REASONS FOR JUDGMENT
SIOPIS AND PAGONE JJ
1 This appeal is from the judgment of Perry J given on 6 February 2015 dismissing the appellants' application for judicial review under s 39B of the Judiciary Act 1903 (Cth) and the Administrative Decisions (Judicial Review) Act 1977 (Cth) to set aside a notice issued by the Commissioner of Taxation under s 264 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act") to attend an interview. The appellants also appeal from the dismissal of their application for ancillary injunctive relief in respect of the proposed interview. The first appellant is a natural person and a director of an investment bank. The second to sixth appellants are companies which are the trustees of discretionary trusts of which the beneficiaries include the first appellant and his family members. The first appellant is also the principal and a director of each of the trustee companies together with his father.
2 On 10 March 2014 the first appellant was served with a notice issued pursuant to s 264 of the 1936 Act requiring him to attend an interview on 11 April 2014. The first appellant had previously given evidence in an examination on 24 February 2011 conducted by the Australian Crime Commission ("the ACC") in the exercise of compulsive powers under the Australian Crime Commission Act 2002 (Cth). The ACC examination was in furtherance of an operation identified as "Operation M" which was part of a wider investigation known as Project Wickenby. Project Wickenby was described by her Honour as a special ACC investigation in which a number of government agencies participated, including the Australian Taxation Office ("ATO"). The first appellant could not rely upon the privilege against self-incrimination at the ACC examination but answered questions put to him on the basis that he had invoked the protection under the Australian Crime Commission Act 2002 (Cth) limiting the uses to which his evidence could be put.
3 On 12 November 2012 the Commissioner issued amended tax assessments to the first appellant for the income years 2001 to 2007 increasing his personal income tax liability for those years by amounts in excess of $13,778,600 with penalties in excess of $12,104,400 on the basis that he had engaged in "intentional disregard" of the relevant provisions of the tax law. Amended assessments were also raised, and penalties imposed, upon his wife. In January 2013 the first appellant and his wife lodged objections to the November 2012 assessments maintaining that the returns of income they had lodged for the years in question were correct. Those objections had not been determined as at 10 March 2014 when the notices under s 264 were issued and at the time an audit of the other appellants by the ATO was still ongoing. The date of 11 April 2014, as the date on which the interview under the s 264 notice was to be conducted, was subsequently altered, and the interview effectively adjourned, until after the determination of the challenge to the notices by these proceedings.
4 Her Honour rejected the challenge to the s 264 notice on a number of bases that were not pursued on appeal. The challenge on the appeal from her Honour's judgment formally relied upon ten grounds which, however, can conveniently be considered in two categories. The first was that the primary judge ought to have concluded that the decision-maker had failed to take into account a relevant consideration, which it was said that the decision-maker was bound to take into account, when deciding to issue the notice under s 264. The second was that her Honour ought to have found that the decision to issue the notice under s 264 was unreasonable in the sense considered in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223, 229 ("Wednesbury"); see also Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; Edelsten v Wilcox (1988) 19 ATR 1370; Premalal v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 117.
5 The challenge to the issue of the notice under s 264 rests in part upon the circumstance that the Commissioner had participated in, and had access to the transcript of, the ACC investigation which had taken place in 2011. The ACC examination had been convened at the suggestion of officers of the ATO who were also conducting an audit of the first appellant and entities associated with him. The first appellant was examined by the ACC as part of Operation M, a multi-agency project that was part of Project Wickenby. Mr Ching, an ATO officer, was involved in the ACC inquiry and had prepared a witness profile in respect of the first appellant in which it had been recommended that the first appellant be interviewed by the ACC rather than by interview under s 264. Mr Ching stated in the profile:
The ACC's role in this investigation is to provide partner agencies, inclusive of the ATO, with assistance through the use of coercive powers to gather strategic intelligence and support additional criminal investigations from the wider Project Wickenby.
The first appellant was a person of interest in the wider investigations and, in that context, Mr Ching expressed the view that an "ACC examination would be more effective in gaining useful intelligence than the use of the tax office's formal s 264 interview powers for a number of reasons". An operational reason was that the secrecy of the ACC examination would reduce the risk of others being informed of the investigation "and possibly jeopardising any formal investigation".
6 The ACC examination was conducted with the first appellant having the benefit of an immunity in respect of the use of the evidence he gave at the examination pursuant to s 30(5) of the Australian Crime Commission Act 2002 (Cth). That, and the subsequent, subsections provide:
(5) [An] answer, document or thing [given or produced at an ACC examination] is not admissible in evidence against the person in:
(a) a criminal proceeding; or
(b) a proceeding for the imposition of a penalty; or
(c) a confiscation proceeding.
(5A) Subsection (5) does not affect whether the answer, document or thing is admissible in evidence against the person in:
(a) a confiscation proceeding, if the answer was given, or the document or thing was produced, at the examination at a time when the proceeding had not commenced and is not imminent; or
(b) a proceeding about:
(i) in the case of an answer - the falsity of the answer; or
(ii) in the case of the production of a document - the falsity of any statement contained in the document.
