

be available from Bankers Trust,

Singapore.

(31) The document headed Letter of Credit

issued by Banker's Trust in Melbourne to

FHF refers to the receipt by them of this

tested telex issued by Bankers Trust,

Singapore. The telex machine in Banker

(sic) Trust Singapore would have produced

a telex in relation to this transmission

at the time of transmission. This

document should therefore be available

from Bankers Trust in Singapore.

(32) As this licence was issued to FA in the

Cook Islands by the Cook Islands

Government, it should be available in the

Cook Islands.

(33) As the legislation requested is Cook

Island legislation, it should be available

in that country.

(34) The original of this Letter of Credit

issued by Bankers Trust Singapore should

be available from Finance Acceptances, the

party to whom the Letter of Credit was

issued.

CLAIRE GILL

SOG C. AULC 11

22/9/92"

14. Finance Acceptances Ltd. of the Cook Islands is now in liquidation. The whereabouts of Mr. G.T. Brown, the authorised signatory of Finance Acceptances Ltd. who executed the relevant documentation on behalf of that company is unknown.

15. On 26 November, 1992 Deloitte Ross Tohmatsu, the applicant's accountants, wrote to the Commissioner of Taxation as follows:-

"We act for F.H. Faulding and Co. Ltd and refer to the notice

issued by you pursuant to section 264A of the Income Tax

Assessment Act 1936 ('the Act'). Our client was surprised

to have received the notice in view of its general attitude

of co-operation in the audit of its affairs and because the

information sought by the notice had not previously been

sought without recourse to section 264A. It has,

nonetheless, endeavoured to comply with the notice, but has

now realised that it will be impossible to do so fully.

In the course of the efforts to date, our client has

discovered at least two obstacles to compliance with the

notice:

(i) Finance Acceptance Ltd is in liquidation;

and

(ii) Mr. G.T. Brown cannot be located.

There is, of course, a more general impediment to our

client's ability to comply with the notice of which your

office is aware, namely, that much of the information sought

is entirely beyond the control of our client, or of any

person over which our client has control.

The service of a notice of this kind has put our client in a

most difficult position; unless our client can obtain the

information in compliance with the notice, it will lose the

right to use that information in subsequent proceedings to

challenge any assessment which you may issue. Some of the

information in the notice may become available to our client

in objection and appeal proceedings by reason of court

powers to compel non parties to produce documents or to give

evidence. No such power, however, is available to our

client before then, although you may be able to obtain the

information directly from those who hold (or control) it

under your statutory powers under the Act.

In the circumstances, we are instructed to request that you

withdraw the notice under section 264A. Our client is

prepared to continue in its present endeavours to seek to

obtain the information you require, but is naturally anxious

that it not lose its rights to rely upon information which

it is incapable now of obtaining but which it may hereafter

obtain if it becomes relevant to an assessment subsequently

issued and when the court's powers of compulsion against

what are undoubtedly and genuinely unrelated third parties,

become available to our client.

Since having received the notice our client has been

informed that your audit manager, Mr Desmond Hennessy, was

unaware of the effect of the notice. We request, therefore,

that you confirm whether this is correct and, if so, why the

notice was issued to Faulding without prior consultation

with the company and on what basis it was considered

necessary to issue it.

In this regard we note that you are required to have formed

certain beliefs before notices under the section can be

issued. Indeed, the notice itself asserts that the beliefs

have been formed, but gives no details of the basis on which

they were formed.

Accordingly, we are instructed to ask for particulars of the

beliefs needed by the section to be formed and which the

notices themselves state have been formed.

Our client does not wish to challenge the validity of the

notice if the risk it poses can be removed and a more

satisfactory basis for providing information can be agreed

to. We repeat that our client has taken steps to obtain the

information and had thought that it might be able to do so.

It now realises that it is unlikely to be able to comply

with the notice for reasons beyond its control, but that it

will be prejudiced for an inability it cannot avoid.

Accordingly, it has sought the advice of senior counsel who

has advised that Faulding has strong grounds to challenge

the validity of the notice, both on its terms and on

constitutional grounds. In view of the time which has

already passed we request that you confirm that the notice

be withdrawn by 2pm tomorrow, failing which our client may

commence court proceedings challenging the validity of the

notice."

16. The Commissioner has declined to withdraw the notice.

17. In response to the notice Geoffrey Malcolm Pritchard, the company secretary and public officer of the applicant deposed:-

"5. On or about 28 October 1992, Faulding engaged KPMG

Peat Marwick of Adelaide ('KPMG') Chartered Accountants, to

assist in collecting the information and documents required

by the notice notwithstanding the matters set out in

paragraph 3 above.

6. Faulding is unable to obtain much of the information

and documents which the notice requires it to obtain. There

are many reasons for this incapacity:

(a) clauses A-1, 4, 5 and 6, B-7,10,11 and 12, C-13, D-14, 15,

16 and 17, F-19, G-20, H-21 and document nos. 23, 25,

26, 27, 28, 29, 32 and 34 require or may require the

co-operation of Finance Acceptance Ltd, a company

incorporated in the Cook Islands to assist Faulding in

responding to those parts of the notice. I am

informed by and verily believe KPMG that Finance

Acceptance Ltd, a company incorporated in the Cook

Islands, is in liquidation and that Mr John Kenning is

the liquidator of the Company. He has informed KPMG

that the company's records in his possession are

incomplete and locating particular documents is

difficult and to obtain his co-operation would require

payment by Faulding of his fees with no assurance as

to the result of his efforts;

(b) clauses A-1, 4, 5 and 6, B-7, 10, 11 and 12, C-13, D-14 and

17, F-19, G-20, H-21 and document nos. 23, 25, 26, 27,

28, 29, 32 and 34 require or may require the

co-operation of Mr GT Brown an officer of Finance

Acceptance Ltd at the time of the relevant transaction

to assist Faulding to respond to those parts of the

notice. I am informed by and verily believe KPMG that

as a result of their enquiries Mr GT Brown left the

Cook Islands 2 years ago and is believed to be

somewhere in Australia.

(c) Clauses A-1, 2, 3, B-8, 9 and 10, C-13, D-15 and 16, F-19,

G-20 and document nos. 24, 25 and 29, require or may

require the co-operation of Messrs Jensen and Carr to

assist Faulding in responding to these parts of the

notice. On or about 19 November 1992, KPMG sent a

letter by facsimile to Messrs Jensen and Carr requesting

their co-operation but to date no response has been

received."

18. Robert William Ward, an accountant employed by KPMG Peat Marwick, Chartered Accountants of Adelaide in an affidavit (Exhibit 5) deposed to the steps taken by KPMG Peat Marwick on behalf of the applicant to obtain from the liquidators of Finance Acceptances Ltd., Bankers Trust Australia Ltd. of Sydney and Mr. Michael Carr of Peat Marwick Mitchell and Co. (Cook Islands) who acted as one of the attorneys for the applicant in the transaction under power of attorney the information and documents sought in the section 264A notice and the results of such attempts. Mr. Ward was not cross-examined on his affidavit.

19. Affidavit material from Mr. Pritchard and Ms. Amanda Hocking, an accountant of Deloitte Ross Tohmatsu, was tendered into evidence and each was cross-examined on the hearing.

"(1) Where the Commissioner has reason to believe that:

(a) information relevant to the assessment of a taxpayer

is:

(i) within the knowledge (whether exclusive or

otherwise) of a person outside Australia; or

(ii) recorded (whether exclusively or otherwise) in a

document outside Australia; or

(iii) kept (whether exclusively or otherwise) by means

of a mechanical, electronic or other device

outside Australia; or

(b) documents relevant to the assessment of a taxpayer are

outside Australia (whether or not copies are in

Australia or, if the documents are copies of other

documents, whether or not those other documents are in

Australia);

the Commissioner may, by notice in writing served on the

taxpayer (which notice is in this section called the

'offshore information notice'), request the taxpayer:

(c) to give to the Commissioner, within the period and in

the manner specified in the offshore information

notice, any such information; or

(d) to produce to the Commissioner, within the period and

in the manner specified in the offshore information

notice, any such documents; or

(e) to make copies of any such documents and to produce to

the Commissioner, within the period and in the manner

specified in the offshore information notice, those

copies.

(2) The period specified in the offshore information

notice must end 90 days after the date of service of the

notice.

(3) Upon written application made by the taxpayer within

the period specified in the offshore information notice, the

Commissioner may, by notice in writing served on the

taxpayer, extend the period specified in the offshore

information notice.

(4) Where:

(a) an application under subsection (3) is made before the

end of the period specified in the offshore

information notice; and

(b) at the end of the period, the Commissioner has not

notified the taxpayer of the Commissioner's decision

on the application;

the following provisions have effect:

(c) the Commissioner is taken to have extended the period

under subsection (3) to the end of the day (in this

subsection called the 'decision day') on which the

Commissioner's decision is notified to the taxpayer;

(d) if the Commissioner decides to extend the period - the

extended period must end after the decision day.

(5) A reference in this section (other than subsection

(3)) to the period specified in the offshore information

notice is a reference to the period as extended under

subsection (3).

(6) Where:

(a) an offshore information notice (in this subsection

called the 'first notice') was served on a taxpayer;

and

(b) during the period specified in the first notice

(including a period specified by virtue of one or more

previous applications of this subsection), another

offshore information notice (which other notice is in

this subsection called the 'subsequent notice') is

served on the taxpayer; and

(c) the subsequent notice is expressed to be by way of

variation of the first notice;

the following provisions have effect:

(d) the request, or each of the requests, set out in the

subsequent notice is taken, for the purposes of

subsections (10), (11) and (14), to have been set out

in the first notice;

(e) if the period specified in the first notice would,

apart from this subsection, end before the end of the

period specified in the subsequent notice - the period

specified in the first notice is taken to have been

extended under subsection (3) to the end of the period

specified in the subsequent notice.

(7) The Commissioner may, by notice in writing served on

the taxpayer, vary the offshore information notice by:

(a) reducing its scope; or

(b) correcting a clerical error or obvious mistake;

and, if the Commissioner does so, a reference in this

section to the offshore information notice is to be read as

a reference to the notice as so varied.

(8) The Commissioner may withdraw an offshore information

notice.

(9) If the Commissioner withdraws an offshore information

notice, nothing in this section prevents the Commissioner

giving another offshore information notice in substitution,

in whole or in part, for the withdrawn notice.

(10) If the taxpayer refuses or fails to comply with the

request or requests set out in the offshore information

notice, then, except with the consent of the Commissioner:

(a) if the information or documents to which the request

or requests apply are only relevant to one issue

concerning the assessment of the taxpayer:

(i) where the request, or any of the requests, apply

to information - the information is not

admissible in proceedings disputing the

taxpayer's assessment; or

(ii) where the request, or any of the requests, apply

to documents - neither the documents, nor any

secondary evidence of the documents, are

admissible in proceedings disputing the

taxpayer's assessment; or

(b) if:

(i) the information or documents to which the

request or requests apply are relevant to 2 or

more issues concerning the assessment of the

taxpayer; and

(ii) the refusal or failure of the taxpayer relates

to information or documents that are relevant to

any or all of those issues;

the following provisions have effect:

(iii) where the request, or any of the requests, apply

to information - the information, to the extent

to which it is relevant to the issue or issues

mentioned in subparagraph (ii), is not

admissible in proceedings disputing the

taxpayer's assessment;

(iv) where the request, or any of the requests, apply

to documents - neither:

(A) the documents, to the extent to which they

are relevant to the issue or issues

mentioned in subparagraph (ii); nor

(B) secondary evidence of the documents, to

the extent to which the secondary evidence

is relevant to the issue or issues

mentioned in subparagraph (ii);

are admissible in proceedings disputing the taxpayer's

assessment.

(11) Without limiting the power conferred by subsection

(10), where:

(a) the taxpayer refuses or fails to comply with the

request or requests set out in the offshore

information notice; and

(b) the refusal or failure of the taxpayer relates to

some, but not all, of the information or documents to

which the request or requests apply and that are

relevant to a particular issue concerning assessment

of the taxpayer;

the Commissioner, in exercising that power, must have regard

to whether there is reason to believe that, because of the

absence of that information or those documents, the

remaining information or documents that are relevant to that

issue are, or are likely to be, misleading.

(12) The Commissioner, in exercising the power conferred by

subsection (10), must ignore the consequences (whether

direct or indirect) of an obligation arising under a law of,

or of a part of, a foreign country, in so far as that

obligation relates to the secrecy of information or

documents.

(13) In spite of anything in this section, the Commissioner

must give a consent under subsection (10) in any case where

a refusal would have the effect, for the purposes of the

Constitution, of making any tax or penalty incontestable.

(14) Where, before the commencement of the hearing of

proceedings disputing the taxpayer's assessment, the

Commissioner forms both of the following views:

(a) the view that the taxpayer has refused or failed to

comply with the request or requests set out in the

offshore information notice;

(b) the view that the Commissioner is unlikely to give a

consent under subsection (10) in relation to that

request or those requests and in relation to those

proceedings;

the Commissioner must serve on the taxpayer a notice in

writing setting out those views.

(15) A failure to comply with subsection (14) does not

affect the validity of a decision under subsection (10).

(16) A reference in this section to a refusal or failure of

a taxpayer to comply with a request includes a reference to

a refusal or failure resulting from the taxpayer being

incapable of complying with the request.

(17) A reference in this section to proceedings disputing

the taxpayer's assessment is a reference to proceedings

before a court or the Tribunal arising out of, or relating

to, an objection against the assessment.

(18) Nothing in this Act precludes an offshore information

notice from being set out in the same document as a notice

under section 264.

(19) An offshore information notice must set out the effect

of subsection (10).

(20) A failure to comply with subsection (19) does not

affect the validity of the offshore information notice.

(21) A request under this section is not taken to be a

requirement for the purposes of any other provision of this

Act or of any provision of the Taxation Administration Act

(22) A refusal or failure to comply with a request set out

in an offshore information notice is not an offence.

(23) The express references in this section to documents do

not imply that references to documents in any other

provision of this Act, or in a provision of the Taxation

Administration Act 1953, do not have the meaning given by

section 25 of the Acts Interpretation Act 1901.

(24) Nothing in this section affects the operation of

section 264 and nothing in section 264 affects the operation

of this section."

22. The applicant in support of its attack on the constitutional validity of section 264A referred to numerous decisions of the High Court which it contended established the following principles:-

1. Chapter III and section 71 of the Constitution imposes a

separation of judicial power from the legislative and

executive powers of the Commonwealth. The judicial power

is to be exercised by courts constituted under or invested

with jurisdiction by Chapter III of the Constitution and

not otherwise. (See, for example, Leeth v. The

Commonwealth [1992] HCA 29; (1992) 174 CLR 455 at 469, 470; Chu Kheng Lim

v. Minister for Immigration (1992) 176 CLR 1 at 26-27;

Nationwide News Pty. Ltd. v. Wills [1992] HCA 46; (1992) 177 CLR 1 at

69-71; Australian Capital Television Pty. Ltd. v. The

Commonwealth [1992] HCA 45; (1992) 177 CLR 106 at 215).

2. The legislature cannot direct or require courts in which

the judicial power of the Commonwealth is invested to

exercise the power in a manner or to produce an outcome

which is inconsistent with the essential character of a

court or with the nature of judicial power. (See, for

example, Leeth at 469-470; Chu Kheng Lim at 26-27, 37, 68;

Polyukhovich v. The Commonwealth [1991] HCA 32; (1991) 172 CLR 501 at

606-607, 608, 613, 704).

3. A legislative provision for the suppression of the truth in

judicial proceedings is inconsistent with the exercise of

judicial power and is unconstitutional. (See, for example,

Australian Communist Party v. The Commonwealth (1951) 83

CLR 1 at 258; Actors and Announcers Equity Association v.

Fontana Films Pty. Ltd. [1982] HCA 23; (1982) 150 CLR 169 at 186, 214,

215, 223; Polyukhovich at 608).

4. The Constitution by necessary implication adopts as a

fundamental principle the essential or underlying

theoretical equality of all persons under the law and

before the courts and the legislative power does not extend

to allow a law to impermissibly intrude into such implied

principles. (See, for example, Leeth at 486, 502).

