Industrial Equity Ltd v Commissioner of Taxation

Federal Court of Australia|1999-10-27|Before: Emmett J, Gyles J

EX TEMPORE REASONS FOR JUDGMENT 1 This case concerns the validity of a notice purporting to be given pursuant to s 264(1)(b) of the Income Tax Assessment Act 1936 (Cth) ("the Act") directed to Mr Gregory Kingston Cottam, the second applicant, dated 25 October 1999, requiring him to attend and give evidence on oath at the Australian Taxation Office, 100 Market Street, Sydney, on Thursday, 28 October 1999, at 9am. A short chronology of events follows.

Facts 2 On 30 June 1999 a notice purporting to be given pursuant to s 264(1)(b) of the Act required the second applicant to attend and give evidence on oath "concerning the income or assessment of the entities and/or persons listed in Schedule A for the years between 1 July 1986 and 30 June 1995". Schedule A included the names of a large number of companies. The date for attendance was Monday, 19 July 1999. 3 Correspondence ensued between solicitors acting for both the second applicant and Industrial Equity Limited, the first applicant, as to the difficulties which the second applicant would have in being available on the day appointed, the validity of the notice and the provision of reasons pursuant to s 13 of the Administrative Decisions (Judicial Review) Act 1976 (Cth) ("the ADJR Act"). In the result, that notice was not pressed. 4 On 10 September 1999 a further notice purporting to be given pursuant to s 264(1)(b) of the Act was issued in a similar form to the notice of 30 June 1999, requiring the second applicant's attendance on Thursday, 28 October 1999, at 9am. 5 By letter of 10 September 1999, the solicitors for the applicants sought reasons, pursuant to s 13 of the ADJR Act, for the decision to issue the second notice, pointing out that their request was, in substance, identical to a similar request made by them in relation to the earlier notice. 6 On 22 September 1999 two of the companies in the respective schedules to the notices gave notice pursuant to s 14ZYA of the Taxation Administration Act 1953 (Cth). 7 After the solicitors' letter of 10 September 1999, and other follow-up correspondence, had not produced any response, the applicants obtained leave from Emmett J on 21 October 1999 to file an application for an order of review and a notice of motion, returnable before me on 26 October. This was done, and proceedings numbered N1213 of 1999 came before me on that day. One of the bases for the application was the failure to supply reasons as required by s 13 of the ADJR Act. 8 By letter dated 22 October 1999, the second respondent forwarded a statement pursuant to s 13 of the ADJR Act to the solicitors for the applicants. 9 On 22 October 1999 the solicitor with conduct of the matter on behalf of the applicants filed an affidavit sworn by him on 21 October 1999 which provided information indicating that there were some real questions in relation to the inclusion of certain of the companies in the schedule to the second notice either at all or for part of the period involved. 10 On 25 October 1999 the second respondent issued a further notice purporting to be given pursuant to s 264(1)(b) of the Act in the following terms: "Pursuant to paragraph 264(1)(b) of the Income Tax Assessment Act 1936, I, James Michael Killaly require you to attend and give evidence on oath - 1. concerning the income or assessment of; (i) Arthur Yates & Co Limited for the year ending 30 June 1991, (ii) Burnley Finance Amsterdam BV, Seymour Finance BV, and Wilbur Enterprises Limited for the years ending 30 June 1991 and 30 June 1992, and (iii) the entities and/or persons listed in Schedule A for the years ending 30 June 1991 to 30 June 1994 inclusive, 2. at the Australian Taxation Office, 100 Market Street, Sydney, 3. on Thursday 28 October 1999 at nine o'clock in the forenoon and until you are excused from further attending, 4. before any or all of Ms Jan Farrell, Ms Jillian Saint, Mr Frank Breen and Mr John Sheldon whom I authorise for that purpose and myself." A number of companies which had been in the previous schedule were omitted from the schedule on this occasion. 11 In a letter of 25 October 1999 to the second applicant (copied to the solicitors for the applicants), the second respondent said: "This notice replaces the notice of 10 September 1999 which I hereby advise I have today revoked. As you will see the width of the former notice has been reduced in light of the matters raised by you for the first time in the judicial review application served on Friday 22 October 1999. It is not conceded that the former notice was invalid as alleged, however given the limited time available to the Commissioner to determine objections, in my view it is more important to ensure that the examination proceeds on the previously agreed dates of 28 and 29 October 1999." 12 As events had obviously overtaken proceedings numbered N1213 of 1999 when the matter came before me on 26 October 1999, I granted leave to commence these proceedings in relation to the new notice, returnable before me instanter. This was done.

Grounds of review 13 Counsel for the applicants raised the following three points: (i) The first point relates to the form of the notice, in that the second applicant is required to attend "before any or all of Ms Jan Farrell, Ms Jillian Saint, Mr Frank Breen and Mr John Sheldon whom I authorise for that purpose and myself". The notice was given by the second respondent and it was not in dispute that the second respondent had a relevant delegation from the Commissioner of Taxation, the first respondent. However, for reasons to which I shall refer to in a moment, the applicants argued that this form of notice was invalid. (ii) The second point was that the errors which had been made in relation to the previous purported notices and the unsatisfactory nature of the reasons given in relation to them meant that, in the absence of any further reasons, there was sufficient probability that the same errors vitiated the new notice as to warrant the grant of a stay pursuant to s 15 of the ADJR Act to enable the issue to be investigated. (iii) The third point was that the circumstances of the issue of the notice provided a proper basis for alleging that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made and perhaps also a basis for review under some other heads under the ADJR Act. Counsel for the applicants conceded that this point was not pleaded and would necessitate amendment to the pleadings. This point was also put in relation to the application for an interlocutory stay. 14 The first point is a question of construction of the Act which does not depend upon any facts save for the form of the notice. The parties agreed that this could be argued on a final basis, and this took place. The other points require to be dealt with on an interlocutory basis. I shall deal with the question of construction first.