The answers given by the first appellant in the ACC examination with the benefit of these provisions may be said to have preserved the privilege against self-incrimination by his answers to the ACC. There is no such immunity in respect of answers which may be given by a person pursuant to an examination under s 264 of the 1936 Act where an interviewee is not entitled to refuse to furnish information or to give evidence pursuant to a s 264 notice on the grounds of the privilege against self-incrimination: see Commissioner of Taxation v De Vonk (1995) 61 FCR 564, 583-4. The first appellant contended that in those circumstances the Commissioner's decision to issue a notice under s 264 ought to, but did not, take into account what was said to be the detriment to which he was exposed by the Commissioner's decision to issue a notice under s 264 of the 1936 Act, namely, to deprive the first appellant of the use immunity which his answers in the ACC examination had enjoyed. He contended that the decision-maker ought specifically to have turned her mind to that fact before deciding to issue the s 264 notice. The appellants also contended that the decision-maker ought to have considered the content of the ACC examination before deciding whether to issue a notice under s 264 of the 1936 Act. In this regard the appellants maintained that the Commissioner had effectively elected to exercise the investigative powers available to the Commissioner through the ACC examination in which the Commissioner had participated and that he could not issue a notice under s 264 without considering what was described as the detriment to the appellants of the inability to rely upon the use immunity which was available to the first appellant and without considering the content of the examination by the ACC.
7 Her Honour was correct to reject the submission that the primary decision-maker, Ms Jay, had failed to take into account a relevant circumstance. In saying that it should be noted that the case before her Honour on this point was significantly different from the case put on appeal. The appellants' case at first instance was that the primary decision-maker had failed to take into account in deciding to issue the s 264 notice "the detriment to [the first appellant] of being made to attend a s 264 interview" in his particular circumstances but had maintained that in doing so the primary decision-maker was not permitted to use or consider the content of the ACC interview. The appellants took the opposite position in respect of the use of the content of the ACC interview on the appeal. In any event, her Honour was correct in deciding that there had been no failure by the decision-maker to take into account the fact of the ACC interview. At [302] her Honour said:
However, in the present case, the evidence discloses that the ATO had sought first to obtain information about the transactions in question from the applicants by other avenues, including through affording the first applicant the opportunity to respond to the draft audit position paper and provide further evidence before deciding to issue the amended assessment: at [95]-[97] above. However, the information obtained via these alternative avenues was considered deficient as a consequence of which the proposed s 264 interview was considered by the decision-maker, to be the most direct and appropriate method to test the veracity of the documents supplied by the first applicant and his tax agent: see part 4.12 above. In these circumstances, I do not consider that there is any force in the contention that the decision-maker failed to have regard to the appropriateness of taking such a step in all of the circumstances. Rather, the applicants seek to take issue with the merits of the exercise of the power by her, as is apparent for example from their submission that any benefits to be obtained from holding the interview are "meagre".
The appellants contended that in reaching this conclusion her Honour erred in what she identified as the mandatory considerations which the primary decision-maker was required to, and did, take into account when deciding to issue the notice under s 264. The appellants' submission on appeal was that the primary decision-maker had a mandatory obligation to consider expressly detriment to the first appellant.
8 What factors a decision-maker is bound to consider in making a decision to exercise a statutory power is to be determined by construction of the statute conferring the power or discretion in question. Not every relevant or appropriate consideration is mandatory or will justify the court setting aside the impugned decision. In Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 Mason J said at 39-41:
What factors a decision-maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If the statute expressly states the considerations to be taken into account, it will often be necessary for the court to decide whether those enumerated factors are exhaustive or merely inclusive. 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, adopting the earlier formulations of Dixon J. in Swan Hill Corporation v. Bradbury, and Water Conservation and Irrigation Commission (N.S.W) v. Browning. 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.
Not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be re-exercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision: see, e.g., the various expressions in Baldwin & Francis Ltd. v. Patents Appeal Tribunal; Hanks v. Minister of Housing and Local Government; Reg. v Chief Registrar of Friendly Societies; Ex parte New Cross Building Society. A similar principle has been enunciated in cases where regard has been had to irrelevant considerations in the making of an administrative decision: Reg. v. Bishop of London; Reg. v. Rochdale Metropolitan Borough Council; Ex parte Cromer Ring Mill Ltd.
The limited role of a court reviewing the exercise of an administrative discretion must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator. Its role is to set limits on the exercise of that discretion, and a decision made within those boundaries cannot be impugned: Wednesbury Corporation.
It follows that, in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power: Sean Investments Pty. Ltd. v. MacKellar; Reg. v. Anderson; Ex parte Ipec-Air Pty. Ltd.; Elliott v. Southwark London Borough Council; Pickwell v. Camden London Borough Council. I say "generally" because both principle and authority indicate that in some circumstances a court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance. The preferred ground on which this is done, however, is not the failure to take into account relevant considerations or the taking into account of irrelevant considerations, but that the decision is "manifestly unreasonable".
