O'Reilly v Commissioners of State Bank of Victoria

High Court of Australia|1981-04-07|Before: Wilson JJ, Dawson JJ

High Court of Australia Gibbs C.J. Mason, Murphy, Aickin and Wilson JJ. Gibbs C.J. Mason, Murphy, Wilson, Brennan, Deane and Dawson JJ. O'Reilly v Commissioners of State Bank of Victoria

ORDER Order that questions three to eight, inclusive, asked by the case stated be answered as follows:Question 3: Was Sch. D:

(a) a notice which was validly and effectively made or brought into existence for the purposes of s. 264 of the Act?

Answer: Yes, in each case. Question 4:Was Cornell an officer authorized within the meaning of s. 264(1)(b) of the Act to receive evidence and books, documents and other papers from Lawson? Answer: Yes. Question 5:Was Sch. F:

(a) a notice which was validly and effectively made or brought into existence for the purposes of s. 264 of the Act?

(b) a notice falling within the provisions of the said section with which Perry was obliged to comply?

Answer: Yes, in each case. Question 6:Was Cornell an officer authorized within the meaning of s. 264(1)(b) of the Act to receive from Perry evidence and books, documents and other papers? Answer: Yes. Question 7:Whether in the circumstances and notwithstanding the provisions of s. 264 of the Act Perry in his capacity as solicitor for the Lawsons is excused in law and if so to what extent from complying with the requirements of Sch. F on the grounds that to do so would result in breach of:

(a) the contractual duty of confidence he owed to the Lawsons;

(b) the duty which arose by reason of the circumstances referred to and set forth in par. 33;

Answer: No, in each case. Question 8:If yes to any of the questions in par. 7 hereof, is Perry entitled to decide in the first instance whether compliance with the requirements of Sch. F would result in a breach by him of:

(a) the contractual duty of confidence he owed to the Lawsons;

(b) the duty which arose by reason of the circumstances referred to and set forth in par. 33;

Answer: Unnecessary to answer. Order that the defendants pay the plaintiffs' costs of the issues raised by questions three to eight inclusive of the case stated. Order that the remaining questions of law raised by the stated case be answered as follows:Question 1: Did each of the Commissioner, the Deputy Commissioner, Cornell and Hughes have full and free access to the books, documents and other papers situate at the South Blackburn branch of the Bank, on 6 and 7 April 1981, within the meaning of s. 263 of the Act? Answer: No. Question 2:Was the Bank obliged and required under s. 263 of the Act:

(a) to tell Hughes and Cornell precisely where the papers and documents for which they had asked, were situated?

(b) physically to deliver to Hughes and Cornell the books, papers and documents for which they had asked?

(c) to take any and if so what steps to facilitate inspection by Hughes and Cornell of the papers and documents for which they had asked?

Answer: No. Order that the plaintiffs pay one half of the defendants' costs of the issues raised by questions one and two of the case stated. Reserve any further questions as to costs. Liberty to apply.

I have had the advantage of reading the reasons for judgment prepared by my brother Mason and those prepared by my brother Wilson. I need not set out in full the facts of the case or the text of the sections of the Income Tax Assessment Act 1936 Cth, as amended (the Act) which appear in those judgments but may proceed immediately to state my reasons for the conclusions which I have reached.

The answers to questions 1 and 2 of the case stated depend on the proper construction of s. 263 of the Act. That section presents difficulties of construction, and is of such importance that it would not be desirable that its effect should be decided by a court which, because of the untimely death of our late brother Aickin, is constituted by only four members. For those reasons, I would adjourn questions 1 and 2 for argument before a full bench of the Court early in the new year.

Questions 3 to 6 raise two questions in relation to s. 264 of the Act. That section provides, inter alia:

The Commissioner may by notice in writing require any person

(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, and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto.

The powers of the Commissioner under this section were delegated by the Commissioner to Deputy Commissioners by a delegation made under s. 8(1) of the Taxation Administration Act 1953 Cth, as amended, and dated 13 November 1979. The notices given in the present case bore a facsimile of the signature of a Deputy Commissioner. The facsimile was stamped on the document by Mr. Holland, who held and occupied the position of Chief Investigation Officer in the Taxation Department. The Deputy Commissioner had no personal knowledge that Mr. Holland intended to issue the notice. However, the Deputy Commissioner had, by an authorization made on 23 September 1980, subject to certain conditions authorized officers occupying or performing the duties of Chief Investigation Officer to exercise the following powers and functions: Authorise issue of notices other than notices requiring the giving of information or evidence on oath.

Imprint facsimile of my signature upon such notices.

The important question that falls for decision is whether the giving of the notices was a valid exercise of the power given by s. 264.

Section 264 in terms confers power only on the Commissioner. However, it is not disputed that the delegation by the Commissioner to the Deputy Commissioner was valid. Equally, it is common ground that the Deputy Commissioner had no power of sub-delegation. On behalf of the defendants it was submitted that the authorization given by the Deputy Commissioner on 23 September 1980 was an invalid sub-delegation or, alternatively, that the Deputy Commissioner had no power to authorize anyone else to exercise the power on his behalf.

The question whether s. 264 requires that the Commissioner (or his delegate) should personally sign the notice in writing is simply one of construction. In In re Whitley Partners Ltd. [42] , Bowen L.J. said:

In every case where an Act requires a signature it is a pure question of construction on the terms of the particular Act whether its words are satisfied by signature by an agent. In some cases on some Acts the Courts have come to the conclusion that personal signature was required. In other cases on other Acts they have held that signature by an agent was sufficient. The law on the subject is thus summed up by Blackburn J., in Reg. v. Justices of Kent [43] : "No doubt at common law, where a person authorizes another to sign for him, the signature of the person so signing is the signature of the person authorizing it; nevertheless there may be cases in which a statute may require personal signature." Quain J., then says, "We ought not to restrict the common law rule, qui facit per alium facit per se, unless the statute makes a personal signature indispensable." There can be no doubt that as a general proposition at common law a person sufficiently "signs" a document if it is signed in his name and with his authority by somebody else, but if by statute a document has to be personally signed the duty of signing cannot be delegated to a third person: see London County Council v. Agricultural Food Products Ltd. [1] . Exactly the same principles apply when the power is given by statute to a designated person to issue a notice. The notice may be given by the authorized agent of the designated person, whose act will be the act of the principal, unless the statute on its proper construction requires the notice to be issued only by the person who is designated. 1. (1886) 32 Ch.D. 337, at pp. 340-341. 2. (1873) L.R. 8 Q.B. 305, at p. 307. 3. [1955] 2 Q.B. 218, at pp. 223-224.

It would serve no useful purpose for me to canvass all the authorities in which questions of this kind have been considered in relation to the exercise of statutory powers; they are discussed in de Smith's Judicial Review of Administrative Action, 4th ed., pp. 303-309. The answer to the question whether the statute requires the power to be exercised personally by the person designated depends on the nature of the power and all the other circumstances of the case: cf. Re Reference under Ombudsman Act, s. 11 [2] , per Brennan J. However, I should mention the line of authorities which commenced with Carltona Ltd. v. Commissioners of Works [3] and which are discussed in In re Golden Chemical Products Ltd. [4] . Those authorities established that when a Minister is entrusted with administrative functions he may, in general, act through a duly authorized officer of his department. This result depended in part on the special position of constitutional responsibility which Ministers occupy, and in that respect these authorities are distinguishable from cases such as the present. However, they also rest on the recognition that the functions of a Minister are so multifarious that the business of government could not be carried on if he were required to exercise all his powers personally. Ministers are not alone in that position. This has been judicially recognized. In Commissioners of Customs and Excise v. Cure & Deeley Ltd. [5] , it was said that the Commissioners in that case were in a position parallel to that of Ministers, and in Ex parte Forster; Re University of Sydney [6] , the Senate of a University was regarded as being in a similar situation. I can see no reason why, in construing sections of the Act which confer powers on the Commissioner, it should not be proper to consider the undoubted fact that the Commissioner could not possibly exercise all those powers personally.

(1979) 2 A.L.D. 86, at p. 93. 2. [1943] 2 All E.R. 560. 3. [1976] Ch. 300. 4. [1962] 1 Q.B. 340, at p. 371. 5. [1963] S.R. N.S.W. 723, at p. 733.