5. The legislature may not pass a law which makes a tax

incontestable. (See, for example, Deputy Commissioner of

Taxation v. Brown [1958] HCA 2; (1958) 100 CLR 32 at 40; Deputy

Commissioner of Taxation v. Hankin [1959] HCA 2; (1959) 100 CLR 566 at

576; Girdis Pty. Ltd. v. Federal Commissioner of Taxation

[1969] HCA 5; (1969) 119 CLR 365 at 378-379, 388-389; MacCormick v.

Federal Commissioner of Taxation [1984] HCA 20; (1994) 158 CLR 622 at 640,

646, 658).

6. To sustain a law, which does not fall fairly and squarely

within the core of a subject matter of the legislative

power, as being incidental to the subject matter of the

power, or, as an exercise of the incidental power contained

in section 51(xxxix) of the Constitution, a reasonable

proportionality must exist between the designated object or

purpose and the means selected by the law for achieving

that object or purpose. (See, for example, The

Commonwealth v. Tasmania [1983] HCA 21; (1983) 158 CLR 1 at 260; South

Australia v. Tanner [1989] HCA 3; (1989) 166 CLR 161 at 165; Davis v.

The Commonwealth [1988] HCA 63; (1988) 166 CLR 79 at 99-100; Nationwide

News Pty. Ltd. v. Wills at 29-30, 93, 101).

23. The respondent did not seek to argue that the relevant constitutional principles were other than contended for by the applicant; rather it submitted that section 264A, as a matter of construction and operation, did not infringe any of the principles contended for.

24. Before undertaking a consideration of this issue, it is important to recall two statements made by members of the court in Leeth. The first is from the joint judgment of Mason CJ, Dawson and McHugh JJ (at 469 - 470):-

"Under s.71 of the constitution the judicial power of the

Commonwealth is vested in the High Court, in such other federal

courts as the Parliament creates and in such other courts as it

invests with federal jurisdiction. In Reg. v. Kirby; Ex parte

Boilermakers' Society of Australia [1956] HCA 10; (1956) 94 CLR 254 it was

held that Ch III of the Constitution, of which s.71 is the first

section, imposes a separation of judicial power from the other

powers of government. The judicial power of the Commonwealth is

to be exercised by courts constituted or invested with

jurisdiction under Ch. III and not otherwise. Nor is it possible

to invest a court under Ch. III with non-judicial powers that are

not ancillary, but are directed to some non-judicial purpose. But

to speak of judicial power in this context is to speak of the

function of a court rather than the law which a court is to apply

in the exercise of its function. Of course, legislation may

amount to a usurpation of judicial power, particularly in a

criminal case, if it prejudges an issue with respect to a

particular individual and requires a court to exercise its

function accordingly (see Liyanage v. The Queen (1967), 1 AC

259). It is upon this principle that bills of attainder may

offend against the separation of judicial power (see Polyukhovich

v. The Commonwealth [1991] HCA 32; (1991), 172 CLR 501). But a law of general

application which seeks in some respect to govern the exercise of

a jurisdiction which it confers does not trespass upon the

judicial function."

See also Harris v. Caladine [1991] HCA 9; (1991) 172 CLR 84 at 136 - 137 per Toohey J

25. The second is in the judgment of Gaudron J (at 501 - 502):-

"It has often been said that judicial power has not proved

susceptible of exhaustive or exclusive definition (Reg. v.

Davison [1954] HCA 46; (1954), 90 CLR 353, at p 366; Re Nolan; Ex

parte Young [1991] HCA 29; (1991), 172 CLR 460, at p 497; Polyukhovich

v. The Commonwealth [1991] HCA 32; (1991), 172 CLR 501, at p 532). A

definition of judicial power must take account of its

varying character: in some cases, the content of the power

will stamp it as one which can only be exercised by courts

(Reg. v. Kirby; Ex parte Boilermakers' Society of Australia

(1956), 94 CLR, at pp 271-272, 289); in others, the

content will indicate that it is a power with a 'double

aspect' (Queen Victoria Memorial Hospital v. Thornton

[1953] HCA 11; (1953), 87 CLR 144, at p 151; Reg. v. Davison (1954),

90 CLR, at pp 368-369; Harris v. Caladine (1991), 172

CLR, at pp 93, 147-148), in the sense that Parliament

may choose whether to confer it on a court in accordance

with Ch. III of the Constitution or on some other body.

Another feature which renders 'judicial power' difficult to

define is that it cannot be defined only in terms of its

content. It is necessary to have regard to the manner in

and the processes by which the power is or is to be

exercised (Harris v. Caladine (1991), 172 CLR, at p

150).

It is an essential feature of judicial power that it should

be exercised in accordance with the judicial process (ibid.;

Re Nolan; Ex parte Young (1991), 172 CLR, at p 496;

Polyukhovich v. The Commonwealth (1991), 172 CLR, at p

703; see also Reg. v. Trade Practices Tribunal; Ex parte

Tasmanian Breweries Pty. Ltd. [1970] HCA 8; (1970), 123 CLR 361, at p

374). A legislative direction which would require a power

vested in a court to be exercised other than in accordance

with that process is necessarily invalid. Its effect would

be to take the power outside the concept of 'judicial

power'. And a conferral of a power of that kind would

infringe the prohibition deriving from section 71 which

limits the powers which may be conferred on a court to those

which are judicial or ancillary or incidental to judicial

power."

26. The statement of Gaudron J is better understood when read in conjunction with her judgment in Harris v. Caladine [1991] HCA 9; (1991) 172 CLR 84 (at 146-148):-

"It is often said that the judicial power of the

Commonwealth is dealt with completely and exhaustively in s.

71 of the Constitution: see, for example, Huddart, Parker and

Co. Pty. Ltd. v. Moorehead [1909] HCA 36; (1909) 8 CLR 330, at p 355;

Dignan (1931) 46 CLR, at pp 96, 98, 116; Reg. v. Kirby;

Ex parte Boilermakers' Society of Australia ('the

Boilermakers' Case') [1956] HCA 10; (1956) 94 CLR 254, at p289; and

Attorney-General (Cth) v. The Queen ('the Boilermakers' Case

(Privy Council)') [1957] HCA 12; (1957) 95 CLR 529, at pp 537-538;

(1957) AC 288 at pp 312-313. The complete and exhaustive

nature of s.71 imports two distinct limitations. First,

only courts named or indicated in s.71 may exercise the

judicial power of the Commonwealth: see Waterside Workers'

Federation of Australia v. J.W. Alexander Ltd. ('Alexander's

Case') [1918] HCA 56; (1918) 25 CLR 434. Secondly, only judicial power

and powers ancillary or incidental thereto may be conferred

on a court as named or indicated in s.71. See the

Boilermakers' Case, noting, however, the criticism of its

principal conclusion by Barwick CJ and Mason J in Reg. v.

Joske; Ex parte Australian Building Construction Employees

and Builders' Labourers' Federation [1974] HCA 8; (1974) 130 CLR 87, at

pp 90, 102.

Although the limitations imported by the complete and

exhaustive nature of s.71 of the Constitution are each

expressed in terms of judicial power, each limitation is

directed to a different concept. The first is directed to

that power which, by reason that it is essentially judicial,

must be vested in courts. In general terms, that is the

power that is brought to bear in determining the guilt of,

or punishment for, breach of the law and in making final and

binding determinations in controversies as to the existence

of a legal right, power or obligation or as to legal status:

see Re Tracey; Ex parte Ryan [1989] HCA 12; (1989) 166 CLR 518, at p

580, per Deane J. See also Huddart, Parker (1909) 8 CLR,

at p 357, per Griffith CJ., and per Isaacs J (1909) 8

CLR, at p 383; Alexander's Case (1918) 25 CLR, at p

442, per Griffith CJ, and per Isaacs and Rich JJ (1918)

25 CLR at pp 463, 465; Reg. v. Trade Practices

Tribunal; Ex parte Tasmanian Breweries Pty. Ltd. (1970) 123

CLR 361, at p 374 per Kitto J. The second limitation is

directed to those powers which, although not essentially

judicial, may be vested in courts named or indicated in s.

71. In general terms, they are powers which are

appropriately vested in courts. The latter powers were

described by Dixon CJ and McTeirnan J. in Davison (1954)

90 CLR, at pp 368-369 as bearing a 'double aspect' in

that '(t)he legislature may commit (them) to courts falling

within Ch. III although much the same function(s) might be

performed administratively.' Powers which bear this 'double

aspect', if vested in a court as named or indicated in s.71,

form part of the judicial power of the Commonwealth with all

the consequences dictated by Ch. III of the Constitution;

see Federal Commissioner of Taxation v. Munro (1926) 38

CLR 153, at pp 175-176, per Isaacs J; Queen Victoria

Memorial Hospital v. Thornton [1953] HCA 11; (1953) 87 CLR 144, at p

151. See also the Boilermakers' Case (Privy Council) (1957)

95 CLR, at p 544; (1957) AC, at p 320. Conversely,

if vested in some other person or body, such powers stand

outside the reach of Ch III. See Reg. v. Hegarty; Ex

parte City of Salisbury [1981] HCA 51; (1981) 147 CLR 617, at p 628,

per Mason J, and per Murphy J (1981) 147 CLR, at pp

631-632; Re Ranger Uranium Mines Pty. Ltd.; Ex parte

Federated Miscellaneous Workers' Union of Australia (1987)

[1987] HCA 63; 163 CLR 656, at p 666.

If a power is one which can, at the will of Parliament, be

vested either in a court as named or indicated in s.71 or in

some other body or tribunal, then it is not one that, of its

nature, must be exercised by a court or, in practical terms,

by a person constituting the court."

27. The statements of Gaudron J reflect the view of all of the then members of the Court (Mason CJ, Wilson, Brennan, Deane, Dawson, Toohey and Gaudron JJ) in Re Ranger Uranium Mines Pty. Ltd.; Ex parte Federated Miscellaneous Workers' Union of Australia [1987] HCA 63; (1987) 163 CLR 656 at 665-666. See also the joint judgment of the Court (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ) in Precision Data Holdings Ltd. v. Wills (1991) 173 CLR 167 at 188-190 and Deane J in Polyukhovich at 608.

28. I turn now to a consideration of section 264A of the Act; as Isaacs J said in Federal Commissioner of Taxation v. Munro; British Imperial Oil Co. Ltd. v. Federal Commissioner of Taxation [1926] HCA 58; (1926) 38 CLR 153 at 180:-

"Has Parliament, on the true construction of the enactment,

misunderstood and gone beyond its constitutional powers?"

29. The power to issue an "offshore information notice" is conditioned upon the Commissioner having reason to believe that one or more of the circumstances specified in section 264A(1)(a) or (b) exists. The power of the Commissioner to request a taxpayer to provide information, to produce documents, or to copy documents and produce them to the Commissioner in accordance with the terms of a notice is contained in subsections 264A(1). The Commissioner may also serve a subsequent notice (section 264A(6)), vary an existing notice (section 264A(7)), withdraw a notice (section 264A(8)) and substitute another notice for the withdrawn notice (section 264A(9)).

30. The legislative purpose underlying subsections 264A(1) to (9) is clear; it is to enable the commissioner to obtain information and documentation relevant to the assessment of a taxpayer where the Commissioner has reason to believe that the information or documentation is outside Australia.

31. The consequence of a refusal or failure to comply with the request or requests set out in the offshore information notice is provided for in section 264A(10). Under that subsection, in proceedings disputing the taxpayer's assessment, the information or documents are not admissible in the circumstances provided in the subsection (paragraphs 264A(10)(a)(i)(ii)(iii) or (b)(i)(ii)(iii)). Nor is secondary evidence of any documents admissible in such proceedings. Notwithstanding the general prohibition as to admissibility provided by the subsection, the Commissioner by section 264A(10) is given power to consent to the admission of the information or documentation into evidence and thereby relieve the taxpayer from the operation of the statutory prohibition. Matters relevant to the exercise of the discretion under section 264A(10) are dealt with in subsections (11) to (13). Section 264A(11) requires the Commissioner, in exercising the power to consent conferred by section 264A(10), to have regard to whether there is reason to believe that because of the absence of the information or documents requested in respect of a particular issue relevant to the assessment, the remaining information or documents that are relevant to the issue are, or are likely to be, misleading. However, the opening words of subsection (11) make clear the power is not limited by that consideration alone and that other considerations not specified in the section may be relevant. Section 264A(12) requires the Commissioner, in exercising the power under subsection (10) to ignore the consequences of an obligation arising under a foreign law as to the secrecy of information or documents. Section 264A(13) requires the Commissioner to give a consent "where a refusal would have the effect, for the purposes of the Constitution, of making any tax or penalty incontestable."

32. By section 264A(21) a request under the section is not a requirement for the purposes of the Act or any provision of the Taxation Administration Act 1953. A refusal or failure to comply with the request set out in the notice is not an offence (section 264A(22)). However, the prohibition as to admissibility contained in subsection (10) applies whether or not the refusal or failure results from "the taxpayer being incapable of complying with the request". (Section 264A(16)). Thus, a taxpayer who was, within the 90 day compliance period or any extension thereof, incapable for whatever reason of complying with the request or requests contained in the notice, and, who subsequently came into possession of information or documentation which would have satisfied the request or requests and which is relevant and in a form otherwise admissible into evidence in proceedings disputing the taxpayer's assessment, is, absent a favourable exercise of the Commissioner's power to consent, precluded by section 264A(10) from leading the evidence in those proceedings.

33. The section contemplates decision-making by the Commissioner as part of two distinct processes. The first is the issue of the notice and the obtaining of information as part of the process of assessment. This stage is covered by subsections (1) to (9) inclusive. The second stage is in proceedings disputing the taxpayer's assessment where there has been a refusal or failure either wholly or in part to comply with a request or requests under the section. This second stage is covered by subsections (10) to (17) inclusive. Subsections (18) to (24) inclusive are of general application.

34. The decision of the Commissioner to issue a notice under subsection (1) is subject to judicial review as to whether the preconditions necessary to the issue of the notice exist and as to whether the exercise of the power is bona fide for the statutory purpose, namely to obtain information and documentation relevant to the assessment of a taxpayer. Additionally, the form and content of the notice itself are amenable to judicial review. Likewise, the Commissioner's decisions to vary or withdraw a notice, or to issue a subsequent or substitute notice or to extend the time for compliance with a notice are all subject to judicial review. The provisions of section 264A(1) to (9) are properly characterised as a law relating to taxation within section 51 of the Constitution. The conduct and actions of the Commissioner provided for in subsections (1) to (9) are wholly administrative in character and involve no exercise of the judicial power of the Commonwealth of Australia.

35. The power of the Commissioner to issue a notice under section 264A stands in no different position to the power of the Trade Practices Commission to issue a notice under section 155 of the Trade Practices Act 1974 (Cth). As to that power, Mason J said in Pioneer Concrete (Vic.) Pty. Ltd. v. Trade Practices Commission [1982] HCA 65; (1982) 152 CLR 460 (at 472):-

"What the Commission does will produce information which may

be presented in evidence by a party in proceedings in

respect of a contravention under the Act, but this is no

basis for saying that there is an exercise of judicial power

on the part of the Commission. The exercise of a power to

compel the provision of information is not inherently such

an exercise. It may constitute an element in the exercise

of judicial power when the power is part of the proceedings

of the court, its object being to aid the court or the

parties to obtain and present evidence in those proceedings.

Then the exercise of the power by the court or the parties

in proceedings in the court is for the purpose of enabling

the court to hear and determine the lis and is, accordingly,

incidental to, if not an element in, the exercise of

judicial power.

Section 155 stands in high contrast. It is a power given to

the Commission, not to the Court. Accordingly, it is not a

power which is an element in the proceedings of a court.

Its purpose, and this will have a bearing on its

construction, is to aid the Commission in the discharge of

its functions under the Act. These functions include the

investigation of alleged breaches, the acquisition of

information and the obtaining of evidence for submission to

the Court in proceedings in respect of contravention. There

is nothing in the nature of the power, nor in its terms, to

suggest that its sole, substantial or immediate object is to

aid the Court in its function of hearing and determining

cases. Of course, a legitimate exercise of the power, one

designed to enable the Commission to discharge its statutory

functions, may yield information which the Commission

presents in the form of evidence in proceedings in court.