The relevant mandatory consideration in the context of the exercise of the power under s 264 is that the power is being exercised for the purposes of the Act. The power conferred by s 264 is to enable the Commissioner to perform his statutory functions. In Industrial Equity Limited v Deputy Commissioner of Taxation (1990) 170 CLR 649 the majority of the High Court said in a joint judgment at 659-60:
It is true that in the instant case the Commissioner had, before the exercise of power under ss. 263 and 264, already issued original assessments or amended assessments to I.E.L. and its associated companies in connexion with some of the years of income to which that exercise of power was directed. The existence of an assessment, even of an amended assessment, cannot itself deny to the Commissioner the powers contained in ss. 263 and 264. It may, particularly where an amended assessment already exists, place an exercise of power under either of the sections in more stark relief than would ordinarily be the case. But the principle involved remains the same; it is that the actions of the Commissioner must be taken for the purposes of the Act.
The words "for any of the purposes of this Act" have been embedded in s. 263(1) and its predecessors since 1918: their legislative history is traced in O'Reilly v. State Bank of Victoria Commissioners, and in Federal Commissioner of Taxation v. Citibank Ltd. No such expression appears in s. 264; purpose is referred to only obliquely in the words "concerning his or any other person's income or assessment" in s. 264(1)(b). It may be, as the Commissioner submits, that any more specific reference to purpose was unnecessary. Be that as it may, it is clear enough that the powers contained in s. 264(1), like those contained in s. 263, must be exercised for the purposes of the Act. The question whether a purpose is a purpose of the Act should be considered in the context of s. 17. That section provides for the levy of tax upon the taxable income of a person derived during a year of income and it is by reference to this primary purpose that all other purposes of the Act are to be determined. Section 8 charges the Commissioner with the general administration of the Act which includes the due making of assessments to tax (s. 169) and the recovery of tax payable by taxpayers pursuant to the Act (Pt VI, Div. 1). Sections 263 and 264(1) each confers on the Commissioner a power to enable him to perform his functions under the Act. Therefore, the power "must be circumscribed by reference to this purpose": Smorgon's Case. The scope of "purpose" in this context is illustrated by Southwestern Indemnities Ltd. v. Bank of New South Wales where Barwick C.J. said:
"In my opinion, an examination of the applicant's affairs to test its assertions as to residence and income source is within the purposes of the Act."
Section 264(1)(b) identified the purpose of the exercise of the power relevant to the current proceeding as being attendance to give evidence concerning a person's income or assessment. The validity of the exercise of the power under s 264 depends upon the function being exercised by the Commissioner in respect of which the notice was issued: Australia & New Zealand Banking Group Ltd v Deputy Commissioner of Taxation [2001] FCA 314, [12]. The Commissioner's process of assessment included a consideration of the objections: see Industrial Equity Limited, 658; Binetter v Deputy Commissioner of Taxation (2012) 206 FCR 37, [36]. The notice issued in this case is, on its face, directed to that purpose. It required the first appellant "to attend and give evidence" concerning the income or assessment of the persons specifically nominated in paragraph 1 in relation to their income or assessment periods from 1 July 1999 to 30 June 2013. The evidence, and her Honour's findings, revealed that the power was exercised for the purpose of gathering evidence concerning the income or assessment of the appellants and related entities identified on the face of the notice.
9 The appellants submitted that a consideration of the "detriment" followed from her Honour's statement of the relevant principle at [301] and the decision in Citibank Ltd v Federal Commissioner of Taxation (1988) 16 ALD 486; (1988) 19 ATR 1479 to which her Honour referred. A consideration of what the appellants refer to as the detriment was neither said by her Honour to be a mandatory requirement nor does it follow from the observations in Citibank. Her Honour said at [301]:
The purpose of the power in s 264 is to require answers in circumstances where persons are unlikely voluntarily to provide the information sought precisely because it may be of an incriminating nature: Boulton (FCAFC) at [57]. In so doing, the power gives priority to the protection of the revenue over the fundamental common law privilege against self-incrimination. From this, it can be implied that the decision-maker deciding whether or not to exercise the power in s 264 must consider the appropriateness of taking so serious a step in all of the circumstances. As for example, Lockhart J observed in Citibank Limited v Commissioner of Taxation (1988) 19 ATR 1479 (Citibank) (on which the applicants relied), "[p]lainly the revenue must be protected, but so must the rights of citizens". As such, I consider that there is considerable force in the submission that it is relevant for the ATO to consider whether there are other means which do not impinge upon the privilege against self-incrimination available by which such information might be obtained. (see by analogy Citibank at [39] (appeal allowed in part but not on relevant grounds: Commissioner of Taxation v Citibank Limited (1989) 20 FCR 403)).
Her Honour was accepting the strength of the proposition which the appellants had advanced, as referred to at [301], in the context of her finding at [302] that the decision-maker in this case had not failed to have regard to the appropriateness of taking the step of issuing a notice under s 264. In reaching this conclusion her Honour did not apply a test that it was mandatory for the decision-maker to consider whether the information to be sought could be obtained by a means that would not impinge upon the privilege against self-incrimination. The test applied by her Honour was, rather, that the decision-maker was required to "consider the appropriateness of taking so serious a step in all the circumstances" which her Honour found to have occurred on the facts.