Section 264 confers on the Commissioner a power whose exercise will be likely adversely to affect rights of individuals. This is a reason for inclining in favour of the view that it must be exercised personally. On the other hand, that section, and a number of other sections of the Act, confer on the Commissioner powers which may be expected to be exercised in myriads of cases. Those other sections include ss. 166-169, 170 and 174, which give power to make and amend assessments and to serve notice of assessments. Since there are literally millions of taxpayers (according to Year Book Australia 1982, p. 577, there were over 5.6 million individual taxpayers in the year 1979-80) it would reduce the administration of the taxation laws to chaos if the powers conferred by those sections could be exercised only by the Commissioner or a Deputy Commissioner personally. It can not be supposed that the Parliament intended such a result. By s. 13 of the Act any reference in the Act to the Commissioner is deemed to include, in respect of matters as to which a Deputy Commissioner has exercised any power or function conferred upon him by delegation, a reference to that Deputy Commissioner. The power of delegation conferred by s. 8(1) of the Taxation Administration Act 1953 Cth, as amended, enables the Commissioner to make a delegation "to a Deputy Commissioner of Taxation or other person". In Re Reference Under Ombudsman Act, s. 11 [7] , Brennan J. said that "The practical administrative necessity which warrants an authority's exercising his power by the acts of another disappears when the authority is empowered to delegate all of his powers and functions to that other." The existence of a power to delegate is of course an important consideration in deciding whether the designated authority may act through an authorized agent. However, the fact that the Act itself contemplates that the delegation will be to a Deputy Commissioner only (notwithstanding that s. 8(1) of the Taxation Administration Act confers a wider power of delegation) suggests that it was not intended that there should be a wholesale delegation of powers to comparatively minor officials. But in any case it would hardly be practicable to make a delegation of that kind, and it seems to me that there exists, as the Parliament must have known, a practical necessity that the powers conferred on the Commissioner by the Act should be exercised by the officers of his Department who were acting as his authorized agents. On the whole I have reached the conclusion that the powers conferred by s. 264 were not intended to be exercised only by the Commissioner or his delegate personally but may be exercised through a properly authorized officer. This is consistent with the decision in Lee v. Federal Commissioner of Taxation [8] , where it was held that the acts of the Commissioner's officers (no doubt acting within the course of their authority) in performing duties under other sections of the Act were the acts of the Commissioner for the purposes of the Act. In opposition to this view reliance was placed on the fact that express reference to officers authorized by the Commissioner is made in ss. 263 and 264, and this, it was said, indicated an intention to exclude action by authorized officers in other cases. Section 263, which refers to "the Commissioner or any officer authorized by him", is concerned with rights, whereas s. 264 is concerned with powers; one may conclude that a power may be exercised through an agent more readily than that a right is conferred upon an agent. The reference in s. 264(1)(b) to "any officer authorized by him" may be explained by the fact that in the context of that provision it is necessary to specify the officer before whom the recipient of the notice is required to attend. The fact that authorization is expressly mentioned in these provisions does not assist the conclusion that s. 264 otherwise excluded any possibility of authorization.

(1979) 2 A.L.D., at p. 94. 2. (1962) 107 C.L.R. 329, at p. 335.

For these reasons, in my opinion, Mr. Holland was authorized to exercise, on behalf of the Deputy Commissioner, the power to issue notices under s. 264.

The second question raised in relation to s. 264 is as to the form of the notices. The notices required the persons to whom they were addressed to attend and give evidence "before Edward Henry Cornell (an officer of the Australian Taxation Office, who is authorised in that behalf)". Mr. Cornell was a Supervisor, Investigation Section, in the Taxation Department and the authorization of 23 September 1980 to which I have already referred authorized officers occupying or performing the duties of that position to "Examine addressees and receive evidence, books, documents and papers." However, it was submitted on behalf of the defendants that an "officer authorized by him in that behalf" within the meaning of s. 264(1)(b) means an officer authorized in respect of the particular matter in relation to which the notice was given. It was said that the notices would have been sufficient if they had included the word "hereby" before the word "authorized", but are insufficient without it. There is no substance in this submission. It is unnecessary to decide whether s. 264 makes it necessary that the officer before whom the recipient of the notice is required to attend and give evidence must have been specially authorized in that particular matter or whether a general authority is sufficient. If (as I incline to think) the latter is the correct view; Mr. Cornell was authorized under the general authorization which I have held to be effective. If, on the other hand, the section requires an authority in the particular case, the notices, on their proper construction, can only be read as authorizing Mr. Cornell to receive the evidence and documents in that particular case.

For these reasons, in my opinion, questions 3(a), 3(b), 4, 5(a), 5(b) and 6 should all be answered, Yes.

Questions 7 and 8 raise the important question whether a solicitor served with a notice under s. 264 can claim to refuse to produce documents on grounds of professional privilege and confidence. I agree to the answers proposed to those questions by my brothers Mason and Wilson, and could not usefully add to what they have said on the matter.

I would direct that questions 1 and 2 be re-argued and would answer the other questions in the case stated as follows:

This case stated pursuant to s. 18 of the Judiciary Act 1903 Cth presents eight specific questions. These questions raise three topics for consideration: (1) the extent of the right of "access" of the Commissioner of Taxation under s. 263 of the Income Tax Assessment Act 1936 Cth (the Act); (2) the extent of the power of a delegate of the Commissioner to empower other persons to perform powers and functions under the Act, in particular the power to issue a notice under s. 264 of the Act and to authorize officers to receive evidence under that section; and (3) the effect of the Act on a solicitor's duty of confidence and on solicitor and client privilege.

Questions 1 and 2 in the case stated relate to the first of the three topics mentioned. Because the two questions raise issues of great practical importance and difficulty not appropriate to be dealt with by the presently constituted bench consisting of the Chief Justice and three justices, it has been decided that the two questions should be reargued before a Full Court consisting of the Chief Justice and all the justices. My judgment therefore deals with the other questions presented by the case stated.

Power of the Commissioner's Delegate to Empower Others to Perform the Commissioner's Powers and Functions Under the Act.

Prior to April 1981 two officers of the Australian Taxation Office, Messrs. Cornell and Hughes, the third and fourth plaintiffs, were investigating the financial affairs and dealings of Mr. Lawson, the fourth defendant, members of Lawson's family, and companies and trusts which were connected with Lawson.

By an instrument in writing dated 13 November 1979 the Commissioner had delegated his powers and functions under, inter alia, ss. 263 and 264 to the Deputy Commissioner.

It seems that on 18 March 1981 Hughes served a notice on Lawson pursuant to s. 264 of the Act requiring him to appear before Cornell to give evidence and to produce certain documents. At the foot of the notice a facsimile signature of the Deputy Commissioner had been affixed by one Holland, who at that time was the Chief Investigation Officer in the Australian Taxation Office. The Deputy Commissioner had purported on 23 September 1980 to authorize the Chief Investigation Officer to perform certain functions. The authorization was said to be "In the exercise of the powers and functions delegated to me by the Commissioner of Taxation" and purported, inter alia, to authorize the Chief Investigation Officer to: (1) "Authorise issue of notices other than notices requiring the giving of information or evidence on oath"; (2) "Imprint facsimile of my signature upon such notices"; and (3) "Examine addressees and receive evidence, books, documents and papers". The notice required Lawson to furnish information to, and to attend and give evidence before, Cornell. Cornell, in his capacity as Supervisor, Investigation Section, was also mentioned in the purported authorization of 23 September 1980 as being authorized in the same three respects as Holland, the only difference being that Cornell's authorization to issue notices was said not to extend to notices requiring "attendance to give evidence or to produce books, documents and other papers". It appears that the Deputy Commissioner himself had no knowledge of the notice served on Lawson until after 15 April 1981. It had been Holland, Hughes and Cornell in conjunction who decided that the notice should be delivered. Lawson did not comply with the s. 264 notice.

On 27 March 1981 a similar s. 264 notice, again issued at the instance of Holland, Hughes and Cornell with a facsimile signature of the Deputy Commissioner affixed, was served by Cornell on Mr. Perry, the fifth defendant, relating to Lawson, his family, and related companies and trusts, all of whom retained Perry as their solicitor. Perry did not comply with the notice.

Questions 3-6 (inclusive) are directed to these facts. They are in these terms:

(a) a notice which was validly and effectively made or brought into existence for the purposes of s. 264 of the Act?

(b) a notice falling within the provisions of s. 264 of the Act with which Lawson was obliged to comply?

Was Cornell an officer authorised within the meaning of s. 264(1)(b) of the Act to receive evidence and books, documents and other papers from Lawson?

(a) a notice which was validly and effectively made or brought into existence for the purposes of s. 264 of the Act?

(b) a notice falling within the provisions of the said section with which Perry was obliged to comply?