But this connexion with the court proceedings is

consequential and altogether too remote to enable us to say

that the power is incidental to the exercise of judicial

power."

See also Gibbs CJ at 467, Murphy J at 475, Brennan J at 475.

36. It is only if there is non-compliance with a valid request contained in a notice that the section has any further operation. This second stage has two relevant aspects.

37. The first is that subsection (10) operates to deny admissibility into evidence in proceedings disputing the taxpayer's assessment of relevant information or documents then available to the taxpayer which have not previously been supplied to the Commissioner in response to a request. The subsection does not deny to the taxpayer the ability to tender into evidence other relevant evidence to dispute the assessment. The subsection operates to control the evidence which comes before the Court where the evidence involves information or documentation the subject of a request in an offshore information notice. That evidence is admissible if it has previously been made available to the Commissioner in compliance with a notice and its use in a Tribunal or Court disputing any assessment is conditioned upon it having been made available. The operation of the prohibition in this circumstance has nothing to do with any decision on the part of the Commissioner; it operates by virtue of the provision of the statute and is, in my opinion, properly characterised as a law relating to evidence and procedure.

38. The constitutional validity of a law relating to evidence and procedure has been considered by the High Court on a number of occasions. For present purposes a consideration of those cases begins with The Commonwealth v. Melbourne Harbour Trust Commissioners [1922] HCA 31; (1922) 31 CLR 1. Knox CJ, Gavan Duffy and Starke JJ said in a joint judgment (at 12):-

"A law does not usurp judicial power because it regulates

the method or burden of proving facts."

39. Williamson v. Ah On [1926] HCA 46; (1926) 39 CLR 95 concerned the constitutional validity of certain sections of the Immigration Act 1901-1925. Section 5(3) and (3A) provided:-

"(3) In any prosecution under either of the last two

preceding sub-sections, the averment of the prosecutor,

contained in the information, that the defendant is an

immigrant who (a) has evaded an officer ... shall be deemed

to be proved in the absence of proof to the contrary by the

personal evidence of the defendant either with or without

other evidence.

(3A) Proof to the contrary by the personal evidence of the

defendant, within the meaning of the last preceding

sub-section, shall not (unless it is proved that the defendant

was born in Australia) be deemed to have been given unless

the defendant in his personal evidence states truly the name

of the vessel by which he travelled to Australia and the

date and place of his arrival in the Commonwealth."

40. The majority of the Court (Isaacs, Higgins, Powers, Rich and Starke JJ) upheld the validity of the sections. The minority found that section 5(3A) was invalid.

41. Isaacs J, with whom Powers J agreed (at 127) said (at 108):-

"The contention for invalidity is rested on the principle

that the Commonwealth Parliament cannot enlarge its powers

by simply 'deeming' anything to be within them. As applied

to this case the argument is that it cannot lawfully 'deem'

a person an immigrant if that person in fact is for any

reason not subject to the immigration power, and as such a

case may be included the provision is illegal. To that

principle, baldly stated, no one could for a moment refuse

assent. The plain answer is: Parliament has not on any

reasonable construction of the words done so or attempted to

do so. It is one thing to say, for instance, in an Act of

Parliament, that a man found in possession of stolen goods

shall be conclusively deemed to have stolen them, and quite

another to say that he shall be deemed to have stolen them

unless he personally proves that he got them honestly. The

first is a parliamentary arbitrary creation of a new offence

of theft, leaving no room for judicial inquiry as to the

ordinary offence; the second is only an evidentiary

section, altering the burden of proof in the ordinary case

of theft, and requiring certain pre-appointed evidence to

fit the special circumstances in the interests of justice,

because the accused best knows the facts, and leaving the

Court with these provisions to examine the facts and

determine the matter."

"The only question remaining is whether the ancillary or

incidental provisions enacted with reference to procedure in

a Court of justice go outside the limits, or whether they,

however drastic, are anything more than evidentiary sections

- not in any way enlarging or attempting to enlarge the

powers of the Parliament, but securing the effective

enforcement of an otherwise admittedly lawful exercise of

power expressly granted. In my opinion, when we have regard

both to principle and to precedent, it is clear the sections

are within the competency of Parliament, and are nothing

more than a necessarily strict requirement as to burden of

proof to be satisfied by the best evidence. 'English

lawyers,' say Dicey and Keith in the Conflict of Laws, 3rd

ed., at p 762, 'give the widest possible extension to the

meaning of the term "procedure." The expression, as

interpreted by our Judges, includes all legal remedies, and

everything connected with the enforcement of a right. It

covers, therefore, the whole field of practice; it includes

the whole law of evidence,' andc. At p763 it is pointed out

that a rule of law, so far as it affects, not the

enforcement of a right, but the nature of the right itself,

does not come under the head of procedure. That distinction

is, I venture to think, the touchstone for determining this

case. In which category do the assailed sub-sections fall?

Little, if any, objection would, I apprehend, be taken to

them if they were confined to the matters included in the

subdivided paragraphs of sub-sec. 3. But, as already shown,

those paragraphs are inseparably connected with the previous

words of the sub-section."

"In my opinion, when an Act is within the powers of

Parliament - such as an Act with respect to 'immigration' -

the evidence by which an offence against that Act may be

proved is within the competence of Parliament, under sec.

51(xxxix.) of the Constitution. Parliament can legislate

not only as to immigration, but as to 'matters incidental to

the execution of any power vested by this Constitution in

the Parliament.' Moreover, the evidence by which an offence

may be proved is a matter of mere procedure;

.....

The argument that it is a usurpation of the judicial power

of the Commonwealth if Parliament prescribe what evidence

may or may not be used in legal proceedings as to offences

created or provisions made by Parliament under its

legitimate powers is, to my mind, destitute of foundation."

"The Parliament has, subject to the Constitution, power to

make laws for the peace, order and good government of the

Commonwealth with respect to immigration and emigration, and

matters incidental to the execution of any power vested by

the Constitution in the Parliament. The question in this

case is whether sub-secs. 3 and 3A of sec. 5 of the

Immigration Act 1901-1925 are within those powers. It is

clear, we think, that a grant of power to a British Dominion

to make laws for the peace, order and good government of its

territory enables that Dominion, subject to any overriding

Imperial legislation, to enact whatever laws of evidence it

thinks expedient, and in particular justifies laws

regulating the burden of proof, both in civil and criminal

cases, and the effect of non-compliance with those laws in

legal proceedings; and it is not for the Courts of law to

say whether the power has been exercised wisely or not

(Hodge v. The Queen (1883) 9 App Cas 117; Union Colliery

Co. of British Columbia v. Bryden (1899) AC 580). It is

so with the Commonwealth within the ambit of its powers.

The substantive provisions in sub-sec. 1 of sec. 5 were not

challenged, and are clearly laws within the competence of

Parliament under the immigration power. The provisions of

sub-secs. 3 and 3A are subsidiary to and in aid of the main

provisions. They simply place the burden of proof upon the

person charged and render it necessary that he should state

truly the name of the vessel by which he travelled to

Australia and the date and place of his arrival in the

Commonwealth before that burden is satisfied.

No doubt the stringent nature of the provisions was dictated

by the difficulty of proof in the cases mentioned in

sec.5(1); but the provisions do not constitute, as was

argued, any exercise by the Parliament of the judicial power

of the Commonwealth. They merely establish a rule of

evidence for observance by the Courts of law."

"Turning now to sub-sec. 3A, it in substance provides that

the burden of proof thrown upon the person charged shall not

be discharged unless he state truly the name of the vessel

by which he travelled to Australia, andc. The provision is

directly connected with a substantive provision in sec. 5,

sub-sec. 1, which is perfectly valid, and the facts required

to be stated truly are in every case relevant for the

purpose of determining whether a given person is or is not

an immigrant within the meaning of sec. 5, sub-sec. 1, and

in the majority of cases probably decisive. The reason for

requiring the proof of these facts is based on experience.

The enforcement of the Immigration Acts is 'attended with

great embarrassment, from the suspicious nature, in many

instances, of the testimony offered' in immigration cases

'arising from the loose notion entertained by the witnesses

of the obligation of an oath' (cf Fong Yue Ting v. United

States (1913) AC 781, at pp 798, 799; 18 CLR 31, at

pp 36-38.) It is said that some persons may not know the

facts or may have forgotten them, but that is challenging

the wisdom, fairness and justice of the law and not its

competency. With the wisdom, fairness and justice of the

law this Court has nothing to do, and cannot express any

opinion upon the matter."

42. In The Orient Steam Navigation Company Limited v. Gleeson [1931] HCA 2; (1931) 44 CLR 254, the High Court was again concerned with provisions of the Immigration Act 1901 - 1925 relating to prohibited immigrants. By section 3 of that Act, the master and crew of any vessel landing during a stay of the vessel in any port were exempted from the definition of a prohibited immigrant subject to three provisos. The third proviso stated:-

"Provided further that the exception contained in this

paragraph shall not apply to any member of the crew as to

whom the master reports in writing to an officer that the

member has deserted or is absent without leave, and, until

the contrary is proved, the member shall be deemed to be a

prohibited immigrant and to have entered the Commonwealth

contrary to this Act."

Dixon J dealt with the validity of the third proviso as follows (at 262-263):-

"Evidence was given that the master had reported in writing

to the Collector of Customs, who is an officer within the

meaning of the third proviso of sec. 3(k), that two members

of the crew had deserted. If the proviso be valid, that is

enough to bring it into operation and to put the burden of

proof upon the defendant. In my opinion the proviso is

valid. I think it may be supported as an exercise of the

power to make laws with respect to immigration. It is

unnecessary to consider whether it might also be supported

under sec.51(xxxix.) of the Constitution. I think upon its

construction the section is confined to proof in legal

proceedings of the character of 'prohibited immigrant' and

the fact of unlawful entry. Upon such matters, falling as

they do within the subject over which the Commonwealth has

power, the Parliament may place the burden of proof upon

either party to proceedings in a Court of law. The onus of

proof is a mere matter of procedure. If the Parliament may

place the burden of proof upon the defendant, it may do so

upon any contingency which it chooses to select. In this

case it has changed the burden of proof contingently upon

the master reporting in writing to an officer that a member

of the crew has deserted or is absent without leave. The

defendant complains that this contingency has little bearing

upon the question whether the member of the crew is a

prohibited immigrant. But this is of no importance because

Parliament may change the burden of proof unconditionally or

conditionally. The proviso appears to me to do no more. It

may be that the consequence is hard upon the Company which

must disprove both immigration and the existence of the

conditions which make immigration prohibited, although the

master's report may have little or no bearing upon these

questions."

"The third and first provisoes to sec. 3(k) are also in my

opinion valid. They operate to make proof of certain

matters prima facie evidence that a person is a prohibited

immigrant. The criterion adopted seems both reasonable and

relevant, but Williamson v. Ah On [1926] HCA 46; (1926) 39 CLR 95 seems

to show that the relevance of the criterion does not matter.

The principle of Williamson v. Ah On determines this part of

the case."

43. See also Starke J at 259 - 260. Gavan Duffy CJ and McTiernan J simply agreed without delivering any reasons.

44. More recently the question of power was again addressed in Milicevic v. Campbell [1975] HCA 20; (1975) 132 CLR 307. Gibbs J said (at 316):-

"The parliament may, when legislating with respect to a

subject within the ambit of its powers, validly enact laws

prescribing the rules of evidence and procedure to be

observed in any legal proceedings, whether criminal or

civil, arising in relation to that subject matter and may in

particular cast the onus of proof upon either party to those

proceedings: Williamson v. Ah On [1926] HCA 46; (1926) 39 CLR 95, at

pp 108 et seq., 126-127, 127-129; cf. at pp 101-102, 122-123;

Orient Steam Navigation Co. Ltd. v. Gleeson (1931) 44

CLR 254, at pp 259-260, 262-263, 264; and see also The

Commonwealth v. Melbourne Harbour Trust Commissioners (1922)

[1922] HCA 31; 31 CLR 1, at p 12. Of course, the parliament may not,

by enacting legislation which purports to be merely

procedural, extend the operation of its laws to subjects

beyond its power; it cannot, in other words, expand the

boundaries of its powers by its own enactments."

45. The Court was asked, if necessary, to overrule the decision in Williamson v. Ah On, particularly that part of the decision based on those provisions of the Immigration Act which restricted the mode of proof. The constitutionality of the restricted mode of proof had attracted academic criticism (eg. Wynes Legislative Executive and Judicial Powers in Australia 4th Ed. (1970) pp 124 - 125). The Court did not do so, it being unnecessary to consider that aspect of the judgment in the appeal under consideration. (See McTiernan ACJ at 311, Gibbs J at 317, Mason J at 319).

46. In Actors and Announcers Equity Association of Australia v. Fontana Films Pty. Ltd. [1982] HCA 23; (1982) 150 CLR 169, Gibbs CJ (at 187) with whose reasons Wilson J agreed, again found it unnecessary to consider the correctness of the decision in Williamson v. Ah On. So too, Mason J (at 210 - 211) with whose reasons Aicken J agreed, distinguished Williamson v. Ah On, as did Brennan J (at 223), and thus did not find it necessary to rule upon the correctness of the decision insofar as it holds valid legislative restrictions on the method of proof of certain facts in issue.

47. In the current state of the authorities I am bound by the majority decision in Williamson v. Ah On and the decisions in The Commonwealth v. Melbourne Harbour Trust and Orient Steam Navigation Co. Ltd. v. Gleeson. Those decisions establish, in my view, that it is within the power of the legislature to enact rules of evidence and procedure to be observed in legal proceedings arising in relation to a subject matter within Commonwealth power subject only to the limitation that it may not do so in a way which is "so flagrantly destructive of any real and reasonable chance to place the real facts before the court" or as "a mere disguise for extending the legislative power" (per Isaacs J in Williamson v. Ah On at 117). Included within the power are the contingencies, conditions or criteria which the legislature may set for admissibility of the evidence.

48. Section 264A(10) conditions the admissibility into evidence in proceedings disputing a taxpayer's assessment of any information and documentation which was subject to a request or requests contained in an offshore notice upon compliance with the request. That is, evidence of the true facts by the taxpayer may be proved by all admissible evidence. Where a relevant notice has been served a further test of admissibility must be satisfied, namely, compliance with the notice.

49. Section 264A(10) is not an attempt to exclude taxpayers from the Courts or Tribunals or to prevent taxpayers from effectively disputing assessments. Nor is it an attempt to force the Courts and Tribunals to decide the issue of a taxpayer's liability to tax on a false factual premise or to extend a tax liability to taxpayers who, on the true facts are not liable to tax. The provision is aimed at procuring for the Commissioner information and documentation to enable the Commissioner to ascertain, so far as is possible, the true facts in order to make an assessment to tax in the light of those facts. The section recognises that the person in the best position to know the true facts and relevant documentation and to have control of or access to that information is the taxpayer. The section is a mechanism designed to facilitate disclosure of material to the Commissioner to enable him or her to discharge his or her statutory duty. The mechanism designed to achieve effective compliance is the sanction of evidentiary exclusion. The model chosen is similar to that which operates in comparable countries to Australia (eg. United States of America: section 982, Internal Revenue Code 26 USCS; Flying Tigers Oil Co. Inc v. Commissioner of Internal Revenue 92 USTCR 1261 (1989); Canada: section 231.6 Income Tax Act, John D. Manko v. The Minister of National Revenue (1990) 90 DTC 6643; New Zealand: section 21A Income Tax Act 1976).

50. Section 264A in terms recognises that there may be circumstances where it is proper that the Commissioner exercise his power under section 264A(10) to consent to the admissibility of material, otherwise relevant and admissible to prove or disprove a fact in issue between the Commissioner and a taxpayer in proceedings disputing an assessment, notwithstanding that the material has not previously been supplied to the Commissioner conformably with a request made in an offshore information notice. Where the operation of subsection (10) would result in a taxpayer being denied the ability to lead any evidence so as to render it impossible for the taxpayer to contest his or her liability to taxation as assessed in any tribunal or court, subsection (13) requires that the Commissioner give the consent to enable the taxpayer to tender into evidence material which is otherwise relevant and admissible to the issue in the proceedings disputing any assessment. The decision of the Commissioner to refrain from exercising the power to consent under subsection (10) is itself subject to judicial review. The power to alleviate the harsh consequences of the operation of the law or to grant a dispensation from its operation may be vested in a Chapter III Court and form part of the judicial power of the Commonwealth if it is incidental to exercise of judicial power by the Court. Thus, if it had chosen to, the legislature could have vested in the Court or Tribunal hearing the dispute as to an assessment the power to dispense with the bar to admissibility into evidence of information or documents where section 264A(10) applied. However, the power is not one which ex facie can only be exercised by a Chapter III Court and it may be reposed in the Commissioner of Taxation to be exercised as an administrative function (Re Ranger Uranium Mines Pty. Ltd. at 665-666; Harris v. Caladine at 146-148; Leeth at 469-470, 501-502).