10 The decision in Citibank was not that it was a mandatory requirement for the Commissioner to consider whether what was sought by the exercise of power could be sought by other means or without transgressing the rights of the person being investigated but, more narrowly, that the Commissioner was required to exercise the power under s 263 without transgressing rights which s 263 did not override. In Citibank Lockhart J said at 1491:
In my opinion, the person - whether the Commissioner or his delegate, who presumably will be a senior and trusted officer of the Taxation Office - who is called upon to authorise the exercise of s 263 powers must apply his own mind to the question of the exercise of such powers, must consider the relevant circumstances and must decide whether it is appropriate in all the circumstances to authorise the exercise of the power to enter a person's premises, search for and copy documents. The power conferred by s 263 is a compulsory power. There is a fine line, even in our society, between responsible exercise of large powers and authoritarian cynicism. The Commissioner and his delegates must consider the circumstances of the particular exercise of the s 263 power to ensure that that line is not transgressed.
In that case the relevant right at risk of being transgressed by the exercise of the power under s 263 was a right of legal professional privilege over communications that a person was entitled to maintain as against the Commissioner in the face of the statutory power: s 263 did not abrogate legal professional privilege and, therefore, the power should not be exercised in disregard of the continuing existence of the right. The exercise of the power under s 263, therefore, and by parity of reasoning under s 264, should not impinge upon rights which are not abrogated by the grant of the power. But the privilege against self-incrimination is abrogated by the grant of the power under s 264 and is inconsistent with it: Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564, 566, 583-4; Binetter v Deputy Commissioner of Taxation (2012) 206 FCR 37, [30]. There is no basis to imply into the terms of the operation of s 264 a mandatory requirement that the Commissioner consider whether the Commissioner could obtain answers without impinging upon a right which the recipient does not have or which might abrogate an analogous right which the recipient might enjoy in a different context. As her Honour found at [278] "the very object of the power conferred by s 264 is to abrogate the privilege". That is because the section is directed to the obtaining by the Commissioner of information to be used by the Commissioner against, amongst others, a person who might otherwise be able to claim the privilege in a different context. It necessarily follows from the enactment of a compulsory questioning power in the terms found in s 264 that an examinee may have to give answers that may incriminate himself or herself when the power is invoked.
11 The appellants also contended that her Honour had made an erroneous factual finding at [270] which was said to have affected the way in which her Honour considered the appellants' arguments concerning the detriment and unreasonableness of the Commissioner's issue of the notice under s 264. In that paragraph her Honour said:
Further and in any event, even if I am wrong in my construction of s 14ZYA, I accept the Commissioner's submission that that would not justify setting aside the s 264 notice in its entirety. It is apparent from the face of the notice that it was issued not only for the purpose of gathering information relevant to the first applicant's objection, but also for the purposes of the ongoing audit of trusts associated with him and the first applicant's wife's income or amended assessments.
The factual error said to be revealed in this paragraph was the finding of a purpose from the face of the notice that the notice was issued also for the ongoing audit of the trusts. It may be accepted that the notice does not in terms state a purpose but there is no error in her Honour concluding that a consideration of the face of the notice revealed the purpose of gathering information for purposes which included the purpose of the ongoing audit of the associated trusts and of the first appellant's wife. It is plain from the face of the notice that it required the recipient to attend and to give evidence concerning the income or assessment of specified persons in respect of a specified period. It is no error, therefore, to say that a purpose was apparent from the face of the notice. It is also no error to describe that purpose as one of gathering evidence relevant to the first appellant and for the purposes of the "ongoing audit of trusts associated with him" and of his wife's income or amended assessment. The identity of the first appellant and of his wife, and of trusts associated with them, is manifest from the face of the notice by the fact that they are specifically named. The description of the purposes of the notice as including "the ongoing audit" is not an erroneous description of what the notice on its face purported to do. Furthermore, what her Honour said at [270] must be understood in light of the actual findings of fact made by her Honour earlier in the judgment. Her Honour set out her findings in relation to the decision to issue the s 264 notice in paragraphs [101]-[122] of her reasons. At [121]-[122] her Honour said:
121 Notwithstanding some awkwardness in expression, sensibly read I understand her evidence to be to the effect that part of her reasons for issuing the s 264 notice was she agreed "with" the purpose and the reason for issuing the notice identified in the submission. Consistently with this, she also explained that "I had no purpose, in issuing the s 264 notice, other than to gather evidence concerning the income or assessment of the first applicant and his wife and his/their associated entities and other entities identified on the s 264 notice."
122 Ms Jay's evidence was not challenged and is consistent with the reasons put forward in the submission to her for holding the s 264 interview and with the teleconferences and internal email correspondence leading up to the issue of the notice. As such, the evidence that she decided to issue the s 264 notice for these reasons and for the purpose identified by her is overwhelming.
[Emphases in original]
What appeared later in paragraph [270] reflected the findings her Honour had previously made and contained no error.