Was Cornell an officer authorised within the meaning of s. 264(1)(b) of the Act to receive from Perry evidence and books, documents and other papers?

The defendants say that, as there are express provisions in the Act and in s. 8 of the Taxation Administration Act 1953 Cth which deal with authorization and delegation, the Deputy Commissioner has no power to sub-delegate his powers under s. 264 or to authorize another to exercise them on his behalf. They say that, for that reason, the Deputy Commissioner's attempt, on 23 September 1980, to authorize the Chief Investigation Officer, Holland, to authorize the issue of notices, or to sub-delegate that power to Holland, was invalid. They do not attach any significance in itself to the fact that Holland affixed a facsimile of the Deputy Commissioner's signature to the s. 264 notices.

Section 8(1) of the Taxation Administration Act provides:

The Commissioner of Taxation may, in relation to a matter or class of matters, or in relation to a State or part of the Commonwealth, by writing under his hand, delegate to a Deputy Commissioner of Taxation or other person all or any of his powers or functions under this Act or an Act which is an Act with respect to taxation (except this power of delegation).

The concluding words of s. 8(1) prohibit any sub-delegation of powers and functions delegated by the Commissioner under the subsection. The question then is whether the power or function of issuing a notice under s. 264 is one which, apart from any exercise of the power of delegation under s. 8(1), is exercisable by the Commissioner alone or whether it is exercisable by his officers, according to the true construction of s. 264.

Delegation is not a parting with powers by the person who grants the delegation, but the conferring of authority to do things which otherwise that person would have to do for himself (Huth v. Clarke [9] , per Wills J.). The point is that if the particular power or function is exercisable by officers of the Taxation Department without a delegation then the inability of the delegate to sub-delegate is of no importance.

The power to issue notices is given to the Commissioner by s. 264. Unlike s. 263 the power is not given to the Commissioner "or any officer authorized by him". The significance which this difference would otherwise have is perhaps partly diminished by the circumstance that many sections of the Act dealing with the powers and duties of the Commissioner speak of "the Commissioner" without making any mention of his officers, even when the power or function is one which could not reasonably be exercised by the Commissioner personally in every case, e.g., the power to make an assessment (s. 169) or the service of a notice of assessment (s. 174). Nevertheless, the absence of any reference to authorization in s. 264 has some significance in view of the close relationship between the two provisions.

The particular provisions of the Act conferring powers or imposing duties on the Commissioner have to be read in the light of the general provisions contained in ss. 8, 10 and 13. Section 8 gives to the Commissioner the general administration of the Act. Subject to certain qualifications not presently material, a second Commissioner may exercise all the powers and functions of the Commissioner (s. 10). By s. 13 any reference in the Act to the Commissioner shall be deemed to include (a) a reference to a second Commissioner in respect of matters as to which he has exercised any power or function conferred upon him by the Act; and (b) a reference to a Deputy Commissioner in respect of a matter as to which he "has exercised any power or function conferred upon him by delegation". In speaking of delegation s. 13(b) effectively takes us back to s. 8(1) of the Taxation Administration Act. As we have seen, that section enables the Commissioner to delegate to a Deputy Commissioner or other person, without power of sub-delegation. Section 13, though including a reference to a Deputy Commissioner, does not include a reference to any other person to whom a delegation has been made under s. 8(1). Not that this is of any significance, because a valid delegation by the Commissioner of a power or function which he has under the Act is effective to enable the delegate to exercise that power or function.

What is important is that the Act contemplates that the powers and functions of the Commissioner may be exercised by a second Commissioner and by delegates who are Deputy Commissioners or, if s. 8(1) is taken into account, other persons, presumably officers. On this view of the relevant provisions there is neither a need nor a basis for implying an authority in officers of the Department to exercise powers and functions of the Commissioner, at least when the exercise of the relevant power or function involves the exercise of a discretion or the formation of an opinion. In the face of such a wide power of delegation it would seem correct in principle that, if the Commissioner desires others to exercise large areas of his powers and functions, he should expressly delegate to them those powers and functions pursuant to s. 8(1). Only those powers and functions involving little or no exercise of discretion should be capable of being exercised otherwise. This must be particularly so when the statutory scheme permits delegation of all of the authority's powers to any person or persons, in contrast to the position where a prospective delegate can only be chosen from a restricted class of persons or where one specific officer is designated. See Cook v. Ward [10] .

It seems to me that delegation pursuant to s. 8(1) presents no practical difficulty. An example of the relative ease of delegation by the Commissioner to his officers is provided by a schedule to the case stated which is a copy of the purported authorization by the Deputy Commissioner on 23 September 1980 of various officers to perform various functions. The authorization merely mentions the positions in the Taxation Office the holders of which are authorized to perform stated functions. It would be very simple for the Commissioner, should he so desire, to adopt this same method and to delegate to the holders of even a great number of positions the power to issue s. 264 notices.

Apart from any exercise of his power of delegation the Commissioner may appoint agents to act on his behalf and in his name. But, having regard to the statutory provisions here, I do not think that the Commissioner can appoint an agent to act on his behalf in exercising a statutory discretion or a statutory power which involves the formation of an opinion, except perhaps on the footing that the Commissioner retains to himself the substantial exercise of the discretion or the substantial formation of the opinion, or the exercise of substantial control over the exercise of the discretion or the formation of the opinion, leaving to the agent the ministerial act of communicating the decision or issuing a notice.

The decision taken in conjunction by Holland, Hughes and Cornell to issue the two s. 264 notices involved a substantial exercise of discretion. It was not the type of ministerial act which, given the presence of s. 8(1), could be validly carried out in the absence of a delegation by the Commissioner. The lack of control exercised by the Deputy Commissioner over Holland, Hughes and Cornell is of crucial importance. Willis, Delegatus Non Potest Delegare, Canadian Bar Review, vol. 21 (1943) 257, at p. 258 , correctly makes the point that it is immaterial that the authority (the Deputy Commissioner here) "retains a general control over the activities of the person to whom it has entrusted the exercise of its statutory discretion". What is needed to avoid invalidity resulting from the application of the maxim is the exercise of "a substantial degree of control" by the authority over the actual exercise of the discretion so that the authority can actually be said to have directed its own mind to the question.

The power to issue a s. 264 notice may have a great impact on the affairs of individual persons. It is not like a power which, being purely administrative in nature or having no consequences of any significance, may perhaps be entrusted to another to exercise despite a statutory proscription against delegation or sub-delegation. It is a power the exercise of which involves a substantial area of discretion. Its exercise may not, therefore, be entrusted to a subordinate in the absence of a great degree of control by the authority.

In the present case it is not evident that the Deputy Commissioner retained any control at all over the decision of Holland, in conjunction with Hughes and Cornell, that the s. 264 notices should issue against Lawson and Perry. Indeed, it is common ground that the Deputy Commissioner had no knowledge of the notices until some weeks after they had been served on Lawson and Perry.

The Commissioner placed much reliance on the English cases dealing with decisions taken on behalf of ministers. The principle according to which they were decided was expressed by Lord Greene M.R. in Carltona Ltd. v. Commissioners of Works [11] . Speaking of the functions given to ministers he said that they -

are functions so multifarious that no minister could ever personally attend to them. To take the example of the present case no doubt there have been thousands of requisitions in this country by individual ministries. It cannot be supposed that this regulation meant that, in each case, the minister in person should direct his mind to the matter. The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the ministers by responsible officials of the department. Public business could not be carried on if that were not the case. Constitutionally, the decision of such an official is, of course, the decision of the minister. The minister is responsible. It is he who must answer before Parliament for anything that his officials have done under his authority See also Metropolitan Borough and Town Clerk of Lewisham v. Roberts [12] ; Reg. v. Skinner [13] ; In re Golden Chemical Products Ltd [14] . 1. [1943] 2 All E.R. 560, at p. 563. 2. [1949] 2 K.B. 608, at pp. 619, 621. 3. [1968] 2 Q.B. 700, at p. 707. 4. [1976] Ch. 300, at p. 306.

As the Master of the Rolls indicated, the doctrine of ministerial responsibility is a dominant factor underlying the exercise by others of a minister's discretionary powers. This doctrine has no application to the Deputy Commissioner. Another factor underlying these cases is the notion of administrative necessity - see Commissioners of Customs and Excise v. Cure & Deeley Ltd [15] . This is hardly a relevant factor in the present case when the Commissioner has a comprehensive power of delegation.