51. Subsection (10) does not, as submitted by the applicant, vest in the Commissioner the power to rule upon the admissibility of material in judicial proceedings which function is ordinarily part of the exercise of judicial power. Rather, the subsection invests the Commissioner with the power to relieve the taxpayer from a disability imposed by the Act itself. The power is analogous to the power of the Commissioner to remit penalty tax which is imposed by the Act itself. The exercise of the power to remit is administrative and not judicial and involves no exercise of the judicial power of the Commonwealth (Federal Commissioner of Taxation v. Trautwein [1936] HCA 48; (1936) 56 CLR 211 at 216). Likewise, the decision to grant or withhold consent under section 264A(10) is an exercise of executive and not judicial power of the Commonwealth.

52. The applicant's submission that section 264(10) renders any assessment incontestable and therefore unconstitutional in my view is not sustainable. The principle underlying the submission was first touched upon in Deputy Commissioner of Taxation v. Brown [1958] HCA 2; (1958) 100 CLR 32. There, Dixon CJ said (at 40):-

"Although there is no judicial decision to that effect, it

has, I think, been generally assumed that under the

Constitution liability for tax cannot be imposed upon the

subject without leaving open to him some judicial process by

which he may show that in truth he was not taxable or not

taxable in the sum assessed, that is to say that an

administrative assessment could not be made absolutely

conclusive upon him if no recourse to the judicial power

were allowed."

53. In Giris Pty. Ltd. v. Federal Commissioner of Taxation [1969] HCA 5; (1969) 119 CLR 365, the validity of section 99A of the Act was in issue. The application of section 99A to any particular trust estate was dependent upon whether the Commissioner was of the opinion that it would be unreasonable for the section to apply. By section 99A(3) certain matters were specified which the Commissioner was required to consider in forming an opinion. The subsection concluded that the Commissioner shall have regard "to such other matters, if any, as he thinks fit". The argument as to invalidity on the basis of imposing an incontestable tax is set out in the judgment of Owen J with whom Menzies J agreed. Owen J said (at 388 - 389):-

"The second ground upon which the validity of s. 99A is

called in question is that the effect of the section is, so

it was submitted, to impose what has been described as an

'incontestable' tax: see Deputy Commissioner of Taxation v.

Hankin [1959] HCA 2; (1959) 100 CLR 566, at pp 576, 577 and it was

rightly conceded by counsel for the Commissioner that a law

which sought to prevent a taxpayer from having recourse to

the courts in order to test the legality or the correctness

of an assessment to tax would be beyond the power of the

Parliament: see Dawson v. The Commonwealth (1946) 73 CLR

157, at p 182; Deputy Federal Commissioner of Taxation v.

Brown [1958] HCA 2; (1958) 100 CLR 32, per Dixon CJ (1958) 100

CLR, at p 40 and per Williams J (1958) 100 CLR, at

p 52; Hughes and Vale Pty. Ltd. v. New South Wales (No.

2), per Dixon CJ, McTiernan and Webb JJ (1955) 93 CLR

127, at p 165. In support of the argument for the

taxpayer, however, emphasis was placed upon the facts that

under s.99A(3)(c) the Commissioner, in considering whether

he should form the opinion to which the section refers, is

to have regard to such matters additional to those stated in

s.99A(3)(a) and (b) as he thinks fit and that he is under no

obligation to inform the taxpayer to what 'other matters',

if any, he has had regard under par. (c). If he does not do

so then, so the argument ran, a taxpayer assessed at the

rate declared by the Parliament for the purposes of that

section might find it impossible on an appeal to the courts

against the assessment to show, for example, that the

Commissioner had had regard to extraneous and inadmissible

matters outside the scope and purposes of the Act and having

no relevance to the subject of income tax. In such case, it

was said, the right of appeal might be of little or no avail

to the taxpayer. The argument seems to me, however, to fail

sufficiently to notice the distinction between a provision

which purports to prevent a taxpayer from invoking the aid

of the courts to determine whether or not his liability to

tax has been lawfully and correctly assessed and one which

may, in some circumstances, make it difficult or impossible

to exercise the right of appeal successfully because the

facts necessary to success cannot be established. There is,

I think, a line to be drawn between purporting to prevent

appeal to the judicial power, on the one hand, and, on the

other, making the application to a particular case of one

taxing provision rather than another dependent upon the

existence of a fact - in the present case the opinion of the

Commissioner - which the taxpayer may be unable, for lack of

evidence, to show was formed after taking into consideration

inadmissible matters. A tax does not become an

'incontestable' tax merely because the person assessed may

be unable to produce the evidence necessary to support his

appeal. A passage in the judgment of Dixon J in Dawson v.

The Commonwealth [1946] HCA 41; (1946) 73 CLR 157 is, I think, in point.

In that case the Court was dealing with a war-time

regulation made under the National Security Act which forbad

the purchase of land without the consent of the Treasurer

and empowered him 'in his absolute discretion' to grant or

refuse to grant his consent. His Honour, after saying

(1946) 73 CLR, at pp 181, 182 that:

'no discretion could be conferred wider than the

purposes of the National Security Act or of the

defence power and any attempt to make a purported

exercise of discretion judicially unexaminable must to

that extent fail',

went on

'It is complained that ordinary judicial remedies

might be defeated if the Treasurer or his delegate

were to adopt measures to conceal the grounds upon

which his consent is withheld. The answer is that

that is a complaint against the inadequacy of judicial

process to uphold the law. It does not go to the

intrinsic validity of the supposed acts of the

Treasurer or his delegate'."

54. Kitto J was of the same opinion. His Honour said (at 378 - 379) -

"The appellant's further contention that sub-s. (2) provides

for an 'incontestable' tax, in the sense in which the

expression was used in Deputy Commissioner of Taxation v.

Hankin [1959] HCA 2; (1959) 100 CLR 566, at p 576 (see also Deputy

Commissioner of Taxation v. Brown [1958] HCA 2; (1958) 100 CLR 32, at

p 40), may be put aside because it is based on a

misunderstanding of what is meant by an 'incontestable' tax.

The expression refers to a tax provided for by a law which,

while making the taxpayer's liability depend upon specified

criteria, purports to deny him all right to resist an

assessment by proving in the courts that the criteria of

liability were not satisfied in his case. Whatever may be

said as to the validity or invalidity of an 'incontestable'

tax in this sense has no relevance to a tax which is

described as incontestable merely because (as is the case

where the formation of an opinion by the Commissioner under

sub-s. (2) makes s.99 applicable instead of s.99A) the

liability of the taxpayer depends upon an opinion of the

Commissioner the grounds of which are not necessarily

ascertainable and for that reason alone are, in a purely

practical sense, not always susceptible of challenge."

55. The statement of Kitto J as to the meaning and sense of the term "incontestable tax" set out above was approved by the court in MacCormick v. Federal Commissioner of Taxation [1984] HCA 20; (1984) 158 CLR 622 and the principle underlying it accepted as correct (at 640 in the joint judgment of Gibbs CJ, Wilson, Deane and Dawson JJ, at 646 per Murphy J at 658 per Brennan J).

56. In the sense in which the term is explained by Kitto J, any assessment made by the Commissioner under the Act is not incontestable. A taxpayer is entitled to appeal as provided by the Act and may call such evidence as the taxpayer may choose in such proceedings. It is only when the taxpayer has no admissible evidence in consequence of non-compliance with a request in an offshore information notice that any question of incontestability can arise. Where the taxpayer has consciously failed or refused to supply the information or documentation in response to the notice it cannot be said that the taxpayer has been denied by the legislation the right to contest the tax. Rather, in a purely practical sense, the taxpayer has denied itself the ability to put into evidence relevant material because of a conscious decision to fail or refuse to comply with the notice.

57. The applicant submitted that the refusal may be involuntary for reasons beyond the control of the taxpayer, yet later the documents may become available for whatever reason including recourse to powers of the courts to force production of information or documents from third parties. In such a case, in the absence of the consent of the Commissioner, the assessment, it was submitted, was incontestable. That may be true so far as it goes, but, it is wrong if it ignores the possibility of a decision to consent and judicial review of any refusal to consent.

58. Where the taxpayer requires the consent of the Commissioner to tender into evidence material or documentation which is otherwise relevant and admissible, the consent of the Commissioner cannot be granted or withheld in an arbitrary or capricious manner. It must be a principled and reasonable decision. The Commissioner must take into account the matters specifically contained in the section. Beyond that the exercise of the decision will be subject to the well-known passage in the judgment of Mason J in Minister for Aboriginal Affairs v. Peko Wallsend Limited [1986] HCA 40; (1986) 162 CLR 24 (at 39 - 40):-

"If the relevant factors - and in this context I use this

expression to refer to the factors which the decision-maker

is bound to consider - are not expressly stated, they must

be determined by implication from the subject-matter, scope

and purpose of the Act. In the context of judicial review

on the ground of taking into account irrelevant

considerations, this Court has held that, where a statute

confers a discretion which in its terms is unconfined, the

factors that may be taken into account in the exercise of

the discretion are similarly unconfined, except in so far as

there may be found in the subject-matter, scope and purpose

of the statute some implied limitation on the factors to

which the decision-maker may legitimately have regard: see

Reg. v. Australian Broadcasting Tribunal; Ex parte 2HD Pty.

Ltd. [1979] HCA 62; (1979) 144 CLR 45, at pp 49 - 50, adopting the

earlier formulations of Dixon J in Swan Hill Corporation v.

Bradbury [1937] HCA 15; (1937) 56 CLR 746, at pp 757 - 758, and Water

Conservation and Irrigation Commission (NSW) v. Browning

[1947] HCA 21; (1947) 74 CLR 492, at p 505. By analogy, where the

ground of review is that a relevant consideration has not

been taken into account and the discretion is unconfined by

the terms of the statute, the court will not find that the

decision-maker is bound to take a particular matter into

account unless an implication that he is bound to do so is

to be found in the subject-matter, scope and purpose of the

Act."

59. The problem identified in Giris as to the practical difficulties of challenging the administrative decision of the Commissioner have now largely been overcome and the statutory requirements for the provision of reasons for decisions allows for a practical basis to challenge administrative decisions and to call the evidence necessary to mount an effective challenge. The power of the Commissioner to consent under subsection (10), and the requirement that consent be given if otherwise the constitutional right to challenge an assessment would be denied by the operation in subsection (10), together with the right of an effective judicial review of any refusal to consent, provides the taxpayer with an avenue to dispute an assessment by proving in the court that the criteria of liability were not satisfied in the taxpayer's case. Importantly, the ultimate question of whether a refusal to consent would have the effect, for the purposes of the Constitution, of making any tax or penalty incontestable, falls to be determined by a Chapter III court in the event of refusal to consent upon judicial review of that refusal.

60. The applicant submitted that section 264A was neither reasonably nor appropriately adapted to the assessment and imposition of tax liabilities as its only effect was to exclude relevant evidence in proceedings disputing an assessment of tax. It was submitted that the section and especially the evidentiary sanction in section 264A(10) went beyond any reasonable sanctions necessary to promote compliance. The appropriate sanction, it was submitted, was to create a criminal sanction for non-compliance to operate in the same manner as that provided for failing to provide information or documentation in response to a notice under section 264 of the Act.

61. In Nationwide News Pty. Ltd. v. Wills, Mason CJ said (at 30-31):-

"Davis establishes two propositions. First, that, even if

the purpose of a law is to achieve an end within power, it

will not fall within the scope of what is incidental to the

substantive power unless it is reasonably and appropriately

adapted to the pursuit of an end within power, i.e., unless

it is capable of being considered to be reasonably

proportionate to the pursuit of that end South Australia v.

Tanner (1989), 166 CLR, at p 165. Secondly, in

determining whether that requirement of reasonable

proportionality is satisfied, it is material to ascertain

whether, and to what extent, the law goes beyond what is

reasonably necessary or conceivably desirable for the

achievement of the legitimate object sought to be attained

and, in so doing, causes adverse consequences unrelated to

the achievement of that object."

62. The object of section 264A is to obtain information and documentation held outside Australia to enable the Commissioner to determine whether a taxpayer is exigible to tax and, if so, to assess the amount of that tax. Applying the test as formulated by Mason J in Nationwide News v. Wills, the applicant submitted that the use of an evidentiary sanction in section 264A(10) causes adverse consequences unrelated to the achievement of that object. The applicant submitted that the Commissioner may draw a notice widely or in such a way as to make compliance with it difficult, if not impossible. Essentially the submission was that the breadth of the power is so wide that it may be abused by the Commissioner for the purpose of making it impossible for a taxpayer to prove up the true facts which would demonstrate no liability to tax.

63. The proper ambit of a power conferred by an enactment is to be ascertained by identifying the statutory object or purpose and construing the operation of the power on the basis of a bona fide and proper exercise of it for the achievement of that statutory object or purpose. The ambit of a power is not determined by attempting to foresee the consequences of its operation when used for an improper and foreign purpose. In the present case it is wrong to attempt to identify any adverse or extraordinary operations of section 264A on the premise that the Commissioner will consciously abuse the power given by the section to raise an assessment on the basis of untrue facts and render it impossible for the taxpayer to establish the true facts which would demonstrate an absence of liability for tax by issuing an offshore information notice containing requests with which the recipient could not comply.

64. If one ignores the possibility of improper use of the power, the issue of a notice under section 264A in itself has no adverse effect on a taxpayer. The section operates generally in respect of all taxpayers where the Commissioner forms the requisite belief as to the existence of information or documentation as described in section 264A(1)(a) and (b). Where the taxpayer has the information or documentation or can procure their production, the threat of the sanction operates to promote production. That the sanction operates for voluntary non-compliance is not an adverse consequence unrelated to the achievement of the statutory object. It is only where non-compliance is involuntary and the taxpayer later acquires information or documentation which it wishes to adduce in evidence and the Commissioner determines not to consent to its introduction where section 264A(10) has an adverse consequence. However, even in that situation the adverse effect is not absolute and is subject to review.

65. The mechanism chosen by the legislature to enforce compliance is essentially the same as chosen in the United States of America, Canada and New Zealand; countries with a similar common law tradition and with comparable administrative and taxation regimes to those operating in Australia. Irrespective of whether other means may have been chosen, the use of such a means of compliance by countries against which this country compares itself and to the judgments of whose superior courts reference is frequently made, tells strongly against a conclusion that the means chosen in section 264A is neither reasonably nor appropriately adapted to the assessment and imposition of taxation, where information relevant to a proper assessment is outside Australia. Nor, in my view, can it be said that the sanction operates disproportionately on a taxpayer who has relevant information or documentation when sub-section (10) vests in the Commissioner a discretion to consent and sub-section (13) requires that the consent must be given if to refuse would make the tax or penalty incontestable.

66. As either an incident of the legislative power over taxation or as an exercise of the incidental power (section 51(xxxix) of the Constitution), section 264A is, in my opinion, reasonably and appropriately adapted to the obtaining of information to enable the Commissioner to perform the statutory duty to assess income to tax which is a function within the taxation power and does not go beyond what is reasonably necessary or conceivably desirable for the achievement of that object. The section in operation does not cause adverse consequences unrelated to the achievement of that object.

The Arbitrary Exaction and Breach of the Right to Equality before the Law Arguments:

67. These arguments have in part been addressed in my consideration of the infringement of judicial power argument and the legislature's power to set the contingencies, conditions or criteria for admissibility of evidence. I do not intend to repeat them. It is sufficient to make the following observations.

68. The argument that the issue of a notice under section 264A(1) has the effect that the law applicable to the taxpayer's tax liability is unilaterally varied by the Commissioner from the general law applicable to other taxpayers cannot stand up to any proper consideration of the operation of section 264A. A request for information or documents has no such effect.