12 It was contended by the appellants that the consequence of what was said to be the factual error was that her Honour had analysed the exercise of the power without specific reference to what was contended to be the mandatory relevant consideration, namely, the "detriment" of the first appellant not having the use immunity in the answers he would give in the s 264 examination which he had in respect of the answers he had given in the ACC examination. The appellants drew attention to what her Honour said at [313] to contend that her Honour did not "address the detriment identified" by the appellants by concluding that the notice had been issued for the purpose of enabling the Commissioner to determine the objection. At [313] her Honour said:
Secondly, the evidence establishes that the Commissioner decided to issue the notice in order to obtain information necessary for the investigation of certain transactions, his suspicions having been aroused. While the assessments had been made, the assessments were the subject of an objection by the first applicant on the basis that the income declared in the original tax returns was accurate. In other words it was based on an assertion that there was no intention to evade tax, and all of the transactions were exactly what they seem to be. The issue of the s 264 notice sought to achieve no more than to enable the Commissioner to determine the objection and, thereby, discharge his obligation to make a true and accurate assessment of the taxpayer's taxable income.
It is no doubt true from this paragraph that her Honour concluded that the s 264 notice sought to obtain information for the purpose of the Commissioner discharging his proper functions in the context of the need to determine the objection. It cannot be said, however, that her Honour was not aware of, and did not deal with, the appellant's contention that his answers in a s 264 examination would result in a detriment to him of denying him the protections granted under the ACC examination. At [303] her Honour specifically referred to that contention saying:
Secondly, the first applicant contends that his answers in a s 264 examination would deny him the protections granted under the ACC Act in respect of his ACC examination as any s 264 transcript could be disclosed under s 355-70 of the TAA to the DPP, the AFP and other Commonwealth agencies for the purpose of enforcing the criminal law. This was said to constitute part of the detriment which the decision-maker was required to consider. This submission depends upon the substratum identified by the applicants as underlying their s 264 submissions and therefore suffers from the difficulties which I have already identified.
The "detriment" argument was thus considered by her Honour and rejected. Her Honour had previously considered whether the primary decision-maker had turned her mind to the appropriateness of issuing a notice under s 264 and her Honour had concluded that the primary decision-maker had done so.
13 It is significant in this context also that the case put on appeal in one respect is significantly different from the case put at first instance. The case put on appeal was that the primary decision-maker had erred in not taking into account the specific information which the Commissioner had available through the ACC examination. At first instance, however, the appellants' case in that respect had been the complete opposite: namely, that the decision-maker could not consider the ACC examination material in deciding whether to issue a notice under s 264. Her Honour set out the appellant's submission in this regard at [285]:
The applicants next allege that the non-publication directions did not, and do not, permit the ACC transcript to be taken into consideration in a decision to require a s 264 interview because the requirement for the first applicant to attend such an interview where he would be required to answer questions on pain of criminal liability is "an adverse administrative action" against the applicant for the purposes of paragraph 5(d) of the non-publication directions (as varied on 10 October 2013) (Statement of Grounds at 4). Paragraph 5(d) read:
Publication of the information and attendance information is subject to the following:
…
(d) it may not be considered as part of any proposed adverse administrative action against any person (other than the tax assessments) without prior approval of the ACC. (emphasis in the original)
The relief sought by the appellants in their further further amended application for relief had sought injunctions restraining proceeding with the s 264 interview and, specifically, preventing the communication of the transcript of the ACC examination, or the substance of its evidence, to any person who might determine whether to require the first appellant to attend to give evidence under a s 264 notice. The grounds relied upon by the appellants in the proceeding before her Honour included such affirmative contentions as that it was impermissible to take the ACC transcript into consideration as part of a decision to require a person to attend to give evidence pursuant to s 264. The person who made the decision to issue the notice under s 264 was Ms Jay who gave evidence on the case as it was put by the appellants at first instance. The evidence of Ms Jay was unequivocally that she had not taken into account the evidence which had been obtained through the ACC interview. There can be no criticism of her Honour in those circumstances in not having considered an argument that was not put and which, had the argument been put, is likely to have resulted in the Commissioner adducing evidence relevant to the reason why the decision-maker had not considered the evidence obtained in the ACC interview when deciding to issue the notice under s 264.