I acknowledge that in Lee v. Federal Commissioner of Taxation [16] the Court regarded assessments made by assessors in the Taxation Office as acts of the Commissioner, but the question whether there was a need for a delegation was not argued or raised as an issue in the case stated.

The Commissioner had power to delegate all his powers and functions under s. 264 to Holland, to a committee comprising Holland, Hughes and Cornell, or, for that matter, to anybody. This he did not do.

The contrast presented by ss. 263 and 264 lends some support to this conclusion. I have already referred to the reference in s. 263 to "any officer authorized by him in that behalf" and to the absence of a corresponding provision in s. 264. It was not disputed that s. 263 empowered the Deputy Commissioner, as the Commissioner's delegate, to authorize others to carry out the powers so conferred. The maxim expressio unius est exclusio alterius suggests that the Commissioner has no power to authorize others to issue s. 264 notices and that he is left to his wide power of delegation under s. 8(1) of the Taxation Administration Act.

The only power of authorization expressly conferred by s. 264(1) is the narrower authorization which may be made pursuant to s. 264(1)(b). It is the content of this narrower power of authorization which gives rise to a further question in this case. Does the power of the Commissioner (or his delegate) to require persons "to attend and give evidence before him or before any officer authorized by him in that behalf" contemplate the general authorization given by the Deputy Commissioner to Cornell to "Examine addressees and receive evidence, books, documents and papers"? The defendants say that an authorization which relates to addressees of notices in a general context does not satisfy the requirements of s. 264(1)(b).

I am not inclined to agree with this argument. However, since I have concluded that the issue of the s. 264 notices was invalid, it is not necessary to give a concluded answer. Suffice to say that there is certainly a valid authorization under s. 264(1)(b) if the relevant officer who is to receive the evidence and the information is specified in the s. 264 notice itself. In this case, had the s. 264 notices been valid, there could have been no challenge to Cornell's authority to receive the evidence and information, as the notices specified him as the officer who was authorized in that behalf.

The Effect of s. 264 on Privilege and Duty of Confidence.

It is common ground that the evidence and documents referred to in the s. 264 notice served on Perry were received or created by Perry whilst acting for the Lawsons solely for the purpose of tendering professional legal advice and assistance to them, though not in relation to any existing or contemplated litigation in which the Commissioner was a party (see pars. 33 and 34 of the case stated).

Whether in the circumstances and notwithstanding the provisions of s. 264 of the Act Perry in his capacity as solicitor for the Lawsons is excused in law and if so to what extent from complying with the requirements of Sch. F on the grounds that to do so would result in breach of:

(a) the contractual duty of confidence he owed to the Lawsons;

(b) the duty which arose by reason of the circumstances referred to and set forth in par. 33;

If yes to any of the questions in par. 7 hereof, is Perry entitled to decide in the first instance whether compliance with the requirements of Sch. F would result in a breach by him of:

(a) the contractual duty of confidence he owed to the Lawsons;

(b) the duty which arose by reason of the circumstances referred to and set forth in par. 33;

Although I have concluded that the s. 264 notices were invalid, it would seem desirable, since the notices may easily be validly reissued, that I express my view on the effect of s. 264 in relation to legal professional privilege and the solicitor's contractual duty of confidence.

In so far as the questions relate to the contractual duty of confidence, they may be disposed of shortly. Counsel for Perry did not dispute that the duty of confidence which is implied into the contract between solicitor and client is subject to, and overridden by, the duty of any party to the contract to comply with the law of the land, including the requirements of s. 264. This was firmly established in Parry-Jones v. Law Society [17] ; Smorgon v. Australia and New Zealand Banking Group Ltd. [18] ; Federal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd. [19] . The effect of s. 264 on legal professional privilege is a much larger question.

[1969] 1 Ch. 1, at pp. 7, 9. 2. (1976) 134 C.L.R. 475, at p. 487. 3. (1979) 143 C.L.R. 499, at pp. 521, 540.

Legal professional privilege is a privilege which protects from disclosure by the solicitor, in the absence of the consent of the client, confidential communications between the two: Minter v. Priest [20] . The basis of the doctrine was established in a gradual way by the Courts of Chancery "by successive steps": Minet v. Morgan [21] . Thus it is no longer open to argument that the privilege attaches to communications made "for the purpose of advice or for the purpose of use in existing or anticipated litigation" (Grant v. Downs [22] ), though prior to Minet (see pp. 366-367) the communications were required to be in respect of particular litigation. Nevertheless, there is a real question whether the documents the subject of the s. 264 notice served on Perry are communications of this nature.

[1930] A.C. 558, at p. 579. 2. (1873) 8 Ch. App. 361, at p. 366. 3. (1976) 135 C.L.R. 674, at p. 682.

It is no bar in itself to the operation of the privilege that the communications sought to be protected are written and not oral (Nias v. Northern and Eastern Railway Co. [23] ). But if communications in written form are to be privileged they must still be confidential communications between solicitor and client made for the purpose of advice or for the purpose of use in existing or anticipated litigation. The documents must come into existence for, and be prepared for, that purpose. So in Grant a majority of this Court held that legal professional privilege is confined to documents which are brought into existence for that sole purpose.

(1838) 3 My. & Cr. 356, at p. 357 [ 40 E.R. 963, at p. 964].

The point is made in Wigmore on Evidence (McNaughton rev. 1961), vol. viii, par. 2307, p. 594. There it is said:

Since a document which is itself a communication is within the privilege, the test is whether the document first came into existence as a part of a communication to the attorney.

The s. 264 notice addressed to Perry required him to produce "Contracts, agreements, correspondence, solicitors disbursement accounts relating to property transactions" and extracts of all transactions relating to Lawson and his associates processed through Perry's trust account. I put aside the "correspondence" for now. Although the facts in the case stated indicate that the specified documents "were received or created by Perry in confidence whilst acting for the Lawsons solely for the purpose of tendering professional legal advice and assistance to them", there is real doubt whether all the documents involve confidential communications between solicitor and client or whether instead they are documents which merely evidence various transactions. In relation to documents received by Perry the test is not whether they were received by him for the purpose of tendering professional legal advice, but whether they were brought into existence for that purpose.

It is true that the contracts, agreements and extracts of other transactions are documents held by Perry and quite probably were drafted by him at Lawson's request. But it is not possible to give protection to every document in that category otherwise "the client's obligation to produce could always be evaded in very simple fashion by placing the deed with the attorney" (Wigmore , vol. viii, par. 2307, p. 591). In Grant , Stephen and Murphy JJ. and I in a joint judgment said [24] :

It is not right that the privilege can attach to documents which, quite apart from the purpose of submission to a solicitor, would have been brought into existence for other purposes in any event, and then without attracting any attendant privilege. 1. (1976) 135 C.L.R., at p. 688.

It is only possible to argue that documents of the kind sought to be protected in the present case should be privileged from disclosure if one ignores the public interest which is universally acknowledged as the fundamental basis of the privilege. In Grant [25] Stephen and Murphy JJ. and I said:

The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision. See also Greenough v. Gaskell [26] ; Bullivant v. Attorney-General (Vict.) [27] . 1. (1976) 135 C.L.R., at p. 685. 2. (1833) 1 My. & K. 98, at p. 103 [39 E.R. 618, at p. 621]. 3. [1901] A.C. 196, at pp. 200-201, 206.

The privilege cannot attach to contracts, agreements and extracts of other transactions. I am unable to perceive how they could have been brought into existence for the purpose which is the central element of the privilege claimed.

The "correspondence" required by the s. 264 notice may or may not fall into the same category. The case stated indicates that the correspondence was received or created by Perry solely for the purpose of tendering professional legal advice. Again a problem is created by speaking of Perry's receipt of correspondence for the relevant purpose.

It is now necessary to look to another important question: Is the privilege merely a rule of evidence confined to curial proceedings or does it have a wider ambit? Lord Diplock in Parry-Jones [28] , was firmly of the view that legal professional privilege is only a rule of evidence confined to proceedings before a court or tribunal exercising judicial functions:

privilege, of course, is irrelevant when one is not concerned with judicial or quasi-judicial proceedings because, strictly speaking, privilege refers to a right to withhold from a court, or a tribunal exercising judicial functions, material which would otherwise be admissible in evidence. See also Minter [29] ; Halsbury's Laws of England, 4th ed. (1975), vol. 13, par. 71. 1. [1969] 1 Ch., at p. 9. 2. [1930] A.C., at p. 579.

In Wigmore , vol. viii, par. 2325, p. 632, the contrary view is taken:

Clearly the privilege could not permit an evasion by receiving the voluntary extrajudicial disclosures of the attorney [T]hey would be equally a violation of the privilege with his voluntary disclosures on the stand.