69. As a power exercisable by the Commissioner if the requisite pre-conditions exist it is one of general application to all taxpayers. If the power falls to be exercised it operates generally in respect of all taxpayers to whom a notice under section 264A is given. In the event of non-compliance, all taxpayers who have failed to comply with a notice are subject to the same statutory sanction.

70. The power of the Commissioner to consent to the admission of evidence otherwise inadmissible by the operation of subsection 264A(10), the obligation to do so if any assessment or penalty would otherwise be incontestable in terms of the Constitution, the laws as to the exercise of the decision to consent or to refuse to consent, and the availability of judicial review all apply equally to all taxpayers. There is nothing which discriminates or intrudes upon the principle of equality before the law in section 264A, let alone in the mere act of issuing a notice under the section.

71. An assessment of the Commissioner is either arbitrary or not at the time when it was made. It does not become arbitrary depending upon the evidence available in proceedings disputing the assessment. It may be that the exclusion of relevant evidence precludes proof in the proceedings that the assessment was arbitrary; but that is a different issue, namely, whether the tax is an incontestable tax and I have dealt with that issue earlier in these reasons.

72. There is no basis of invalidity in either of these arguments.

The Acquisition of Property Without Just Terms Argument:

73. Finally, the applicant submitted that if paragraph 264A(1)(c) allowed the respondent to require that compliance with the offshore information notice necessitated that the taxpayer bring into existence documentation which did not previously exist and give the same to the respondent, that paragraph and paragraph 264A(1)(e), which provides for the making of copies and producing them to the respondent, amounted to an acquisition of property without the provision of just terms. Thus, it was submitted the constitutional guarantee contained in section 51(xxxi) of the Constitution was breached and the legislation was invalid.

74. Section 51(xxxi) provides that the Parliament shall, subject to the Constitution, have power to make laws with respect to:-

"The acquisition of property on just terms...for

any purpose in respect of which the Parliament

has power to make laws."

75. The applicant contended that to require property to be brought into existence and then to be given to the respondent involved an acquisition of property of the taxpayer by the respondent.

76. Alternatively, it was put that section 264A, because of the sanction in section 264A(10), caused any assessment made to constitute an arbitrary exaction or penalty in a monetary form and not a tax within a proper exercise of the taxation power. If it operated to require an exaction of money which was not a tax a fortiori, it was submitted, it was an acquisition of property on unjust terms.

77. In support of these contentions the applicant relied upon the decision of the High Court in Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993) 177 CLR 480 at 508-511, 526.

78. The respondent submitted that there is no compulsory acquisition of property in the operation of section 264A(1). Firstly, it submitted that the Commissioner could only request that material be provided in terms of the section. Secondly, it was submitted that provision of the material was voluntary; it being a matter for the taxpayer to provide the material or not. These two conditions, it was submitted, denied that there was any acquisition of property of the type contemplated in section 51(xxxi) of the Constitution. To support this contention the respondent relied upon the decision in British Medical Association v. The Commonwealth [1949] HCA 44; (1949) 79 CLR 201 where Dixon J (at 269-271) expressed the opinion that to create a situation of economic, business or practical pressure which constrains a person to act in a way desired by the legislature was neither an excess of constitutional power nor a compulsory acquisition of property where the person remains legally free to retain the property as he or she chooses. The lack of legal compulsion in the passing of any property in the documents was, it was submitted, fatal to the argument contended for by the applicant (John Cooke and Co. Pty. Ltd. v. The Commonwealth [1924] UKPCHCA 2; (1924) 34 CLR 269 PC at 282; Poulton v. The Commonwealth (1952) 89 CLR 540 at 573; Trade Practices Commission v. Tooth and Co. Ltd. [1979] HCA 47; (1979) 142 CLR 397 at 416-417).

79. The respondent further submitted that as a matter of construction section 264A(1)(c)(d) and (e) did not provide that any property in the documents created, whether full beneficial ownership or some lesser possessory interest, was acquired by the Commissioner. All that the Act required was that the documentation be produced for the inspection of the respondent and that "give" in section 264A(1)(c) did not involve any notion of passing of property where the manner specified by the respondent for the communication of the relevant information involved the creation of a document. Whether or not the respondent was entitled to retain possession of or copy documents produced in respect of a request under section 264A was not a matter dealt with by the section and it was submitted, was irrelevant to the proper construction of the section. Finally, the respondent submitted that if any property was acquired in any documents created and produced in response to a request, then such acquisition properly characterised was not an acquisition to which section 51(xxxi) applied (Attorney-General (Cth) v. Schmidt [1961] HCA 21; (1961) 105 CLR 361 at 372), that properly characterised, section 264A(1) is a provision with respect to the obtaining of information and is a law in respect of taxation and that any property incidentally obtained in the paper containing the information was not a compulsory acquisition of the type with which section 51(xxxi) deals.

80. The extent and operation of both the power and the constitutional guarantee have been considered by the High Court in a number of recent cases (Mutual Pools and Staff Pty. Ltd. v. Commonwealth of Australia [1994] HCA 9; (1994) 179 CLR 155; Health Insurance Commission v. Peverill [1994] HCA 8; (1994) 179 CLR 226; Director of Public Prosecutions; Ex parte Lawler and Another [1994] HCA 10; (1994) 179 CLR 270; Georgiadis v. Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297).

81. In Peverill, Mason CJ, Deane and Gaudron JJ, in a joint judgment, expressed (at 235) the opinion that section 51(xxxi) was directed to requisition not to voluntary acquisition and cited as authority for that opinion the cases relied upon by the respondent. Brennan J likewise expressed the view that property acquired by agreement did not come within section 51(xxxi) (see at 245). Dawson J (at 250) accepted as correct the statement of Stephen J in Trade Practices Commission v. Tooth and Co. Ltd. (142 CLR at 416-417) that section 51(xxxi) was confined to compulsory acquisition of property.

82. It is unnecessary to decide for present purposes whether or not the threat of imposition of a statutory sanction prevents the passing of property being categorised as voluntary. It may be that the existence of a positive sanction of the type contained in section 264A(10) distinguishes this enactment from the statutory regimes under consideration in the earlier cases. As Mason CJ said in Mutual Pools and Staff Pty. Ltd. v. Commonwealth of Australia (at 173):-

"...It has been said that what the Constitution forbids

directly cannot be achieved indirectly or by means of some

circuitous device (Bank Nationalisation Case (1948), 76

CLR, at pp 349-50; see also Trade Practices Commission

v. Tooth and Co Ltd (1979), 142 CLR at p 407, per Gibbs

CJ; the Tasmanian Dam Case (1983), 158 CLR at p 283,

per Deane J)"

The matter may be left to another occasion because in my view section 264A(1)(c)(d) and (e) do not operate so as to compulsorily acquire from a taxpayer property in any document produced in response to a request. There is nothing in the section which authorises the respondent to retain the documents as beneficial owner, or on any other basis, and nothing in the section would defeat the claim of the taxpayer as owner to retain or re-take possession of the documents.

83. If contrary to my view the word "give" in section 264A(1)(c) is to be construed as empowering the respondent to acquire property in the documents produced in response to a request, then the acquisition of that property in the documents is an appropriate and adapted means of obtaining necessary information for the purpose of assessment of a taxpayer under the Act. Accordingly, the section falls outside section 51(xxxi) and within a valid exercise of the taxation power.

84. In Mutual Pools and Staff Pty. Ltd. v. Commonwealth of Australia, Brennan J said (at 179-180):-

"...Although s.51(xxxi) abstracts from other heads of power

the power of acquisition which that paragraph itself

confers, it does not thereby abstract the power to prescribe

the means appropriate and adapted to the achievement of an

objective falling within another head of power where the

acquisition of property without just terms is a necessary or

characteristic feature of the means prescribed.

In each of the cases in which laws for the acquisition of

property without the provision of just terms have been held

valid, such an acquisition has been a necessary or

characteristic feature of the means selected to achieve an

objective within power, the means selected being appropriate

and adapted to that end. Therefore a law which selects and

enacts means of achieving a legitimate objective is not

necessarily invalid because the means involve an acquisition

of property without just terms. What is critical to

validity is whether the means selected, involving an

acquisition of property without just terms, are appropriate

and adapted to the achievement of the objective. The

absence of just terms is relevant to that question, but not

conclusive. Where the absence of just terms enhances the

appropriateness of the means selected to the achievement of

the legitimate objective, the law which prescribes those

means is likely to fall outside s.51(xxxi) and within

another supporting head of power. If it were otherwise, the

guarantee of just terms would impair by implication the

Parliament's capacity to enact laws effective to fulfil the

purposes for which its several legislative powers are

conferred. It would be erroneous so to construe grants of

legislative power as to fetter their exercise by implying

that s.51(xxxi) precluded the enactment of laws under other

heads of power where the laws involved an acquisition of

property without just terms, even though laws of that kind

are appropriate and adapted to the execution of those powers

in the public interest.

It would be erroneous to elevate the constitutional

guarantee of just terms to a level which would so fetter

other legislative powers as to reduce the capacity of the

Parliament to exercise them effectively. When the United

States Supreme Court was considering the effect of a charter

granted to the proprietors of a bridge on the capacity of

the legislature to enact a law affecting the benefits of a

franchise created by the charter, the Court wrote (Charles

River Bridge v. Warren Bridge [1837] USSC 2; (1837), 11 Pet 420, at p 548;

36 US 341, at p 431):

'The continued existence of a government would be of

no great value, if, by implications and presumptions,

it was disarmed of the powers necessary to accomplish

the ends of its creation, and the functions it was

designed to perform, transferred to the hands of

privileged corporations.'

This observation, repeated more recently (Keefe v Clark

(1944) 322 US 393, at p 397), was not concerned with the

reconciliation of different constitutional provisions. The

Court was concerned to show that legislative authority is

not bargained away by executive contracts (Perpetual

Executors and Trustees Association of Australia Ltd v.

Federal Commissioner of Taxation [1948] HCA 24; (1948) 77 CLR 1, at

p 28). Nevertheless, the dictum is appropriate to describe

the approach to be taken to the reading down of express

legislative powers in order to accommodate the guarantee of

just terms.

In my view, a law may contain a valid provision for the

acquisition of property without just terms where such an

acquisition is a necessary or characteristic feature of the

means which the law selects to achieve its objective and the

means selected are appropriate and adapted to achieving an

objective within power, not being solely or chiefly the

acquisition of property. But where the sole or dominant

character of a provision is that of a law for the

acquisition of property, it must be supported by s.51(xxxi)

and its validity is then dependent on the provision of just

terms."

85. I do not read any of the reasoning in the recent cases to cast doubt on what his Honour has said. The present case is an example of the absurd situation which arises if the respondent cannot require that copy documents be made and produced to the respondent in order that relevant information be made available for assessment without offering just terms. Where the respondent asks for production of original documents, the respondent is accused of not acting bona fide, reasonably and requiring the doing of an oppressive act. Where information in written form is requested, the respondent is confronted with an argument that without offering just terms for the acquisition of the paper, the applicant's constitutional guarantee in section 51(xxxi) is infringed. The provision of copy documents to the respondent in lieu of the originals may be very much more convenient to a taxpayer. Yet if the applicant's argument is correct, without the agreement of the taxpayer, the respondent cannot require the creation of a copy document and its being given to the respondent unless just terms are offered.

86. As I do not consider that section 264A operates so as to cause any assessment made to constitute an arbitrary exaction or penalty in a monetary form, the alternative argument put by the applicant also fails.

Conclusion as to Constitutional Validity of Section 264A:

87. The applicant has failed to make out any ground of constitutional invalidity.

88. The power given by section 264A(1), like any other administrative power, must be exercised bona fide for the purposes for which it is given and within any statutory limitations attaching to the extent of the power and the means by which the power is exercised. The statutory limitation contained in section 264A is that the information or documents are "relevant to the assessment of a taxpayer" (section 264A(1)(a) and (b)) and as the power is given to enable the Commissioner to perform his or her functions under the Act it must be used for that purpose. Thus in the instant case the power is only available for the purpose of obtaining information or documents relevant to the assessment of the applicant as a taxpayer.

89. The applicant submitted that the notice was not issued for the purpose of assessment but for the purpose of defending an assessment adverse to the applicant by causing the evidentiary sanction in section 264A(10) to render any evidence subsequently obtained to challenge the assessment inadmissible. This improper purpose was demonstrated, it was submitted, from the width of the notice, the fact that Mr. Hennessy in issuing the notice had had reference to and agreed with a submission of Ms. Gill, the fact that the notice was issued notwithstanding that Mr. Hennessy had regard to the circumstances identified in paragraph 11(1)(ii), (iii), (v) and (vi) of his reasons set out earlier in this judgment, and the fact that the notice was issued in circumstances where any reasonable person would know that full compliance would not be possible. These facts demonstrated, it was submitted, that one of the reasons for formulating the notice in the form in which it was, was to achieve and maximise the evidentiary sanction. In particular, the applicant relied upon the decision of Ms. Gill to recommend that original documents be sought where copies had been provided to the respondent. In the submission which she made to Mr. Hennessy there is included the following handwritten notation against the recommendation to seek original documents:-

"The Court will like best available. Surely we should try

and ensure that the originals are the best available, also

may bear annotations which will be useful in understanding

funds flow and true nature of arrangements, also will verify

authenticity of copies seen (defective P of A used) and

ensure sanction operates effectively if needed."

"I have therefore come to the conclusion that we should use

section 264A in this case to endeavour to obtain access to

all of the relevant documents to this issue that are held

overseas. This appears to be the only option open to the

Commissioner to ensure that all relevant information is

obtained. The evidentiary sanction is such that if some of

these documents/information are withheld, the Commissioner

is empowered to preclude the use of all of the

documents/information in any dispute proceedings. Although

we have already been provided with some copies of documents

(and copies of copies), many of the original documents

(which, under the rules of evidence would be required to be

produced in any court proceedings) are believed to be

overseas. I propose to request these originals. (Note that

secondary evidence, such as copies of the requested

documents, are also subject to the evidentiary sanction).

The fact that copies of some documents are available in

Australia does not preclude the Commissioner from including

the originals in the request.

A draft request is attached. Covered is all information

believed to be held overseas (including documents containing

that information) necessary to reconstruct all aspects of

the funds movement and accounts transfers, as well as all

original documentation believed to be overseas which would

be necessary to evidence the transactions, as well as to

understand the tax status of Finance Acceptances in the Cook

Islands. The following paragraphs deal with each item in

the request and address my reasons for believing the

information or documents are overseas.

The request is fairly lengthy and detailed, and is likely to

cause some concern to the taxpayer. I have confined myself

solely to matters that I consider to be relevant to the

issue in question, whilst at the same time endeavouring to

be thorough, giving that the effectiveness of the notice and

the sanction depend upon this. I feel, however, in order to

minimise the impact of the notice on the taxpayer, that the

taxpayer should be forewarned that it is coming, and it

should be explained to them that this course of action is

being taken solely because the Commissioner has no other

avenues open to him to obtain vital evidence relating to

this matter. This could be done at the meeting to be

arranged with the taxpayer to discuss the progress of the

audit and the audit plan."

90. The applicant submitted that in order to exercise the power to give the requisite notice the respondent was required to have regard to the effect the exercise of the power would have upon the person affected thereby (Pyneboard Pty. Ltd. v. Trade Practices Commission [1983] HCA 9; (1982) 57 FLR 368 at 374). In the context it was submitted that the effect of the notice was that in some respects the applicant could not comply and that the information sought or documents requested were unnecessary because copies were held, or the respondent had not sought the information or documents from others, for example Bankers Trust Australia Ltd., before seeking documents from the applicant. It was submitted that Mr. Hennessy and Ms. Gill were wrong in holding the view that the respondent was unlikely or unable to obtain the information or documents requested and that it was necessary to give the notice for the Commissioner to obtain such information or documents. This was particularly so when the respondent had neither sought the information or documents from those prima facie holding the relevant information or documentation nor asked the applicant to voluntarily attempt to obtain them from third parties the applicant did not control.