14 The affidavit of Ms Jay set out her belief concerning who within the ATO had access to the evidence resulting from the examination of the first appellant which had been conducted by the ACC. She went on to identify the material available to her in making her decision about whether to issue the notice to require the first appellant to attend to give evidence pursuant to s 264 of the 1936 Act. The material upon which she decided to issue the notice included a submission to her stating that the compulsory interview was sought "in order to gather further evidence in relation to the offshore arrangements that [the first appellant], and his associates, participated in". The reason for proposing the issue of a notice was identified as being seen "the most direct and appropriate method to test the veracity of the documents supplied by [the first appellant] and his agents". The statement of that reason in the submission was preceded by an account of the previous action which had been taken in seeking information from the first appellant and of his response. It was noted in the submission that the first appellant had been interviewed by another Commonwealth agency and that the transcript of the interview was shared with the ATO. The first appellant was described as generally responsive to requests for information and documents in a timely fashion but, crucially, that "the veracity of the documents produced by him and his agents [was] doubtful". It was permissible for Ms Jay to rely upon what she was told by others in the ATO without her having to undertake her own investigation or to review the material for herself. A detailed audit report stated at [182]:
Responses provided by [the first appellant] or [his] agent on [his] behalf were incomplete and found to be contradictory to information available to the Commissioner
That statement appeared immediately before a table setting out the requests which had been made by the ATO to the first appellant and his responses both before and after the ACC examination on 24 February 2011. That is consistent with what Ms Jay was told in the submission seeking the issue of a notice under s 264. The first appellant had also been informed that the Commissioner sought to obtain "sworn evidence in answer to questions additional to and more specific than those which were posed by the ACC examiner". The first appellant's advisors had written to an officer of the ATO on 26 March 2014 in which they expressed concern that the attempt to obtain evidence from the first appellant was an abuse of power and sought for a collateral purpose. It was in response to that letter that the first appellant's advisors were informed that the ATO sought to obtain sworn evidence in answer to additional and more specific questions.
15 The appellants' case on the ground of unreasonableness overlapped with the contention of a failure to have considered relevant considerations. The appellants contended that the decision to conduct an interview pursuant to s 264 in the circumstances was unreasonable and an abuse of the statutory discretion because: (i) the Commissioner already had the benefit of the ACC transcript covering "the same matters" but had issued the notice under s 264 without giving consideration to the ACC evidence available to the Commissioner at the time of making the decision to issue the notice; (ii) the Commissioner had already determined that the arrangements which had been entered into by the first appellant and his entities were a sham; (iii) the relevant officer had already drafted a decision that purported to disallow the objections and had regarded the s 264 interviews as an opportunity to "strengthen the position" of the Commissioner; (iv) to obtain stronger evidence that the transactions were a sham could not change the amount of liability if the decision-maker had already concluded that the transactions were a sham; (v) the conduct of an interview pursuant to s 264 by the same barrister as had been briefed by the Commissioner for the purposes of the Part IVC proceedings would "mainly yield benefits of a kind" that were said not to be permissible as a reason for conducting an interview under that section; and (vi) a side effect of conducting an interview in reliance upon s 264 would be to undermine the immunity which had been conferred upon the first appellant in respect of the examination conducted by the ACC.
16 The principle that a decision-maker may not exercise a power unreasonably does not permit merits review. In Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 Lord Greene MR said at 229:
It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word "unreasonable" in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting "unreasonably." Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrington L.J. in Short v. Poole Corporation gave the example of the redhaired teacher, dismissed because she had red hair. That is unreasonable in one sense. In another sense it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith; and, in fact, all these things run into one another.
In Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 French CJ explained at [23]-[30] that the principle applied to ensure that decisions were confined to the framework of rationality imposed by the statute in question. At [28]-[30] the Chief Justice said:
28 Beyond unreasonableness expressive of particular error however, it is possible to say, as Lord Greene MR said, that although a decision-maker has kept within the four corners of the matters it ought to consider "they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it". In such a case the court may interfere. That limiting case can be derived from the framework of rationality imposed by the statute. As explained by Lord Greene MR, it reflects a limitation imputed to the legislature on the basis of which courts can say that parliament never intended to authorise that kind of decision. After all the requirements of administrative justice have been met in the process and reasoning leading to the point of decision in the exercise of a discretion, there is generally an area of decisional freedom. Within that area reasonable minds may reach different conclusions about the correct or preferable decision. However, the freedom thus left by the statute cannot be construed as attracting a legislative sanction to be arbitrary or capricious or to abandon common sense.
29 A connection between vitiating unreasonableness and an implied legislative intention was made by Brennan CJ in Kruger v The Commonwealth:
"[W]hen a discretionary power is statutorily conferred on a repository, the power must be exercised reasonably, for the legislature is taken to intend that the discretion be so exercised."
(Footnote omitted.) In similar vein, Gaudron J said in Abebe v The Commonwealth, in a passage quoted by Crennan and Bell JJ in SZMDS:
"[I]t is difficult to see why, if a statute which confers a decision-making power is silent on the topic of reasonableness, that statute should not be construed so that it is an essential condition of the exercise of that power that it be exercised reasonably, at least in the sense that it not be exercised in a way that no reasonable person could exercise it."
30 The requirement of reasonableness is not a vehicle for challenging a decision on the basis that the decision-maker has given insufficient or excessive consideration to some matters or has made an evaluative judgment with which a court disagrees even though that judgment is rationally open to the decision-maker. Gleeson CJ and McHugh J made the point in Eshetu that the characterisation of somebody's reasoning as illogical or unreasonable, as an emphatic way of expressing disagreement with it, "may have no particular legal consequence". As Professor Galligan wrote:
"The general point is that the canons of rational action constitute constraints on discretionary decisions, but they are in the nature of threshold constraints above which there remains room for official judgment and choice both as to substantive and procedural matters. In other words, within the bounds of such constraints, different modes of decision-making may be employed."