As is said in Wigmore , vol. viii, par. 2291, p. 554, because the privilege is "an obstacle to the investigation of the truth" it "ought to be strictly confined within the narrowest possible limits consistent with the logic of its principle " (emphasis added). The one thing that is entirely certain about the privilege is that its basis is grounded in the public interest in the freedom of consultation of legal advisers. To confine the operation of the privilege to proceedings of the kind mentioned might result in the disclosure of the communications outside those proceedings. The value of the privilege would be impaired when the witness was required to give evidence or produce documents before a non-judicial tribunal, commissioner or investigator having a power to compel answers or compel the production of documents. Once disclosure is made, the protection given by allowing the privilege to operate in later judicial proceedings is undermined. Disclosure will enable other evidence, not obtainable but for that disclosure, to be presented in subsequent judicial or quasi-judicial proceedings.

This suggests that the privilege should not be confined to judicial or quasi-judicial proceedings. This was the view taken by the New Zealand Court of Appeal in Commissioner of Inland Revenue v. West-Walker [30] . Fair J. [31] concluded that none of the authorities was inconsistent with the view that privilege extends "logically to protect communications from all compulsory disclosure". North J. [32] also rejected the view that the privilege was only a rule of evidence. He said that, since the privilege rests on the wide ground of public policy, it must apply to inquiries in general, including those "made by executive officers pursuant to statutory authority".

[1954] N.Z.L.R. 191. 2. [1954] N.Z.L.R., at pp. 205-206. 3. [1954] N.Z.L.R., at p. 219.

The argument for confining the privilege, that expressed by Lord Diplock, is that it is no more than a rule of evidence applicable to judicial and quasi-judicial proceedings. But should it be so confined? It has been suggested that, if not so confined, the privilege would extend to other confidential relationships (Crowley v. Murphy [33] ). However, the policy behind the privilege - enhancing the administration of justice by encouraging freedom of communication and candour between client and solicitor - would not support this extension of the privilege.

(1981) 52 F.L.R. 123, at pp. 149-150; 34 A.L.R. 496, at pp. 520-521.

A more persuasive reason for confining it is that it is impossible to assess how significantly the privilege advances the policy which it is supposed to serve. The strength of this public interest is open to question. It may be doubted whether it does very much to promote candour on the part of the client to his legal adviser. Candour on the part of public servants has ceased to be an important buttress to Crown privilege. And, even if the existence of the privilege does encourage the client to make full disclosure to his legal adviser, is that public interest so much stronger than the public interest in having litigation determined in the light of the entirety of the relevant materials?

The existence of the privilege is too well entrenched to be abolished by a flourish of the judicial pen. But the nature of the public interest which it serves and the comments which I have made indicate that it should be closely confined. Indeed, its application beyond judicial and quasi-judicial proceedings would create other problems. It is difficult to evaluate the benefits that would flow from a wider application of the privilege, except to say that it would preserve the advantages of allowing the privilege in subsequent judicial or quasi-judicial proceedings. But it would secure these advantages by denying access to information which might be highly relevant and important for other purposes and at the cost of imposing on unqualified persons - in this case an authorized officer of the Commissioner - the burden of deciding difficult questions of legal professional privilege. To me these factors indicate that the privilege should be limited to judicial and quasi-judicial proceedings. The fact that Grant has narrowed the ambit of legal professional privilege in judicial proceedings is not a persuasive reason for giving the privilege an application outside the field of judicial and quasi-judicial proceedings.

I therefore do not need to answer the question whether the provisions of s. 264 have the effect of overriding the privilege.

I would answer the relevant questions in the case stated as follows:

Questions 3 to 6. I agree with the Chief Justice's answers and with his reasons.

Questions 7 and 8. Section 264 of the Income Tax Assessment Act 1936 (the Act) overrides any contractual obligation, including any implied duty of confidence (Smorgon v. Australia and New Zealand Banking Group Ltd. [34] ; Federal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd. [35] ).

(1976) 134 C.L.R. 475. 2. (1979) 143 C.L.R. 499.

The question is whether a federal common law of legal professional privilege applicable to statutory powers of obtaining information should be recognized, and what is its operation in relation to s. 264 of the Act. The same considerations which led to a general recognition under State law of legal professional privilege warrant extension to federal statutes in the absence of some countervailing consideration. The privilege attaches to and is confined to communications solely "for the purpose of advice or for the purpose of use in existing or anticipated litigation" (Grant v. Downs [36] ). The privilege does not attach to contracts, conveyances, declarations of trust or other transactions or arrangements, even if they have come into the hands of a solicitor for legal advice. The test of whether privilege exists is not the purpose for which the document came into the hands of the solicitor but whether the sole purpose for which it was created was to obtain advice or for use in pending or anticipated litigation.

Thus the privilege is strictly limited to a narrow class of communications. But the exercise of privilege is not confined to judicial or quasi-judicial proceedings, as suggested in England (see Minter v. Priest [37] and recently Lord Diplock in Parry-Jones v. Law Society [38] The important public-policy which justifies the privilege would often be defeated if the privilege were not generally available. In general the privilege is a sufficient answer to any officer seeking the disclosure of the protected communication, whether written or oral. The common law exception that the privilege cannot be used to facilitate the commission of crimes is applicable in relation to the operation of federal statutes. The strict confinement, since Grant v. Downs, of the class of privileged communications, is a powerful reason for extending the protection generally and not limiting it to judicial or quasi-judicial proceedings. Leaving aside judicial proceedings (where special considerations may apply connected with the judicial power of the Commonwealth) the privilege may be excluded by statute.

[1930] A.C. 558, at p. 579. 2. [1969] 1 Ch. 1, at p. 9.

(a) No. (b) No. (c) Perry is excused only in respect of evidence and documents created by or on behalf of the Lawsons solely for the purpose of obtaining legal advice and assistance in relation to existing or contemplated litigation.

(a) Unnecessary to answer. (b) Perry is entitled, and bound to decide, whether compliance with the requirements of Sch. F would result in a breach by him of the duty of confidence. His decision is not conclusive, but is the basis for his claim of privilege in respect of the documents, and if not allowed, for his good faith application (for declaration or other relief) to a court of competent jurisdiction to maintain privilege. (c) Same as for (b).

This case seeks the opinion of the court upon a series of questions numbered one to eight. They relate to three distinct issues touching the operation of ss. 263 and 264 of the Income Tax Assessment Act 1936 Cth, as amended (the Act), namely, (1) the question of "access" pursuant to s. 263; (2) the validity of the notices issued in purported pursuance of s. 264; (3) whether the obligation to respond to a s. 264 notice is affected by legal professional privilege or the contractual duty of confidence. The first and second questions relate solely to the question of access. Questions 3-6 inclusive are concerned with the validity of the notices and questions 7 and 8 with the issue of privilege and confidentiality.

At this stage, it is proposed to deliver judgment with respect only to the second and third issues. That part of the stated case which deals with the question of access will stand reserved.

Mr. Lawson and Mr. Perry each received a notice under s. 264 of the Act. So far as is material to the questions requiring to be answered the notices are identical. The body of the notice addressed to Mr. Lawson, so far as is material, read as follows:

take notice that in the exercise of the powers and functions conferred upon me as Deputy Commissioner of Taxation by delegation from the Commissioner of Taxation under the provisions of the Taxation Administration Act 1953, I, Eric John Unger, do by this notice require you to attend at and give evidence before Edward Henry Cornell (an officer of the Australian Taxation Office, who is authorised in that behalf) concerning your income and assessments , and in connection therewith i do further hereby require you to produce at the same place and time the following books, documents and papers At the foot of each notice there appeared a facsimile of the signature of the Deputy Commissioner. That facsimile had been imprinted on each notice by one Kevin Holland who then occupied the position of Chief Investigation Officer in the Australian Taxation Office. At the time of the preparation and delivery of the notices the Deputy Commissioner had no personal knowledge that such action was proposed or undertaken. In executing each notice Mr. Holland was acting in accordance with a general authorization which the Deputy Commissioner had signed some months earlier. That authorization was in general terms, and purported to authorize him, for the purposes of s. 264 of the Act, to exercise a power and function, inter alia, as follows: Authorise issue of notices other than notices requiring the giving of information or evidence on oath.

Imprint facsimile of my signature upon such notices.

The same document purported also to authorize Mr. Cornell, inter alia, to "Examine addressees and receive evidence, books, documents and papers".