91. The applicant further submitted that to attempt to coerce the applicant to provide all the information and documents under threat of the sanction was an improper exercise of the power. The power, it was submitted, could only be used to the extent that it was necessary to make an assessment, and having regard to the severe sanctions, could not be used where it was known that the taxpayer could not comply and the respondent had sufficient material to make an assessment or could not demonstrate that any additional material requested was unobtainable by the respondent by the operation of any other power under the Act or by seeking to obtain the information or documents from another source. To hold otherwise, it was submitted, would allow the sanction to be applied by the giving of a notice which, to the knowledge of the respondent, was incapable of being complied with simply for the purpose of precluding the production of later material to challenge any assessment made by the respondent. That, it was submitted, was the intention of Ms. Gill and Mr. Hennessy which intention is to be inferred from the reasons expressed by them in the extracts cited above, the fact that the material sought goes beyond the issues raised by the applicant's claim to have the income treated as exempt income under section 23(q) of the Act and the requirement that original documents be produced, especially originals of the Cook Island banking licence of Finance Acceptances Ltd. and the Cook Island law imposing withholding tax.

92. The clear intention of the legislature was to cast the obligation on the taxpayer to produce all relevant information and documentation where that information and documentation, in the reasonable belief of the respondent, was relevant to the assessment of the taxpayer and was outside Australia. The rationale being that the taxpayer was best placed to know its own affairs in relation to a liability to tax and best placed to obtain, or put pressure on others to provide, information and documentation which is overseas. The sanction for refusing or failing to comply with a request is intended to ensure early and full disclosure of all relevant information and documentation to enable the respondent to make an assessment of the true facts. The sanction operates to prevent taxpayers producing information or documentation from overseas in proceedings disputing an assessment to prove that the factual basis or legal consequences upon which the respondent acted in making the assessment were erroneous in circumstances where that material had been denied to the respondent at the time of making the assessment. Likewise, the purpose is to prevent relevant information and documentation being withheld from the Commissioner, the Administrative Appeals Tribunal, and the courts so that the assessment is made, and any dispute determined, on an incomplete basis of what ought properly to be all relevant information and documentation necessary to make the assessment and determine the dispute. The section itself in sub-section (16) recognises that the refusal or failure of the taxpayer may result from "the taxpayer being incapable of complying with the request'. However, the section provides as safeguards from an improper use of the power to make the request that there must be a reason to believe that the information or documentation exists and is relevant to an assessment of a taxpayer (section 264A(1)(a) and (b)), that the request is made in writing (section 264A(1)), and, that the sanction may or must be removed by the respondent depending upon a consideration of the relevant circumstances including whether to maintain the sanction would be to make any assessment or penalty incontestable (section 264A(10), (11), (12) and (13)).

93. Having regard to the purpose of the section and the manner in which it is intended to operate, it cannot be said that the power is only available for use as a matter of last resort or that the power may not be used if there is a real risk that the taxpayer may be incapable of complying with the request. Provided that the preconditions for the use of the power are satisfied and that the power is used to seek to obtain information or documents to allow the Commissioner to discharge the statutory duty to assess, no other limitations beyond those required by the Act or the general body of administrative law ought to be applied to the exercise of the power. The fact that compliance with the notice will be onerous or in the end result may be impossible and thereby expose the taxpayer to a sanction, will not of itself impose any limitation on the use of the power. In this respect I see no relevant difference between section 264 and section 264A. (See Federal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd. (1979) 143 CLR 499 at 537).

94. The challenge to the respondent's exercise of the power under section 264A(1) of the Act requires a consideration of the circumstances in which it came to be used and for what purpose.

95. It is apparent from the submission of Ms. Gill in support of a notice being issued that the applicant had produced to the respondent documentation from persons attempting to sell investment proposals to it involving the earning of interest outside Australia in circumstances where it was claimed the interest was not assessable to tax in Australia by the operation of section 23(q) of the Act. The proposals which were made around April, 1987 involved companies other than Bankers Trust Australia Ltd. and Finance Acceptances Ltd. The proposals involved depositing funds with banks in either Fiji or the Cook Islands and the payment of withholding tax overseas on the interest earned. The proposals required that the deposit be made before 30 June, 1987 and that the interest be received within the year of income ended 30 June, 1987.

96. Section 23(q) was repealed by Act No. 51 of 1986 and the repeal was to apply in respect of income derived in the years commencing on and after 1 July, 1987. There were in consequence some important time constraints on making the deposit and in deriving the interest within the relevant year. The advantage of the proposal in terms of the material accompanying it was that section 23(q), if it applied, produced a return free of Australian tax. To produce the same financial return in Australia, if subject to Australian tax, would require an interest rate return almost double that payable on a Fiji or Cook Islands investment. The material was accompanied by an accountant's opinion that the interest was not assessable to Australian tax because of the operation of section 23(q) of the Act, and that the proposal was not caught by the anti-avoidance provisions of Part IVA of the Act.

97. On 9 June, 1987 Finance Acceptances Ltd. of the Cook Islands issued a letter of offer to the applicant to accept a deposit of A$10,000,000.00 for a one year term to earn interest of A$1,164,325.90 after payment of withholding tax, the interest being payable "On the day of settlement and credited to your account". The offer provided for settlement day in the Cook Islands as 11 June, 1987 and in Australia as 12 June, 1987. The letter provided for acceptance as follows:-

"Acceptance of this offer should be effected arranging for a

duly appointed Attorney to present the Bank in the Cook

Islands by not later than 3.30 on Settlement Day (i.e. 11.30

am Australian Eastern Standard Time) the face value of the

proposed Negotiable Certificate of Deposit in Australian

dollars.

As regards transfer of funds, it might assist to advise your

bankers that the Bank has established correspondent banking

arrangements with Bankers Trust Australia Limited ('BTAL')

and that any queries the transfer of funds may be directed

to the capital city office of BTAL."

98. On 10 June, 1987 the applicant faxed a letter of request to Finance Acceptances Ltd. seeking the opening of a short term money market account with Finance Acceptances Ltd. at its head office in the Cook Islands, the authorised signatories on the account to authorise remittances or transfers to or from the account being any two of three Adelaide based officers of the applicant. On the same day the applicant appointed Kenneth Jensen and Michael Carr, chartered accountants of Peat Marwick Mitchell and Co. of the Cook Islands under Power of Attorney to perform certain specified acts in the Cook Islands. Those acts were:-

"(i) On 11th June, 1987 ('Settlement Day') in the

Cook Islands to purchase from Burns Philp

Finance Acceptances Limited ('the Bank') on

behalf of the Grantor a Non-Negotiable

Certificate of Deposit ('the CD') as follows:-

Face Value: $10,000,000.00 in Australian

dollars

Term of Deposit: 364 days

Maturity Date: 9th June, 1988 in the Cook

Islands

Interest Rate: As advised by Fax or

Telex on Settlement Day

(ii) For the purpose set out in (i) to request and

authorise the Bank on Settlement Day to debit

the Face Value of the CD to the Short Term Money

Market account maintained by the Grantor with

the Bank.

(iii) To hold the CD in safe custody for the Grantor

in the Cook Islands and to send to the Grantor

by mail a photocopy duly certified by the

Attorney.

(iv) To instruct the Bank to credit to the aforesaid

Short Term Money Market account on Settlement

Day interest payable for the full term of the CD

less Withholding Tax payable in the Cook Islands

AND to remit the balance of the Short Term Money

Market account to the credit of the Grantor as

follows:-

Bank: A.N.Z. Banking Group Limited

Branch: 81 King William Street,

Adelaide, S.A.

Account Number: 7752 63498

(v) To receive from the Bank a receipt issued by the

Government of the Cook Islands (or an agency

thereof) for the Withholding Tax paid by the

Grantor and to forward same to the Grantor be

(sic) registered mail.

(vi) To receive on behalf of and forward to the

Grantor any 'non-recourse notice' issued by the

Bank and to surrender the CD to the Bank in

consequence thereof.

(vii) In the event the Bank has not during the term of

the CD issued a 'non-recourse notice', to

surrender the CD to the Bank at Maturity and to

have the Face value of the CD paid into the

Grantor's Short Term Money Market account AND to

remit the balance of the Short Term Money Market

account to the credit of the Grantor as set out

in (iv) above or in accordance with any other

directions given the Attorney by the Grantor

prior to maturity."

On 10 June, 1987 the applicant wrote to the ANZ Bank as follows:-

"We hereby request that an amount of ten million dollars

($10,000,000.00) be telegraphically transferred from our

short term money market account (account no. 7752 63498)

with the ANZ Bank, 81 King William Street, Adelaide, SA on

Friday, 12th June 1987, at 10.00 a.m. as follows:

Credit: Finance Acceptances Limited

for account: F.H. Faulding and Co. Limited

Bank: Bankers Trust Company, Singapore

Would you please advise ANZ Bank (Sydney) to deliver this

warrant to:

Bankers Trust Australia Limited,

350 George Street,

SYDNEY, N.S.W. 2000

Attention: Ms. Debbie Mosman."

99. On 12 June, 1987 in Australia A$1,164,304.90 was received in the applicant's account with the ANZ Bank Adelaide. On 10 June, 1988 A$10,000,000.00 was paid into the applicant's account with the ANZ Bank in Adelaide, the monies coming from Bankers Trust Australia Ltd., Melbourne.

100. In addition to copies of the documents executed by the applicant, it produced to the respondent during the audit copies of other documents. One purports to be an undated non-negotiable Certificate of Deposit issued by Finance Acceptances Ltd. in favour of the applicant containing or evidencing the terms of the contract of deposit and recording on the reverse side that interest was paid on 11 June, 1987 in the Cook Islands. Another is a copy of an undated letter from Bankers Trust Australia Ltd. advising particulars of a letter of credit in favour of the applicant issued by Bankers Trust Company Singapore Branch which letter stated:-

"IRREVOCABLE NON-NEGOTIABLE STANDBY LETTER OF CREDIT NO.

SC733/87

THIS CREDIT IS EFFECTIVE ON AND FROM JUNE 12, 1987

(AUSTRALIAN TIME) FOR A PERIOD EXPIRING ON JUNE 17, 1988

(AUSTRALIAN TIME) ('TERM')

On account of: Finance Acceptances Limited (The 'Account

Party')

Issued in

Connection with: Non-Negotiable Certificate of Deposit

issued by Finance Acceptances Limited to

the Beneficiary having a face value of

A$10,000,000.00 and maturing on June 10,

1988 (AUSTRALIAN TIME) ('the Certificate

of Deposit').

Amount: A$10,000,000.00 (the 'Maximum Amount')

Available at: Any office of Bankers Trust

Australia Limited by a draft payable

at sight."

101. The letter of credit provided for a draft drawn under it being delivered to an office of Bankers Trust Australia Ltd., Melbourne, accompanied by certain declarations and documents. Those documents included a certified copy of the Certificate of Deposit unless the certificate had not been issued despite request, in which case a declaration that the applicant by its attorney had paid an amount equal to the face value of the Certificate to Finance Acceptances Ltd. at its offices in the Cook Islands to be deposited for maturity on 10 June, 1988 was necessary. The applicant also produced a copy of a letter dated 24 June, 1987 to Messrs. Jensen and Carr as attorneys for the applicant giving non-recourse notice as contemplated by the non-negotiable Certificate of Deposit, and advising that payment of the principal amount deposited should be sought on maturity from the Bankers Trust Company Singapore pursuant to the letter of credit.

102. The applicant also produced a copy of a letter from the Collector of Inland Revenue, Cook Islands, addressed to the applicant dated 12 June, 1987 acknowledging receipt of NZ$44,011.30 from Finance Acceptances Ltd., being the final tax on interest paid to the applicant. The tax was calculated at the rate of 5% on the interest earned on the first A$2,000,000.00 deposited, and 2.5% on the interest earned on the A$8,000,000.00. The tax in Australian dollars was $30,010.05.

103. On 5 January, 1988 the applicant filed a return wherein it claimed that an amount of A$1,164,324.90 had been received by it as interest income from sources in the Cook Islands and upon which tax was paid in the Cook Islands. In consequence it claimed that the sum was exempt from Australian income tax by virtue of section 23(q) of the Act. An assessment issued to the applicant on the assumption that the income was exempt. On the audit the applicant was required to substantiate the claim for exemption under section 23(q). The applicant relied on the above facts and documents.

(f) FH Faulding and Co Ltd were not aware of any

instructions or procedures relating to the putting in

place of the deposit in the Cook Islands other than

those referred to in the information and documents

provided.

.....

(h) FH Faulding and Co Ltd did not have a Statement of

Account or other documentary evidence of the actual

opening or usage of a short term money market account

with Finance Acceptances Ltd.

.....

(j) FH Faulding and Co Ltd recently acknowledged that the

Power of Attorney contains an error in referring to

the purchasing of the Certificate of Deposit from

Burns Philp Finance Acceptances Ltd.

(k) FH Faulding and Co Ltd did not receive a report or

advice from the Attorneys advising of the carrying out

of any of the duties. No account was ever rendered to

FH Faulding and Co Ltd in respect of those services."

105. By the time of the audit, the respondent had some experience and information as to arrangements for depositing funds in the Cook Islands and for claiming the interest as exempt under section 23(q). Ms. Gill was of the view that the arrangements were open to challenge on a number of bases and she records this in her submission for the issue of a notice under section 264A of the Act. She says:-

"It is apparent from a perusal of this file, and in

particular the Melbourne Case Report, that several arguments

are open to us on which to challenge the arrangements.

Firstly, on the basis that the transactions as put in place

were effective in transferring the funds into the Cook

Islands, it will be argued that under 'sourcing law' as it

exists, the source of the interest was in some other place

than the Cook Islands. Secondly, and depending on the way

in which the funds were transferred to the Cook Islands, we

may be able to argue, as in other cases, that the actual

transfers put in place were ineffective in 'transferring the

funds to the Cook Islands for sourcing purposes. And

thirdly, we will seek to argue that a scheme pursuant to

Part IVA of the Act was entered into embodying the decision

and actions taken in making the deposit in the Cook Islands,

as opposed to another location where such deposit would

normally be made by the company. (i.e. that the selection

of the location and steps to send the deposit to that

location were the 'scheme' from which a tax benefit was

derived. Lastly, from information obtained from Melbourne

Appeals, it seems likely that Finance Acceptances, under

Cook Island Law, was originally exempt from all taxes,

including interest withholding tax, but made application to

Cook Islands Cabinet to pay such a tax, provided it was at a

lower rate than normal (i.e. negotiated down from 15% to

5%). Consequently we may be able to argue that the interest

paid was exempt in the Cook Islands,; a situation which is

unaffected by the voluntary payment of moneys to the Cook

Islands Government.

Also substance over Form. Arg: True deposit taken may be

BT Singapore part if F.A. never has any control over

disposition of the funds.

Particularly in relation the (sic) the middle two arguments,

it is necessary to fully understand the way in which the

transactions were implemented, and from this the true

'substance' of the arrangements can be determined. It is

clear from the responses to two preliminary questionaires

(sic) issued to the company that the funds did not take a

direct route to the Cook Islands."

"As has been noted, it is seen as crucial to determine the

exact means by which the funds arrived in the Cook Islands;

and full details of the movement of the funds/value from the

time of settlement until the time of unwinding of these

arrangements. Until this information is obtained, it is not

possible to fully address the issues relevant to determining

the source of the interest. Given that:

.the taxpayer claims to have no knowledge of these matters;

.the Commissioner has no double tax treaty with the Cook

Islands, and therefore no powers to access any information

there;

.Bankers Trust were not cooperative in providing information

in another such case involving a deposit with Finance

Acceptances,

the Commissioners prospects of obtaining any further

information on these matters by conventional means are slim.

Although a Melbourne case is proceeding as a 'test case' in

relation to the proper legal interpretation of the 'source'

of interest, it will still be necessary to determine the

factual situation in this case in as far as

confirming/attacking the effectiveness of the transactions

in achieving their purpose.

.....

Guidelines have been issued on the usage of section 264A

(Copy attached). One of the aims of the provision is to

prevent, as has happened in the past, a taxpayer from

providing to the Commissioner only those offshore documents

which are favourable to his case in response to a section

264 request, whilst claiming to have no custody or control

over other offshore documents (which are outside of the

jurisdiction of the section 264 notice).