A distinction may arguably be drawn between rationality and reasonableness on the basis that not every rational decision is reasonable. It is not necessary for present purposes to undertake a general consideration of that distinction which might be thought to invite a kind of proportionality analysis to bridge a propounded gap between the two concepts. Be that as it may, a disproportionate exercise of an administrative discretion, taking a sledgehammer to crack a nut, may be characterised as irrational and also as unreasonable simply on the basis that it exceeds what, on any view, is necessary for the purpose it serves. That approach is an application of the principles discussed above and within the limitations they would impose on curial review of administrative discretions.
A similar view was expressed in the joint judgment of Hayne, Kiefel and Bell JJ at [68]-[76] where their Honours explained that the passage from Lord Greene MR in Wednesbury may be taken to recognise an inference of error in reasoning in a decision which lacks an evident and intelligible justification. The challenge to a decision on grounds of unreasonableness does not apply, however, where the question in issue is the weight that a decision-maker may properly give to considerations available to be taken into account: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 41; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332, [30], [75] and [110]. In this regard fiscal statutes do not form a class of their own to which different rules of construction apply: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27, 49 [57].
17 None of the six circumstances relied upon by the appellants justify the conclusion that the decision to require the first appellant to attend to give evidence pursuant to a notice under s 264 was unreasonable in the relevant sense. The first of the circumstances is, as mentioned above, contrary to the appellants' case at first instance and cannot now be relied upon. The case as put below had been that the decision-maker was not permitted to consider the content of the evidence obtained by the ACC when considering whether to issue a notice under s 264. The Commissioner would now be prejudiced if the appellants were permitted to rely upon that as a ground on appeal where it is reasonable to assume that evidence might have been led for the Commissioner on that question at trial had the appellants' case at trial not been opposite to the position now sought to be put. The position of the appellants is not like a litigant seeking to raise a new point which is consistent with the case put below and which should be considered by an appellate court in the efficient administration of justice. There is, in any event, no reason to limit the exercise of the power under s 264 in the way in which the argument would now require. It is plain from the evidence before her Honour that the decision-maker was aware of the existence, and availability to the Commissioner, of material in support of the assessments and that some of that material had been obtained in the context of the ACC examination, but it is not unreasonable for the power in s 264 to be exercised to test that material. The decision to issue a notice under s 264 in this case was made to test the evidence upon which the objection decision might depend in circumstances which included the fact that some of the answers which had been given to the Commissioner were considered to be inconsistent. It was not unreasonable in this case for the decision-maker herself to undertake a separate review of the material which had been considered by others within the ATO. The reasonableness of the exercise of the power under s 264 must take into account the function performed by the Commissioner in relation to which the power is exercised: see Australia & New Zealand Banking Group Ltd v Deputy Commissioner of Taxation [2001] FCA 314, [12]. In this case the functions performed by the Commissioner were the determination of the objection and the ongoing audits. Her Honour found that the purpose of gathering information by the issue of the s 264 notice in this case was to determine the objection of the first appellant and also for the purposes of the ongoing investigations of the trusts associated with him and his wife.
18 The fact that the Commissioner may already have determined that some of the appellants' arrangements were a sham and had issued assessments to that effect did not make the decision to issue a s 264 notice unreasonable. The power was exercised in the discharge of the Commissioner's function to consider the objection and at a time when the Commissioner was considering the liability of the trusts associated with the first appellant and his wife. It was not unreasonable for him to seek evidence bearing upon that question. The questions to be asked, and the information to be obtained, pursuant to the notice issued under s 264 would not, in any event, have been the same as those asked and that obtained under the ACC examination. On 26 March 2014 accountants acting for the first appellant wrote to the Commissioner expressing the view that the Commissioner's attempt to obtain evidence in exercise of the power under s 264 was an abuse of power and was unnecessary for the Commissioner to determine the objections in light of the material already obtained. The Commissioner's response to those contentions was in part to explain that the Commissioner was seeking evidence "to questions additional to and more specific than those which were posed by the ACC examiner".
19 The fact that the relevant ATO officer had already drafted a decision that purported to disallow the objections and regarded the interview conducted under s 264 as an opportunity to "strengthen the position" does not make the exercise of the power unreasonable. The objection had not yet been decided and as Robertson J observed in Binetter v Deputy Commissioner of Taxation (No 3) (2012) 89 ATR 296 at [108] "the better the information before the Commissioner at the objection stage the better the decision on the objection". In that regard, as her Honour added at [316], "it is not for the Court to pre-empt the outcome of the exercise of [the Commissioner's] discretion and weigh up the potential benefits to the Commissioner of proceeding with the proposed s 264 interview".
20 The fourth circumstance relied upon to maintain that the decision was unreasonable has no bearing on the question independently of the second matter advanced, namely, that the Commissioner had already determined that some of the arrangements were a sham. The fourth factor was that the evidence establishing that the transactions were a sham could not change the amount of liability but the fact that the amount might not alter upon inquiry of the facts is not relevant when the issue concerns the proper inquiries to determine an objection decision as a result of taxpayers having filed objections to amended assessments. The inquiries may or may not lead to a change in the amount of the assessments but in either case what is relevant to inquire into are the facts upon which the amount of liability depends.