Mr. Lawson and Mr. Perry contend that these notices are ineffective. Two submissions are advanced in support of that contention. The first is that the general authorization amounted to a sub-delegation, and consequently offended the principle embodied in the maxim delegatus not potest delegare. The second is that in any event Mr. Cornell was not validly authorized to receive the evidence and documents. The proper construction of s. 264(1)(b) requires, so it is said, that there be a specific authority conferred on the examiner on each occasion on which the power conferred by the section is exercised; consequently the general authority of Mr. Cornell is ineffective for the purpose, and the notices themselves did not invest him with the requisite authority. This second submission may be readily disposed of. If the notices are effective in imposing a requirement on Mr. Lawson and Mr. Perry, then it seems to me that each notice was also effective in authorizing Mr. Cornell to act in the stated way, and it is therefore unnecessary for the plaintiffs to establish that the general authorization was effective. Mr. Castan, counsel for Mr. Lawson, argues that the notices do not make it clear that each notice itself constituted an authorization of Mr. Cornell, pointing to the absence therein of the word "hereby" in the parenthetical reference to him. It comes down to a simple question of the construction of the notices. Provided that the notices were good in themselves, I have no difficulty in finding in them a sufficient authorization of Mr. Cornell to satisfy the terms of s. 264.

The difficult question is whether the notices were a valid exercise by the Deputy Commissioner of the power which s. 264 vests in the Commissioner. It is common ground that the Commissioner has validly delegated the exercise of that power to the Deputy Commissioner. That delegation was made pursuant to s. 8 of the Taxation Administration Act 1953 Cth, as amended. So far as relevant, that section provides as follows:

(1) The Commissioner of Taxation may, in relation to a matter or class of matters, or in relation to a State or part of the Commonwealth, by writing under his hand, delegate to a Deputy Commissioner of Taxation or other person all or any of his powers or functions under this Act or an Act which is an Act with respect to taxation (except this power of delegation).

(2) A power or function so delegated may be exercised or performed by the delegate with respect to the matter or to the matters included in the class of matters, or with respect to the State or part of the Commonwealth, specified in the instrument of delegation.

The plaintiffs do not contend that the Deputy Commissioner can validly sub-delegate his powers under s. 264 to Mr. Holland. They submit that he has not attempted to do so. There has been no transfer to Mr. Holland of any power vested in the Deputy Commissioner. The power which Mr. Holland has been authorized to exercise remains a power delegated to the Deputy Commissioner; it can be exercised only in his name and on his behalf.

It seems to me that a clear distinction is to be drawn between the delegation of a power and the exercise of that power through servants or agents: see the informative discussion by Brennan J. in Re Reference under Ombudsman Act, s. 11 [39] . In Carltona Ltd. v. Commissioners of Works [40] Lord Greene M.R. described, in words which have become well-known, the necessity in modern government for the shared performance of duties short of delegation. He said:

It cannot be supposed that this regulation meant that, in each case, the minister in person should direct his mind to the matter. The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the ministers by responsible officials of the department. Public business could not be carried on if that were not the case. Constitutionally, the decision of such an official is, of course, the decision of the minister. The minister is responsible. Denning L.J. (as he then was) made the same point in Metropolitan Borough and Town Clerk of Lewisham v. Roberts [41] , when he said: Now I take it to be quite plain that when a minister is entrusted with administrative, as distinct from legislative, functions he is entitled to act by any authorized official of his department. The minister is not bound to give his mind to the matter personally. That is implicit in the modern machinery of government: see Carltona Ltd. v. Commissioner of Works and an article by Professor Willis in 21, Canadian Bar Review, at p. 257. Cf. also Reg. v. Skinner [42] ; In re Golden Chemical Products [43] . 1. (1979) 2 A.L.D. 86, at pp. 93-95. 2. [1943] 2 All E.R. 560, at p. 536. 3. [1949] 2 K.B. 608, at p. 621. 4. [1968] 2 Q.B. 700. 5. [1976] Ch. 300.

The defendants make two submissions in answer to the plaintiffs. They would dismiss the English authorities to which I have referred as dealing with the relationship of Ministers of the Crown to their departments. It is true that the emphasis in the cases is primarily expressed in that way. Yet I find the logic of the principle equally persuasive in its application to the head of any large government department, and, a fortiori, to a Deputy Commissioner of Taxation responsible within a State for the implementation of the Commonwealth's laws with respect to taxation. No permanent head of a department in the Public Service is expected to discharge personally all the duties which are performed in his name and for which he is accountable to the responsible Minister. I share the view expressed by Sachs J. in Commissioners of Customs and Excise v. Cure & Deeley Ltd. [44] :

The commissioners are in a position parallel to that of the Ministers referred to in the judgment of Lord Greene in the Carltona Case [45] , in that their functions are so multifarious that they could never personally attend to them all, and the powers given to them are normally exercised under their authority by responsible officials of the department. 1. [1962] 1 Q.B. 340, at p. 371. 2. [1943] 2 All E.R., at p. 563.

However, the defendants further argue that the existence of the power to delegate (s. 8, Taxation Administration Act) makes it unnecessary to resort to the Carltona principle, with the result that a formal delegation to Mr. Holland was necessary to empower him to issue the notices. I note that in the advisory opinion of the Administrative Appeals Tribunal on the reference under the Ombudsman Act to which I have referred, Brennan J. said [46] , when discussing the possibility that a person may be both a delegate of a power and a servant exercising the like power on behalf of another:

Is a dual character consistent with the statutory scheme for reviewing determinations under s. 14 of the Social Services Act? I think not. The practical administrative necessity which warrants an authority's exercising his power by the acts of another disappears when the authority is empowered to delegate all of his powers and functions to that other. That observation is, of course, to be understood in the context of the examination which his Honour was making of the Social Services Act 1947 Cth, as amended. In any event, the statement which I have cited can afford no analogy to the present case, because here the Deputy Commissioner, himself a delegate, has no power to delegate his power to Mr. Holland. The question is whether the existence of the power of delegation requires that the Commissioner or his delegate must direct his mind personally to the exercise of every power or function vested in him. Stated in that way, in my opinion, the question admits only of one answer. The practical administrative necessity to allow a Deputy Commissioner to exercise the powers delegated to him by the actions of officers authorized by him is evident. The opposing argument would oblige the Commissioner himself to delegate his powers, not only to the Deputy Commissioners, but to a host of departmental officers throughout Australia, rendering each of them a Commissioner in his own right. It would be wholly destructive of any semblance of administrative order and efficiency. 1. (1979) 2 A.L.D., at p. 94.

Nor does the plaintiffs' argument have the result that s. 8 of the Taxation Administration Act is otiose, in that there is no need for a power of delegation. There is every need for such a power, in the interests of administrative efficiency and a sensible devolution of power and responsibility throughout Australia. Without the power of delegation, every act performed by departmental officers throughout Australia would be in law the act of the Commissioner, for which he would be responsible. By delegating substantially all of his powers and functions to Deputy Commissioners he transfers the power base to the geographic regions of the country, allowing the Department to operate in each of the States more or less as a separate administrative unit, with the Deputy Commissioner as its head. Without a power of delegation, this decentralisation would be impossible.

Each of the notices which are under challenge is expressed to be an exercise by the Deputy Commissioner of the power under s. 264 which was duly delegated to him. Each notice bears his signature. In my opinion each notice is what it purports to be. In resolving to issue the notice, Mr. Holland was acting for the Deputy Commissioner, in exercise of an authority duly vested in him. His action was the action of the Deputy Commissioner, notwithstanding that the latter had no personal knowledge of it.

Legal Professional Privilege and the Duty of Confidence.

Mr. Perry is a solicitor, and acts in that capacity for Mr. Lawson and the other persons named in his notice. The s. 264 notice which was served on him referred to evidence and documents received or created by him in confidence whilst acting for the persons named solely for the purpose of tendering professional legal advice and assistance to them. Some of the material related to existing or contemplated litigation to which the Commissioner is not and will not be a party, while other material did not relate to any litigation at all. The substantial question to be determined in this part of the case is whether the obligation imposed on Mr. Perry by s. 264 overrides (a) the contractual duty of confidence and (b) the clients' privilege in respect of professional legal communications with Mr. Perry.