Intentionally or otherwise, this is the situation here. FHF

has provided certain documentation which, if taken alone,

could lead to the presumption that a sum of money was sent

to the Cook Islands and deposited in an account in the name

of FHF and then subsequently drawn upon to purchase a CD in

the Cook Islands. The company claims to have no other

information or evidence to prove that the actual funds

reached the Cook Islands, other than the CD itself, the

application to open the account and the Power of Attorney.

It can be seen from the other cases however, that the

existence of these documents does not necessarily mean that

the funds ever reached the Cook Islands or came under the

control of Finance Acceptances Ltd, or that the true nature

of the transactions was such as the documentation purported

them to be. Such conclusions, which are all relevant to the

'source' of the interest derived, can only be drawn after

all of the details of the way in which the transactions were

effected are known. Consequently the existing documents

provided may be misleading in isolation."

106. Those were the reasons which led to Ms. Gill making the submission to Mr. Hennessy seeking the issue of the notice. It was "to endeavour to obtain access to all relevant documents to this issue which are held overseas. This appears to be the only option open to the Commissioner to ensure that all relevant information is obtained."

107. The respondent, by Ms. Gill, was clearly not satisfied on the material provided by the applicant that:-

(a) even if the A$10,000,000.00 had in fact been transferred to

the Cook Islands and deposited with Finance Acceptances

Ltd., the source from which the money claimed as interest

was derived was the Cook Islands;

(b) the sum of A$10,000,000.00 was ever effectively transferred

to the Cook Islands and placed on deposit there with

Finance Acceptances Ltd;

(c) the scheme was one to which Part IVA of the Act had no

operation;

(d) the interest, if earned in the Cook Islands, was subject to

Cook Islands withholding tax;

(e) the purported arrangements were not in fact a sham and that

the effective deposit was made with Bankers Trust Company

Singapore;

108. Ms. Gill determined to seek the information and documents contained in the draft notice she submitted to Mr. Hennessy for the purpose of investigating and determining each of the above issues to see whether the claim to exemption was properly made or whether the sum of $1,164,324.90 ought to be assessed to tax.

109. There is in the circumstances outlined above no lack of bona fides or use of the power contained in section 264A for an improper purpose. It would be a proper use of the power to attempt to obtain relevant information and relevant documents to resolve each of the matters listed above. In his reasons Mr. Hennessy states that he was moved to issue the notice for the same purposes and reasons of Ms. Gill, and I see no reason to reject this.

110. I do not accept that a perusal of the terms of the notice, the request for the production of original documents, or an acknowledgment that the applicant may have major difficulties in complying demonstrates a lack of bona fides and the use of the notice for an improper purpose, namely to render a re-assessment adverse to the applicant, harder to contest by denying to the applicant an ability to tender relevant evidence in proceedings disputing an assessment of the sum of $1,164,324.90 to tax. That does not mean, however, that no errors have been made as to what was relevant information or documents to determine the issues raised on the applicant's claim that the particular sum is exempt from tax because the facts as disclosed cause the Act itself by the operation of section 23(q) to exclude the sum of $1,164,324.90 from assessable income. Nor does it mean that no errors have been made by Ms. Gill or Mr. Hennessy in construing the power to specify the manner in which information is to be provided to include a power to require that the applicant procure from third parties written statements by those third parties. If such errors have been made, then the issue of the notice was ultra vires unless the notice can be severed to remove so much as is beyond power.

111. In considering the terms of the notice it will necessarily involve consideration of some of the objections to form. The applicant submitted that because section 264A(1) required that the respondent have reason to believe that relevant information was held by a person overseas, it was necessary that the requirements of the notice be couched in clear terms. It was further submitted that to be valid it must be apparent on the face of the notice that the information and documents which it seeks, in fact relate to the taxpayer's assessment. This, it was submitted, will not be apparent unless the relevant assessment is identified and the information and documents are identified with sufficient precision to make good the connection with that issue. In support of these contentions the applicant relies upon the decisions of two Full Courts of this Court on the requirements for valid notices under section 155 of the Trade Practices Act 1974 (Cth) (see Bannerman v. Mildura Fruit Juices [1984] FCA 156; (1984) 2 FCR 581 at 582, 584, 588, 589-590 and 591; Pyneboard Pty. Ltd. v. Trade Practices Commission [1983] HCA 9; (1982) 57 FLR 368 at 373-376).

112. In my opinion there is no valid basis to distinguish between the requirements as to sufficient identification of the issue in respect of which the power is exercised where the power is exercised under section 264 or under section 264A of the Act. In both cases non-compliance may have a serious consequence to the recipient of the notice. In the former case non-compliance is a criminal offence and can lead to conviction and imposition of a penalty. In the latter it can lead to the imposition of the evidentiary sanction. Both sections are designed to enable the respondent to obtain information and documents to make an assessment of the liability of a taxpayer to tax. Accordingly, it is the decisions of the High Court dealing with notices under section 264 of the Act which are of greatest assistance in determining questions of content and form of notices under section 264A.

113. In Federal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd. (1979) 143 CLR 499, Gibbs ACJ said as to a notice under section 264 (at 525):-

"...To be valid a notice to produce documents under

s.264(1)(b) must of necessity identify with sufficient

clarity the documents which are required to be produced.

However the notice must in my opinion go further: it must

show the person to whom it is addressed that any document

which he is required to produce is one whose production the

Commissioner is entitled to require. Where a notice is

addressed to a taxpayer who is required to produce documents

which relate to his own income or assessment, the very

description of the documents (for example, 'your books of

account') may be enough to show that the notice is within

the power conferred by the section. Where however the

notice is addressed to one person, requiring him to produce

the documents of another, the notice must show that those

documents relate to the income or assessment of a particular

person, who must be identified. The power is confined to

giving a requirement of a particular kind - a requirement to

produce documents relating to the income or assessment of

some person - and a notice requiring the production of

documents not so related is beyond the scope of the power."

"The Commissioner's power to require production under

s.264(1)(b) is limited to documents relating to a person's

income or assessment. Consequently, the Commissioner may

not legally require the production of all the contents of a

specified box or even all the documents therein, but only

such of them as relate to a person's income or assessment.

For this reason there is a fatal defect in the short form of

notice addressed to the Bank dated 23rd February 1977 as it

does not describe the documents required to be produced

except by reference to their location.

What par.(1)(b) has in mind is that a notice may be given

requiring the recipient to produce 'all books, documents and

other papers' in his custody or control 'relating thereto',

that is, to the income or assessment of the person whose

name is stated in the notice.

.....

As the Commissioner's coercive power to require production

is limited, any notice given in exercise of the power must

in terms conform to the statutory limitations if it is to be

valid. It will in my view conform to those limitations only

if it clearly confines the documents to be produced to the

class of which the Commissioner is authorized to require

production, though it may go on to include particular

documents on the footing that they fall within that class.

If not so limited, the notice fails on its face to express

the limitation which the section places on the

Commissioner's authority. Because the exercise of the power

casts onerous obligations on the recipient of a notice, and

because the recipient (not being the taxpayer) is only

justified, vis-a-vis the taxpayer, in producing the

taxpayer's documents without his consent in response to a

valid demand, it is for the Commissioner so to formulate his

notice that this limitation on his authority is drawn to the

attention of the recipient."

114. The notices in question in Federal Commissioner of Taxation v. Australia and New Zealand Banking Group were held to be sufficient where the notice stated that the information or documents were required for the ascertainment of the taxable income and the tax payable on it for specified years in respect of identified taxpayers.

115. The same conclusion was reached by a Full Court of this Court in Perron Investments v. Deputy Commissioner of Taxation (WA) [1989] FCA 397; (1989) 90 ALR 1.

116. It was submitted by counsel for the respondent that the statement on the notice:-

"...do by this notice pursuant to paragraph 264A(1)(c) and

(d), require you to provide me, on or before 18 January

1993, with information and documents relevant to the

assessment of FH Faulding and Co Ltd for the year ended 30

June 1987 as specified in the following paragraphs."

entitled the respondent to undertake a general investigation of all aspects of the applicant's financial affairs for the year ended 30 June, 1987 to determine whether an amended assessment ought to be made as a result of that investigation. Without more in the notice the submission may well be correct. However the notice in terms identified the specific issue to which the request for information and documentation related. By the inclusion of the following:-

"ISSUE TO WHICH THIS REQUEST RELATES

This request relates to your claim for exemption from tax

pursuant to section 23(q) of the Income Tax Assessment Act

of interest of $1,164,304.90 derived from an investment of

$A10m in the Cook Islands in the Income Year ended 30 June

1987."

the respondent has identified the relevant issue as being whether or not the income of the applicant in the sum of $1,164,304.90 claimed by the taxpayer as interest derived from an investment of A$10,000,000.00 in the Cook Islands is assessable income because of the operation of section 23(q) of the Act. Additionally, the submission of Ms. Gill makes plain that the purpose of the notice was to ascertain all of the relevant facts and information to see where the interest has its "source" for the purposes of section 23(q) and whether, if section 23(q) did apply, Part IVA of the Act would nevertheless operate to deny the applicant the benefit of section 23(q).

117. The particularity with which the respondent has chosen to identify the relevant assessment issue, in my view, not only satisfies the requirement for particularity and identification of the limits on the power, but also sets the test of relevance of the information and documents sought by reference to that issue. Further, the introductory words to each section of the notice may operate to further limit the issue. For example, the terms of "(A) IN RELATION TO THE TRANSFER BY YOU OF $A10M TO FINANCE ACCEPTANCES LTD IN THE COOK ISLANDS TO PURCHASE A NON-NEGOTIABLE CERTIFICATE OF DEPOSIT IN JUNE 1987" limit the ambit of the inquiry to the transfer of funds to Finance Acceptance Ltd. in the Cook Islands to place on deposit with that company.

118. Requests 1(a), (b), (c) and (e), with the exclusion of the words "and then invested/utilized by Finance Acceptances Ltd" are relevant to the issue identified because the information is designed to show whether or not the sum of A$10,000,000.00 in fact got to the Cook Islands as money beneficially owned by the applicant and was there placed on deposit by the applicant. That the money in fact got to the Cook Islands and was placed on deposit with Finance Acceptances Ltd. as the non-negotiable Certificate of Deposit asserts occurred, is an essential part of the applicant's claim to exemption of the interest from assessable income by the operation of section 23(q). The information sought in paragraph 1(d) does not relate to the transfer of the funds in issue to the Cook Islands, nor is it limited to account transactions involving funds of the applicant. The sub-paragraph is beyond the power of the respondent under section 264A(1).

119. The concluding part of request 1 is objectionable for two reasons. The first is that it assumes that the funds were invested by Finance Acceptances Ltd. with another entity and requires an answer on the basis that the assumption is correct. The question makes no attempt to establish that the assumption is in fact correct. The second is that, even if the assumption is correct, the dealing with the monies after receipt from the applicant cannot be relevant to the claim that the sum of A$1,164,304.90 was received as interest in circumstances where section 23(q) applies. The claim of the applicant is that the monies were deposited in the Cook Islands on the terms and conditions set forth in the non-negotiable Certificate of Deposit and it was that contract entered into and to be performed in the Cook Islands which was the source from which the specified sum was derived. If the applicant is correct and the contract was the source from which the income was derived when the interest was paid at the time of the deposit (if that be the case), then nothing done subsequently by Finance Acceptances Ltd. in the enjoyment of the fruits of its contractual arrangements with the applicant can alter the source or the character of the income derived by the applicant. (See Premier Automatic Ticket Issuers Ltd. v. Federal Commissioner of Taxation [1933] HCA 51; (1933) 50 CLR 268 at 286, 290-292, 296-297, 303; Commissioner of Taxation (NSW) v. Premier Automatic Ticket Issuers Ltd. [1933] HCA 55; (1933) 50 CLR 304; Tariff Reinsurances Ltd. v. Commissioner of Taxes (Victoria) [1938] HCA 21; (1938) 59 CLR 194 at 205, 208-209, 217, 218; Esquire Nominees Ltd. v. Federal Commissioner of Taxation [1973] HCA 67; (1973) 129 CLR 177 at 212, 220, 226-238).

120. Beyond the payment of interest the applicant does not rely upon any act subsequent to the deposit of the funds in the Cook Islands to establish a Cook Island source. If the funds reached the Cook Islands into the control of Finance Acceptances Ltd., dealings by it with the funds are irrelevant to the identified issue of whether the funds in fact got to the Cook Islands for the purpose of deposit with Finance Acceptances Ltd. Likewise, no act subsequent to the deposit and payment of the interest is necessary for the tax benefit claimed by the applicant and any scheme for the purpose of Part IVA of the Act requires no step to be taken to provide the tax benefit beyond the deposit and payment of interest less the withholding tax. The use of the deposit during its term by Finance Acceptances Ltd. or any other entity is irrelevant to the operation of Part IVA. This was recognised by Ms. Gill in outlining possible grounds for attacking the claim when she discussed the possible option of Part IVA. The scheme she identified was the selection of the location and the steps taken to send the deposit to that location and there to earn the interest which was subject to withholding tax. The requirement to provide information of the flow of funds from Finance Acceptances Ltd. to the party described as the "investee" in request 1 is beyond power.

121. Request 2 is relevant to the issue of what acts, if any, were performed by the applicant in the Cook Islands by an attorney or agent. The question bears directly upon the issue of the source from which the sum of $1,164,304.90 was derived as income.

122. Request 3 is relevant to the sourcing issue in that it bears upon the issue as to whether Messrs. Jensen and Carr were acting on behalf of the applicant, what acts were undertaken by them, if any, in the Cook Islands, whether they did any act of the type required or contemplated in the Cook Islands in the letter of offer of Finance Acceptances Ltd. of 9 June, 1987, whether they did any act which constituted the making of a contract of deposit or the placing of money on deposit with Finance Acceptances Ltd. for and on behalf of the applicant. The request is directly relevant to the section 23(q) and sham issues.

123. Request 4 in my opinion is not relevant to any issue in relation to the claim made by the applicant. Whether or not Finance Acceptances Ltd. was authorised to debit a withdrawal of A$10,000,000.00 from the short term money market account having regard to the terms of the power of attorney granted to Messrs. Jensen and Carr, does not determine the question of sourcing for the purposes of section 23(q). The relevant question is whether the money was in fact taken from the short term money market account of the applicant and placed on deposit in the name of the applicant with Finance Acceptances Ltd. and by whom this was done.

124. Request 5 in my opinion is not related to any issue relevant to the claim made by the applicant.

125. If the request is to be construed as concerned with the investment/utilisation of the funds after deposit with Finance Acceptances Ltd., any agreements between Finance Acceptances Ltd. and the named or any other financial institution as "to the investment of the funds or the pledging of same or any other aspect of the transactions", it is irrelevant for the reasons given in respect of that part of request 1.

126. If the request is to be construed as concerned with agreements between Finance Acceptances Ltd. and others as to the investment of funds by the applicant with Finance Acceptances Ltd. in the Cook Islands, then such agreements cannot relevantly bear on the section 23(q) issues. Nor, in my view, would any such agreements bear on any Part IVA issue because the tax benefit comes from the deposit of the funds in the Cook Islands, the operation of the revenue laws of the Cook Islands to subject the interest earned, if any, to Cook Islands withholding tax, and the operation of section 23(q) and not from any agreements between Finance Acceptances Ltd. and any other financial institution.

127. If the request is to be construed as concerned with agreements between Finance Acceptances Ltd. and the named and other financial institutions facilitating the transfer of the A$10,000,000.00 from Australia to the Cook Islands, then the questions have previously been asked in requests 1(a)(b)(c) and (e).

128. There is no basis to interpret the question one way or the other and the question is bad for uncertainty. However, on any view of the question, the information sought on the first two constructions is not relevant to the assessment of the sum of $1,164,304.90 to tax or otherwise because of section 23(q) or Part IVA of the Act and therefore the request for that information is beyond power. On the third possible construction the request is bad for being unreasonably repetitive.

129. Request 6 is, in my opinion, too uncertain as drafted to constitute a valid request. The vice of this request is that in attempting to use the question as a catch-all general request and not directing the question as to the knowledge of particular persons in respect of relevant identifiable transactions, the question becomes both uncertain as to what is being sought of any particular person and beyond power if it relates to all relevant transactions having regard to the requirement that a reasonable basis to believe exists that each person had information as to all relevant transactions, and, beyond power to the extent that the question relates to irrelevant transactions.