Construction of s 264(1)(b) 15 The relevant part of s 264(1) is as follows: "264(1) The Commissioner may by notice in writing require any person …: (a) … (b) to attend and give evidence before him or before any officer authorized by him in that behalf concerning his or any other person's income or assessment …" 16 Counsel for the applicants attacked two aspects of the form of the notice. The first is that the notice contemplates that the persons before whom evidence is to be given can include both the second respondent and one or more officers. He argued that s 264(1)(b) contains a true disjunctive "or" in the phrase "before him or before any officer authorized by him in that behalf". The second point is that this notice is uncertain or unauthorised in that it does not specify which person or persons the second applicant is to attend and give evidence before. 17 Counsel for the respondents, in answer to the first point, relied upon authorities such as Unity APA Ltd v Humes Ltd (No 2) (1987) VR 474, particularly at 481-2; Ormerod v Blaslov (1989) 52 SASR 263, particularly at 269-270; Commissioner of Taxation (Cth) v Citibank Ltd (1989) 20 FCR 403, particularly at 413; and Minister for Immigration & Ethnic Affairs v Baker (1997) 73 FCR 187, particularly at 194-5, which, he said, establish that "or" need not be a true disjunctive. It was then submitted that as the Full Court in Wouters v Deputy Commissioner of Taxation (NSW) (1988) 20 FCR 342 at 348-9 decided that "officer" in the phrase to which attention is directed in this case can include the plural (so that more than one officer may be authorised for the relevant purpose), there is no rational basis for excluding the Commissioner (or his deputy) from any multi-person panel so constituted. In this regard, counsel for the respondents also draw my attention to the decision of Lockhart J in Johns v Connor (1992) 35 FCR 1, particularly at 8-9, and Dunkel v Commissioner of Taxation (1990) 27 FCR 524 at 525 and 528. 18 In my opinion, the section does contain a true alternative as submitted by counsel for the applicants. I have considered each of the cases to which reference has been made, and, beyond the general proposition that "or" may sometimes not be a true disjunctive, I find little assistance in construing this section. The only direct guidance to be gleaned from these authorities is, if anything, in favour of the applicants. In Wouters (supra) their Honours noticed an argument by counsel for the appellants to the following effect, at 348-9: "However, they argue that there is here an expression of a contrary intention; the provision for attendance before "any officer" is an alternative to attendance before the Commissioner. The Commissioner is necessarily a single person. So, according to counsel, the intention of Parliament was examination by a single person; …" Although the construction contended for by counsel for the appellants in that case was not acceded to, their Honours said nothing to cast doubt upon the foundation for that particular submission . 19 I should also say something about Commissioner of Taxation (Cth) v Citibank Ltd (supra) as counsel for the respondents placed some emphasis upon it because it related to s 263 of the Act, which has obvious connections with s 264. Although the time available does not enable me to indulge in a complete analysis of this decision, it seems to me that the general nature of the authorisation which that decision accords in the context of s 263 has no counterpart in s 264(1)(b), where a particular notice is required for a particular attendance. 20 This consideration also gives substance to the second point advanced on behalf of the applicants, namely, that a notice pursuant to s 264(1)(b) must specify the person or persons before whom the examinee is to attend. Although the view as to construction which I have expressed in relation to the first point is sufficient to decide the case, and I do decide the case on that basis, I incline to the view that the notice is bad on the second basis as well, as a matter of authority rather than uncertainty. I take that view because s 264(1)(b) operates by way of notice requiring a particular attendance, and it seems to me that the better view is that you should know before whom you are to attend.

Conclusion and orders 21 It was submitted by counsel for the respondents that a s 264 notice may be severable and that this notice could be saved by taking a blue pencil to it. Assuming for the purposes of argument that severance might be possible, I do not think that it can be applied in the present case. There is a choice between alternatives on each ground of attack and it is not for the Court to make that choice. 22 These conclusions mean that it is unnecessary for me to consider the other arguments advanced and enable the proceedings to be disposed of. Accordingly, I order that the notice directed by the second respondent to the second applicant dated 25 October 1999 for attendance pursuant to s 264 of the Income Tax Assessment Act 1936 (Cth) on 28 October 1999 be set aside. I also order that the respondents pay the costs of the applicants.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Counsel for the Applicants: Mr AH Slater QC with Mr NJ Williams

Solicitor for the Applicants: Blake Dawson Waldron

Counsel for the Respondents: Mr A Robertson SC with Mr IS Young

Solicitor for the Respondents: Australian Government Solicitor

Date of Hearing: 26, 27 October 1999

Administrative Decisions (Judicial Review) Act 1976(Cth)ss 13, 15

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