Notwithstanding the importance of the question, I believe that it can be answered quite shortly. The first task is to identify the context in which the issue of privilege becomes relevant. Is that context supplied solely by judicial or quasi-judicial proceedings? The notice now under consideration obliges Mr. Perry to attend and give evidence and to produce documents. He is not obliged to give the evidence upon oath, but the characterization of the proceeding is not affected by that circumstance. It is properly described, not as a judicial or quasi-judicial proceeding but as an administrative inquiry. If legal professional privilege is relevant only to the former type of proceeding, then Mr. Perry cannot raise the privilege in answer to the s. 264 notice, and he is left only with such protection, if any, as his duty of confidence to his client will provide. It will not become necessary to consider whether s. 264 overrides the privilege, a question involving the application of the established principle that "where an affirmative statute is open to two constructions, that construction ought to be preferred which is consonant with the common law": R. v. Bishop of Salisbury [47] , per Wills J.

In my opinion, the law was stated correctly by Diplock L.J. (as he then was) in the Court of Appeal in Parry-Jones v. Law Society [48] , when he said:

So far as Mr. Parry-Jones' point as to privilege is concerned, privilege, of course, is irrelevant when one is not concerned with judicial or quasi-judicial proceedings because, strictly speaking, privilege refers to a right to withhold from a court, or a tribunal exercising judicial functions, material which would otherwise be admissible in evidence. Cf. also Minter v. Priest [49] ; Halsbury's Laws of England (4th ed.), vol. 13, par. 71. The decision in Parry-Jones was followed in the Supreme Court of New South Wales by Bowen C.J. in Eq. (as he then was) in Brayley v. Wilton [50] , and by the Full Court of the Federal Court in Crowley v. Murphy [51] . However, in Commissioner of Inland Revenue v. West-Walker [52] , a strong majority of the New Zealand Court of Appeal came to a different conclusion. 1. [1969] 1 Ch. 1, at p. 9. 2. [1930] A.C. 558, at p. 579. 3. [1976] 2 N.S.W.L.R. 495. 4. (1981) 52 F.L.R. 123; 34 A.L.R. 496. 5. [1954] N.Z.L.R. 191.

Counsel for Mr. Perry naturally relies heavily on the New Zealand decision. He argues that to restrict the operation of the privilege to legal proceedings would erode the principle, which is one of high public policy. I venture to think that it is not a question of eroding the principle but of defining consistently with authority the circumstances of its application. The principle of public policy was declared by the Earl of Halsbury L.C. in Bullivant v. Attorney-General (Vict.) [53] in the following terms:

for the perfect administration of justice, and for the protection of the confidence which exists between a solicitor and his client, it has been established as a principle of public policy that those confidential communications shall not be subject to production. It will be noted that there the principle was enunciated in the context of its application to legal proceedings, as also was the case in the leading authority of Greenough v. Gaskell [54] , and all the subsequent cases until West-Walker . In Greenough v. Gaskell [55] , Lord Brougham L.C., speaking of the nature of the privilege, said: But it is out of regard to the interests of justice, which cannot be upholden, and to the administration of justice, which cannot go on, without the aid of men skilled in jurisprudence, in the practice of the Courts, and in those matters affecting rights and obligations which form the subject of all judicial proceedings. If the privilege did not exist at all, every one would be thrown upon his own legal resources; deprived of all professional assistance, a man would not venture to consult any skilful person, or would only dare to tell his counsellor half his case. 1. [1901] A.C. 196, at pp. 200-201. 2. (1833) 1 My. & K.98 [39 E.R. 618]. 3. (1833) 1 My & K., at p. 103 [39 E.R., at p. 621].

In Grant v. Downs [56] , Stephen, Mason and Murphy JJ. in a joint judgment stated the rationale of the privilege in these terms:

The rationale of this head of privilege, according to traditional doctrine, is that it promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisers, the law being a complex and complicated discipline. This it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice, and encouraging the client to make a full and frank disclosure of the relevant circumstances to the solicitor. The existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available. As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision. None the less there are powerful considerations which suggest that the privilege should be confined within strict limits. 1. (1976) 135 C.L.R. 674, at p. 685.

With great respect to their Honours who formed the majority in West-Walker , I have concluded that it would be an unwarranted extension of the privilege to hold it capable of protecting the documents in question from disclosure to the Commissioner pursuant to a s. 264 notice to Mr. Perry. In my opinion the privilege is available to be claimed only in judicial or quasi-judicial proceedings. It cannot therefore be claimed by Mr. Perry on behalf of his clients in the circumstances of this case. Before leaving the case of West-Walker , I would say that I agree, with respect, with the detailed discussion of the decision by Lockhart J. in Crowley v. Murphy [1] ; I acknowledge my indebtedness to that passage of his Honour's judgment.

(1981) 52 F.L.R., at pp. 146-149; 34 A.L.R., at pp. 518 520.

I emphasise that I have been concerned with the question of whether the privilege is available in the circumstances of this case. I have not found it necessary to direct my attention to the question of the range of documents to which the privilege would extend if it was found to apply.

There remains the contractual duty of confidence which Mr. Perry undoubtedly owes to Mr. Lawson. There can be no doubt that such a duty must yield to an inconsistent duty imposed by statute: Parry-Jones [2] . In the present case, ss. 264 and 224 of the Act impose such a duty, and there is already the authority of a decision of this Court for the proposition that any contractual duty owed by Mr. Perry to Mr. Lawson and the other persons mentioned in the notice is subject to, and overriden by, this statutory duty: Federal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd [3] ; see also Smorgon v. Australia and New Zealand Banking Group Ltd [4] .

[1969] 1 Ch., at p. 9. 2. (1979) 143 C.L.R. 499. 3. (1976) 134 C.L.R. 475.

Counsel for Mr. Perry expressed concern over the possible implications of a conclusion that s. 264 arms the Commissioner with investigatory powers which override both the contractual duty of confidence and legal professional privilege. As I have said, no such privilege exists other than in the context of disclosure in the course of judicial and quasi-judicial proceedings, and in my opinion it would be an unwarranted extension of the privilege to find otherwise. In any event, it seems to me that any reading down of the powers which s. 264 vest in the Commissioner could seriously inhibit the investigatory process which is essential to a proper administration of the Act. The provisions of s. 16 with respect to secrecy must be relied upon to provide some protection, if not consolation, to persons who may be affected by that process.

I would answer the questions set out in the case as follows:

Aickin J. died before judgment was delivered in the case argued on 10 and 11 March 1982. The Court directed that the questions concerning the effect of s. 263 of the Income Tax Assessment Act should be re-argued before a Bench of seven Justices.

1983, April 19 Gibbs C.J., Wilson and Dawson JJ.

The Court has already decided certain of the questions that were raised by this case stated. Those that remain concern the effect of s. 263 of the Income Tax Assessment Act 1936, as amended, (the Act). That section reads as follows:

The Commissioner, or any officer authorized by him in that behalf, shall at all times have full and free access to all buildings, places, books, documents and other papers for any of the purposes of this Act, and for that purpose may make extracts from or copies of any such books, documents or papers.

The relevant facts were as follows. Messrs. Hughes and Cornell, officers of the Australian Taxation Office, each of whom was duly authorized by the Commissioner for the purposes of s. 263 of the Act, were, for the purposes of the Act, investigating the financial affairs and dealings of David Mark Lawson and other persons. For the purposes of that investigation Mr. Hughes, on 30 March 1981 commenced, and on 1 and 2 April continued, an examination of documents at the South Blackburn branch of the State Bank of Victoria (the Bank) in relation to an account conducted at the branch in the name of "Lawson, Lawson and Brookshaw". In his examination Mr. Hughes was assisted by Mr. Castanelli, the accountant of the South Blackburn branch of the Bank, who at first would extract and hand to Mr. Hughes the vouchers which the latter required, and who later obtained boxes of vouchers and allowed Mr. Hughes to extract the particular voucher he wanted. On 6 April 1981, when Mr. Hughes again went to the South Blackburn branch for the purposes of continuing his examination, he was informed by Mr. Castanelli that the Bank would give him access to the Bank premises but no assistance with his investigations. Mr. Hughes was not sure where the documents which he needed were kept. After a conversation with Mr. Allen, the Manager of the South Blackburn branch of the Bank, he proceeded to inspect the Bank premises in an endeavour to find the room in which the documents were stored. There were two rooms in the Bank in which at that time vouchers and documents were stored - namely the strongroom and a records room. The strongroom was open, and it in fact contained some documents relating to Mr. Lawson, but Mr. Hughes did not see them. The door to the records room was locked, and Mr. Hughes was unable to enter it.