130. Mr. Brown was the authorised signatory for Finance Acceptances Ltd., he signed the letter of offer, the non-negotiable Certificate of Deposit, the certificate of payment of interest and the non-recourse notice. He may be expected to have relevant information as to receipt of the A$10,000,000.00 by Finance Acceptances Ltd. and its placement on deposit, the issue of the non-negotiable Certificate and the payment of interest. Likewise Finance Acceptances Ltd. can reasonably be expected to have or have had information in relation to such matters. Bankers Trust Company Singapore can reasonably be expected to have information as to the receipt by it of the A$10,000,000.00 from Australia and the transfer of that money or its value to the Cook Islands and its being placed on deposit there with Finance Acceptances Ltd., the deposit being a circumstance relevant to the irrevocable bankers letter of credit issued by the bank. But beyond that there is no reasonable basis to believe that Bankers Trust Company Singapore has any relevant information as to the payment by Finance Acceptances Ltd. of A$1,164,304.90, being the claimed interest less withholding tax. The only connection of South Pacific Trust Corporation of the Cook Islands with the matter is the fax machine imprint "FROM SOUTH PAC TRUST" on the head of some fax copies. This grounds no reasonable belief beyond the fact that Finance Acceptances Ltd. had access to or use of a fax machine owned or operated by South Pacific Trust Corporation. There is nothing to suggest that this corporation had anything to do with the placement of the A$10,000,000.00 with Finance Acceptances Ltd. or the payment of interest by it to the applicant, or that it has or had any information relevant to those matters. Where no reasonable basis exists to believe that relevant information exists there is no power to request the information.

131. That the request in terms refers to "transactions and the investment of funds" in respect of which requests have been made indicates that the request is not limited to the transfer of funds to the Cook Islands and the placement of the money on deposit with Finance Acceptances Ltd. The request purports to encompass the investment/utilisation of the funds referred to in request 1, any movement of the funds to a member, associate or affiliate of Finance Acceptances Ltd. or the "Bankers Trust Group", and the investment with the "investee" as defined in request 1. For reasons given earlier, dealings with the funds beyond their receipt on deposit with Finance Acceptances Ltd. in the Cook Islands are irrelevant to the assessment issue and questions as to such matters are beyond power.

132. Requests 7(a), (b), (c) and (e) are relevant as going to the payment of interest to the applicant in the Cook Islands and its repatriation to Australia.

133. Request 7(d) is beyond power for the same reasons as request 1(d).

134. Requests 8 and 9 are relevant for similar reasons to those given to requests 2 and 3 above.

135. Request 10 is irrelevant and therefore beyond power. Once the interest was paid, received and retained by the applicant, whether or not Finance Acceptances Ltd. was authorised by the power of attorney to Messrs. Jensen and Carr to pay the interest into the short term money market account in the Cook Islands in the name of the applicant and thereafter to repatriate it, is irrelevant to either the section 23(q) or Part IVA issues. The interest was derived for the purpose of section 23(q), and the tax benefit obtained, when the interest was paid and held to the account of the applicant.

136. Request 11 is relevant to the issue that the interest was subject to withholding tax in the Cook Islands and further to satisfy the Commissioner as required by section 23(q) that the tax had been or would be paid on the interest in the Cook Islands.

137. Request 12 carries with it the same vice as request 6, and for similar reasons it is invalid in this form.

138. Request 13 purports to inquire as to "any other interest" derived on the A$10,000,000.00 in funds. The request relates to any interest earned by Finance Acceptances Ltd. on its own behalf in respect of a dealing with the A$10,000,000.00 after deposit by the applicant. The income of Finance Acceptances Ltd. can have no relevance to the assessment of income of the applicant. As is made clear in Tariff Reinsurances v. Commissioner of Taxes (Vic.) the source of the funds Finance Acceptances Ltd. used to discharge its contractual obligation to pay the interest to the applicant is irrelevant to any question as to the source from which the applicant derived income. Nor is it relevant to any Part IVA or other issue. The question is therefore not relevant to any issue on the assessment of the applicant's claim and is beyond power.

139. Requests 14, 15, 16 and 17 fall within Section (D) of the notice and deal with the redemption in 1988 of the A$10,000,000.00 on deposit. In my opinion redemption of the deposit is post derivation of income activity. It cannot have any effect upon whether or not A$1,163,304.90 was derived as income in June, 1987 and the source from which such income was derived. For the purpose of determining the source of the income the relevant questions relate to the A$10,000,000.00 getting to and being placed on deposit in the Cook Islands and the payment of interest there. If those matters are established as facts, then post-derivation activity in repatriating the capital is irrelevant. The requests are therefore irrelevant to any issue, including the Part IVA issue in the assessment of the applicant's claim and its liability to tax, if any, on the sum of $1,163,304.90 and are in consequence beyond power.

140. There is a further difficulty with request 14 in that it requires information on the assumed premise that money was repaid by an "investee" and that such money flowed back through the banking system to the applicant's account in Adelaide when the known situation was that the sum of A$10,000,000.00 was "redeemed" by calling upon Bankers Trust Company Singapore to perform its obligations under the security provided by way of a banker's irrevocable letter of credit. It is not within the power granted by section 264A to require that information be provided where such cannot be provided because the underlying assumption is contrary to the known facts. There can be no reasonable basis to believe that information or documents exist overseas which would validate or prove the assumption as required by Section 264A(1).

141. Request 18 relates to the provision of a security for repayment of the deposit in the nature of a bankers irrevocable letter of credit provided by Bankers Trust Company Singapore. The circumstances which motivated the bank to issue the letter of credit can have no relevance to the issue of whether the interest was derived in the Cook Islands or to any Part IVA or other issues arising on the assessment of the applicant to tax on the interest income. The request is therefore beyond power.

142. Request 19 relates to the election by Finance Acceptances Ltd. to avail itself of a right under the contract of deposit to require the applicant to seek to recover the sum of A$10,000,000.00 by having recourse to the irrevocable letter of credit which was provided as security. The circumstances which motivated Finance Acceptances Ltd. to exercise a contractual right as to repayment of the sum of A$10,000,000.00 can have no relevance to any of the source, Part IVA or other issues arising on an assessment of the applicant's claim that the interest earned was exempt from tax in Australia. The request is therefore beyond power.

143. Request 20 relates to all matters covered in sections (A) to (F). When it refers to "any aspect of the whole of these arrangements" it is not speaking only of the arrangements between the applicant and Finance Acceptances Ltd. as claimed by the applicant and recorded in the non-negotiable Certificate of Deposit purporting to evidence the deposit with Finance Acceptances Ltd. of the A$10,000,000.00. The request covers all other arrangements including post-deposit dealings with the sum of A$10,000,000.00 by Finance Acceptances Ltd. because it includes arrangements, if any, with the 'investee" as defined in request 1. In the present form the question is beyond power. I am far from persuaded that even in relation to the arrangements claimed between the applicant and Finance Acceptance Ltd. the information sought is relevant to any issue save marginally as to whether it may in some limited way bear on any Part IVA issue.

144. Request 21(a) seeks information as to the incorporation and shareholding in Finance Acceptances Ltd. In my opinion that information cannot have any relevance to an assessment of the applicant to tax or any of the issues arising on its claim to be exempt from tax on the sum of $1,164,304.90 and is therefore beyond power.

145. Request 21(b) as drafted is beyond power. Any communications from the parties identified in the request relating to the particular investment arrangements in place between the applicant and Finance Acceptances Ltd. up until the derivation of the income as interest as claimed and its repatriation to Australia would be relevant to all of the issues raised on the assessment of the particular sum to tax. However, beyond that the information would be irrelevant.

146. Requests 21(c) and (d) are relevant to the question of whether the interest earned by the applicant was subject to withholding tax in the Cook Islands. If the conditions of any banking licence granted to Finance Acceptances Ltd. rendered interest earned by the applicant free from withholding tax under the law of the Cook Islands voluntary payment of a "tax" would not be sufficient for the purposes of section 23(q) of the Act (Gilder v. Federal Commissioner of Taxation (1991) 91 ATC 5062).

147. I turn now to the documents sought in the notice.

148. Requests 22, 23, 24, 25, 26, 27 and 28 are all relevant to the assessment issues arising on the applicant's claim that the particular sum was exempt income by reason of the operation of section 23(q).

149. Requests 29, 30 31 and 34 are not documents which are relevant to the said assessment issues. The presence or absence of security for repayment and recourse to it have no tax consequences and are irrelevant to the derivation of the interest as income. They also have no demonstrable connection with any possible Part IVA argument. In consequence these requests are beyond power.

150. Counsel for the respondent conceded that the requests numbered 32 and 33 were not valid requests.

151. The applicant submitted that the requests for the original of the documents in requests 22, 23, 24, 25, 26, 27 and 28 are oppressive because the original documents were overseas, because the applicant may not have any right to the document and because the document may be in the possession or control of a third party. In my view these requests are not oppressive and do not become oppressive because the applicant has failed to ensure that original documents evidencing the transaction it contends for were preserved to allow for production and inspection of the documents if called upon to substantiate the claim for exemption of the $1,164,324.90 from tax by the operation of section 23(q) of the Act. If the applicant finds itself in a difficulty to procure the production of the documents sought or required to expend monies in order to find the documents and present them for inspection, these difficulties or that expense flow from the applicant's own failure and not because of conduct of the respondent which is oppressive in itself or causative of an oppressive result. Further, the submission overlooks the circumstance that if the interest is re-assessed to tax and the applicant wishes to contest the assessment, the onus of proof will be on the applicant to demonstrate that the Commissioner was in error. If the applicant seeks to demonstrate error because of the operation of the then section 23(q) of the Act, it will be necessary for the applicant to prove the transaction by tendering the documents into evidence. This will require production of the original documents or proof of an entitlement to rely on secondary evidence of their contents. This was alluded to in the reasons of Ms. Gill when she argued that the originals be required of the applicant.

152. The notice contained the following stipulation:-

"MANNER IN WHICH INFORMATION TO BE PROVIDED:

Where such information exists in original documentary form

overseas (regardless of whatever other form it may exist

in), then the original documents are to be provided to Mr

Desmond J Hennessy, Case Manager, Complex Audit in Adelaide.

Where such information does not exist in original

documentary form overseas, but does exist in copied

documentary form overseas, (regardless of whatever other

form it may exist in), then the copies are to be provided to

Mr Desmond J Hennessy, Case Manager, Complex Audit in

Adelaide.

Where such information does not exist in documentary form,

(regardless of whatever other form it may exist in), but is

kept by means of mechanical, electronic or other device

outside of Australia, then printed output of the information

from such device is to be provided to Mr Desmond J Hennessy,

Case Manager, Complex Audit in Adelaide.

Where such information does not exist in any of the above

forms, it is to be provided to Mr Desmond J Hennessy, Case

Manager, Complex Audit in Adelaide in the form of a

statement made by the overseas party who has first-hand

knowledge of the information."

153. The applicant contended that section 264A(1) does not empower the respondent to require of the applicant that it procure a third party to make a statement which the applicant is to convey, or cause to be conveyed, to the respondent. The applicant contended that section 264A only allows the respondent to specify the manner in which the taxpayer is to give the information sought for example orally or in writing, to a particular person at a particular place.

154. The respondent contended that the section is wide enough to allow the respondent to specify that it wishes the information to be provided by a person with first-hand knowledge and request delivery of that information by the taxpayer in the form of a statement by the third party.

155. Section 264A(1), as a matter of construction, requires that the respondent has reason to believe that the relevant information or documentation exists. The relevant information is the identification of the true facts and circumstances relevant to the assessment of a taxpayer. That information in terms of the section is within the knowledge of a person outside Australia (section 264A(1)(a)(i)) or recorded in a document outside Australia (section 264A(1)(a)(ii)) or kept by means of a device outside Australia (section 264A(1)(a)(iii)). The respondent's power to make the request is contained in section 264A(1) in the following terms:-

"...the Commissioner may, by notice in writing served on the

taxpayer (which notice is in this section called the

'offshore information notice'), request the taxpayer:

(c) to give to the Commissioner, within the period and in

the manner specified in the offshore information

notice, any such information."

156. It is therefore the taxpayer who is to supply the information requested, where that information is relevant to the assessment. The phrase "in the manner specified" qualifies the giving of the information. That is, "manner" in the context means the procedure or way the information is to be communicated to the respondent by the taxpayer. It does not extend to a power to specify that a third party record in a statement the third party's version of the fact or answer the questions asked of the taxpayer by the respondent in the notice and that the statement so obtained be delivered within the time and in the manner specified in the notice. Such a requirement in the notice was, in my view, beyond power and invalid.

157. The applicant also submitted that to be a valid notice, the person who made the request, in this case the Deputy Commissioner Mr. Power, must hold the reason to believe stipulated in section 264A(1)(a) and (b). On the material Mr. Power did not have the reason to believe; the belief was held by Mr. Hennessy, an officer of the Department. In my view there is no material difference between the nature of the power given under section 264 and the power given under section 264A. Both have the potential to have serious impact upon a taxpayer in complying with such notices and in the consequences of non-compliance. Accordingly on the question of whether the giver of the notice must hold the requisite belief, there is no basis to hold that any result different to the majority view in O'Reilly v. The State Bank of Victoria [1983] HCA 47; (1983) 153 CLR 1 is justified. The requirements of administrative necessity referred to by Gibbs CJ (with whom Murphy J agreed) at 12 and Wilson J at 30-33 apply equally to a notice under section 264A. It is sufficient that the Deputy Commissioner to whom the power has been delegated act by Mr. Hennessy and that Mr. Hennessy hold the requisite belief. It is not necessary that Mr. Power also personally hold the requisite belief required by section 264A(1) of the Act.

158. The respondent submitted that such parts of the notice as were found to be beyond power or were invalid ought to be severed from the notice. I have no doubt that in an appropriate case a notice under section 264A(1) may be severed. However, the invalid components in the notice in issue are so inextricably mixed up with the valid requests and the existence of the requirement as to the provision of information by third party statements makes severance impractical (Perron Investments Pty. Ltd. v. Deputy Commissioner of Taxation (WA) [1989] FCA 397; (1984) 90 ALR 1 at 6, 15). Relief

159. The only relief to which the applicant is entitled is a declaration that the notice dated 19 October, 1992 is not a valid notice issued under or for the purposes of section 264A of the Income Tax Assessment Act 1936 and an order that the notice be set aside. Otherwise, the applicant has failed to make out any basis for the relief in paragraphs 1, 2 and 3 of the application. Other Objections to the Notice

160. The applicant raised numerous other objections to the notice on the basis of uncertainty, oppression and requests outside the range of requests available to a reasonable decision-maker. Some of those objections related to requests which, in my opinion, were within power. However I have not dealt further with the objections for two reasons. The first is that the notice will be set aside and if any fresh notice is given it will of necessity be in a different form and will involve substantial re-drafting. The second reason is that since the original notice was issued, additional facts are now known to the respondent for example that Finance Acceptances Ltd. is in liquidation and that the whereabouts of Mr. Brown is unknown, which may effect what requests are made and the nature of the information sought. That is, any decision to issue a further notice will be made against a different matrix of background facts and with knowledge of the alleged uncertainties in the way questions were previously framed. Nothing which I would have to say in respect of the present objections would necessarily be relevant or useful to the issuing or contents and form of a further notice. To the extent to which there are substantial questions as to power and form relevant to any further notice, I have expressed my opinion on those matters in these reasons.

161. Although the applicant has succeeded in having the notice set aside, it has failed on the issues of the constitutionality of section 264A and its attack on the propriety of the conduct of the respondent's officers and of their purpose in issuing the notice. The issues on which the applicant failed took up a considerable amount of the time of the hearing and argument. In my view the applicant should not recover against the respondent its full costs and the order should reflect its substantial failure on the totality of the grounds argued. The applicant should recover only half of its costs of the application.

The notice of the applicant dated 19 October, 1992 under the

signature of Brian Francis Power is not a valid notice issued

under or for the purposes of section 264A of the Income Tax

Assessment Act 1936.

1. The said notice be set aside.

2. The respondent pay the applicant one-half of its costs of and

incidental to the application to be taxed if not agreed.