21 The fifth factor complained about relied upon passages from the decision in Binetter at first instance where his Honour said at (2012) 89 ATR 296, [110]-[111]:
110. I accept that such a purpose would be an improper purpose, although it might be the effect of such a notice, but the absence of a provision equivalent to s 264A(10) in s 264 makes this submission weaker, rather than stronger as contended on behalf of the applicant. This is because there is no equivalent statutory advantage given to the Commissioner by use of the power in s 264 and the use of that power would not affect the applicant's ability to tender relevant evidence in a Pt IVC review or appeal.
111. In my opinion, the purpose of the respondent in issuing the notice was better to make the objection decision. The Commissioner was also aware that a consequence of the production of the material was that if and when litigation commenced, either in the Tribunal or in the court, and if the notice was complied with, he might or would be better placed in that litigation by virtue of having the applicant's relevant material at the objection stage. However, this is a consequence of the statutory scheme and of the Commissioner making a better decision, in the sense of a decision based on fuller factual material. On the present facts I conclude that there was no improper purpose or other legal defect flowing from the Commissioner's consciousness of the consequences of any production of material by the applicant pursuant to the notice.
The appellants in the present case contend that what was said by his Honour in the passages quoted above indicated that seeking to yield benefits of strengthening the forensic position of the ATO in civil litigation was not a permissible reason for conducting a s 264 interview. The passages relied upon, however, were concerned with a proposition deriving from the decision in FH Faulding & Co Ltd v Commissioner of Taxation (1994) 54 FCR 75 in the context of the exercise of the power in s 264A(10) and not s 264. In the passage preceding those quoted above his Honour had said at [109]:
The applicant also relied on the difference between s 264 and s 264A(10). The latter provision deals with offshore information notices. According to the terms of s 264A(10), if the taxpayer does not comply with the request set out in the offshore information notice then, except with the consent of the Commissioner, the information or document, or any secondary evidence of a document, is not admissible in proceedings disputing the taxpayer's assessment. In FH Faulding & Co Ltd v Commissioner of Taxation (1994) 54 FCR 75 Cooper J, at 131-132, rejected on the facts a submission that the Commissioner had issued 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."
It is clear from the passages in his Honour's judgment which follow [109] that considerations relevant to the exercise of power under s 264A are different to those under s 264 because, amongst other matters, there is no equivalent in the latter to subsection 264A(10) which crystallises a forensic advantage to the Commissioner. In the context of the exercise of power under s 264, however, as his Honour went on to observe at [111] it may be a consequence of the statutory scheme and of the Commissioner making a better decision "in the sense of a decision based on fuller factual material" by issuing a notice under s 264. It is not unreasonable in the Wednesbury sense to ensure that a more robust and defensible objection decision is made and that it may ultimately be better defended in court proceedings. Nor is it unreasonable in the Wednesbury sense that the interview be conducted by the same person who conducted the ACC interview. It is probably incorrect to say that the interview was conducted by the counsel asking questions (see Grant v Commissioner of Taxation (2000) 104 FCR 1, [17]), but there is nothing unreasonable in principle in the same counsel being involved in the two examinations involving similarly structured transactions: see Grimwade v Meagher [1995] 1 VR 446.
22 The sixth matter relied upon to contend that the decision was unreasonable is in substance the same as the matters previously considered, namely, that an effect of conducting interviews under s 264 would not give to the answers the use immunity which any similar answer had when given in the ACC examination. The fact that similar answers given in an interview under s 264 will not have the use immunity attaching to the same evidence given in the ACC examination does not establish unreasonableness in the Wednesbury sense. Her Honour found, and it was not challenged on appeal, that the purpose of issuing a notice under s 264 was to gather further evidence in relation to the offshore arrangements of the first appellant and those associated with him for the purposes of determining the objection and the ongoing audit. The use immunity attaching to the answers given in the ACC examination would not prevent questions in cross-examination in Part IVC proceedings and for the Commissioner to obtain better information at the objection stage is apt to lead to a sounder decision.
23 The appellants' notice of appeal, and written submissions, also contended that her Honour had failed to give reasons or proper reasons for her findings at [303] and [304] in dismissing the appellants' application. Paragraph [303] is quoted above and the last sentence concludes with her Honour explaining that the reason for rejection of the submission was that it suffered from the difficulties which her Honour had already identified. In paragraph [304] her Honour set out the appellants' complaint that the testing of the appellants' evidence would impose a significant forensic disadvantage on the first appellant and the paragraph concluded with her Honour observing that the submission was based upon the misconception which her Honour had identified at [314]-[315] of her judgment. In each case the contentions that there were no reasons or insufficient reasons for rejection of the appellants' arguments in those paragraphs had no substance and were not pressed as a separate ground at the appeal.
24 Accordingly the appeal should be dismissed.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Siopis and Pagone.