On the following day Mr. Hughes returned to the South Blackburn branch, accompanied by Mr. Cornell. Mr. Cornell informed Mr. Allen of the provisions of s. 263 of the Act and then asked Mr. Allen whether bank vouchers were held in the room which Mr. Hughes had found to be locked on the previous day. Mr. Allen replied that bank vouchers were held in that room but he could not say whether those required by Mr. Cornell were there because he did not know which vouchers Mr. Cornell required. In reply to further questions Mr. Allen said that the room was normally kept locked for security reasons, that the door would be unlocked when the Bank staff required access, and that he had the custody or control of the key to the room, although he did not have physical possession of it. Mr. Cornell then said that for the purposes of s. 263 he formally required Mr. Allen to grant to Mr. Hughes and himself access to the vouchers in the room and that if the room was locked he required Mr. Allen to unlock the door and to facilitate their access to the room. Mr. Allen, after making a telephone call, said that on the advice of the Bank's solicitor he must refuse Mr. Cornell's request. Mr. Hughes went to the door of the records room and found that it was locked. Mr. Cornell and Mr. Hughes then left the Bank. In fact on both 6 and 7 April 1981 the key to the records room was in the top drawer of the filing cabinet in Mr. Allen's office. That drawer was not locked. Neither Mr. Hughes nor Mr. Cornell asked for the key and Mr. Allen did not tell either of them where the key was to be found.

In these circumstances the Court is asked the following questions.

Did each of the Commissioner, the Deputy Commissioner, Cornell and Hughes have full and free access to the books, documents and other papers situate at the South Blackburn branch of the Bank, on 6 and 7 April 1981, within the meaning of s. 263 of the Act?

Was the Bank obliged and required under s. 263 of the Act:

(a) to tell Hughes and Cornell precisely where the papers and documents for which they had asked, were situated?

(b) physically to deliver to Hughes and Cornell the books, papers and documents for which they had asked?

(c) to take any and if so what steps to facilitate inspection by Hughes and Cornell of the papers and documents for which they had asked?

The answers to these questions depend on the proper construction of s. 263. That section grants to the Commissioner, and to any authorized officer, "full and free access" to, inter alia, all buildings and documents, for any of the purposes of the Act. The ordinary dictionary meaning of "access" is "a way or means of approach". The words "shall have" in the section obviously cannot indicate mere futurity; they are used to confer a right. The words of the section, considered as a whole, confer upon the Commissioner a right to enter buildings and look at documents for the purposes of the Act. The right is to be "full and free", which means, in effect, that it is unrestricted, except, of course, by the requirement that it may only be exercised in good faith for the purposes of the Act.

The question is whether the section imposes a duty upon any person to take active steps to assist the Commissioner to enjoy the right which the section gives him. The contention for the Commissioner is that the section creates an imperative obligation; in other words that it obliges any person who is able to provide the Commissioner with the means of entry into a building, or the means of looking at a document, to which the Commissioner has a right of access, to do so. It was submitted that in the present case the officers of the Bank were obliged to tell Messrs. Hughes and Cornell the precise location of the documents which they wished to see, and to take them to those documents so that they might read them and if they wished copy them. Further, it was submitted, it was the duty of the Bank officers to unlock the door of the records room, which in fact contained documents, when required to do so by Mr. Cornell.

In our opinion s. 263 on its proper construction does not impose an obligation on anyone to take positive steps to enable the Commissioner more easily or effectively to enjoy his right of access. We agree with the conclusion provisionally reached by Mason J. in Federal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd. [7] . In that case [8] Mason J. said that s. 263 is a general provision which makes lawful that which otherwise would be unlawful and he went on to say [9] :

the section does not impose an obligation on the owner or occupier of premises or on the person having custody or control of a safe deposit box, to produce a key to the Commissioner or his representative to enable him to gain access. It is not a section which arms the Commissioner with a coercive power or which imposes obligations on persons to make the statutory right of access effective. The section states the nature of the Commissioner's right in wide and unqualified terms but it does not expressly provide that any person is under a duty to assist the Commissioner to exercise the right. There is nothing in the words of the section that supports the view that it should be implied that there was created a positive duty to provide assistance to the Commissioner. The section neither indicates what persons would be subject to the suggested duty, nor defines the limits of the duty. If any person were obliged to do all that he reasonably could to assist the Commissioner to obtain access to a place or document, the duty would be indeterminate in scope, since the degree of assistance required might vary widely from one situation to another. The right of access is very broad and general, and, as Gibbs A.C.J. pointed out in Federal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd. [10] , is not expressed to be subject to the production of any warrant or authority, or to be limited as to time or in any other way. The courts would be slow to imply in such a section a duty of an undefined kind to assist the Commissioner to enjoy his right. 1. (1979) 143 C.L.R. 499. 2. (1979) 143 C.L.R., at p. 535. 3. (1979) 143 C.L.R., at p. 540. 4. (1979) 143 C.L.R., at p. 525.

There are other strong reasons for holding that the section does not create any positive duty to assist the Commissioner. The section must of course be construed in the light of the other sections of the Act, and in particular of s. 264. Sub-section (1) of that section provides as follows:

The Commissioner may by notice in writing require any person, whether a taxpayer or not, including any officer employed in or in connexion with any department of a Government or by any public authority -

(a) to furnish him with such information as he may require; and

This sub-section provides a means of giving effect to the right conferred by s. 263 (although that is not its only purpose) and stands in marked contrast to that section. The earlier section does no more than declare a right, whereas the later section expressly enables the Commissioner to impose specific obligations on particular persons. A person who fails to comply with a requirement of the Commissioner given under s. 264 may be guilty of an offence under ss. 223 or 224 of the Act. The only section which creates an offence which may be relevant to the provisions of s. 263 is s. 232, which provides, inter alia, as follows: Any person who obstructs or hinders any officer acting in the discharge of his duty under this Act or the regulations shall be guilty of an offence. Anyone who obstructed or hindered an officer of the Commissioner who, acting in the discharge of his duty, sought to exercise the right of access conferred by s. 263 would be guilty of an offence against s. 232 of the Act. There is a difference between obstructing or hindering the Commissioner on the one hand, and merely failing to provide active assistance to him on the other. Anyone who took active steps to prevent the Commissioner from entering a building or inspecting documents would be infringing the right given to the Commissioner by s. 263 and would at the same time be guilty of an offence against s. 232. There is no reason in the light of these sections to imply that a person who fails to take active steps to assist the Commissioner to exercise the right of access is guilty of a breach of duty or an offence.

The legislative history of ss. 263 and 264 supports this conclusion. Their progenitors appeared as ss. 55 and 56 in the original Income Tax Assessment Act 1915. Section 55 was rather more specific than is s. 263 in its description of the purpose for which the Commissioner or any officer authorized by him was to have access. It was to be "for the purpose of ascertaining the taxable income of any person". Section 56 in substance empowered the Commissioner by notice in writing to require any person to attend and give evidence "concerning any income or assessment", and to produce all books, documents and other papers in his custody or control relating thereto. No power was then given, corresponding to s. 264(1)(a), to require any person to furnish the Commissioner with "such information as he may require". That power was first conferred on the Commissioner by amending Act No. 18 of 1918 (s. 37). At the same time the phrase "concerning any income or assessment" was expanded, in form if not in effect, to read "concerning his or any other person's income or assessment". The same amending Act brought s. 55 into the same form which it now bears in s. 263, by substituting for the words "for the purpose of ascertaining the taxable income of any person", the words, "for any of the purposes of this Act". Thereafter, apart from the addition of some further words which are not of any materiality in this case, the sections have retained this form through successive legislation to the present time. It would seem that experience gained in the early administration of the original Act demonstrated that the mere declaration in s. 55 that the Commissioner shall have "full and free access" did not suffice to secure for him all the information he desired, with the result that s. 56 was amended to enable him to gain that information by coercive means. One must not attempt to read too much into the legislative history of a section of an Act, but this history tends to support a limited view of s. 263.

Question 1 inquires whether the Commissioner and his officers had full and free access to the books, documents and other papers situated at the South Blackburn branch of the Bank on 6 and 7 April 1981, within the meaning of s. 263. In our opinion the fact that the door of the records room was locked meant that Messrs. Hughes and Cornell did not have full and free access to the records room or to the documents in it. To say that, however, is not to say that the Bank or any particular officer obstructed or hindered the officers of the Commissioner. The case stated does not ask the Court to answer that question and its consideration could be affected by facts which are not disclosed in the case.

As to question 2, for the reasons given we consider that the Bank officers were not obliged to tell Messrs. Hughes and Cornell where the documents were, or to deliver the documents to them, or to facilitate their inspection in any other way.

We would accordingly answer question 1, "No", and question 2, "No".

Two questions remain to be answered in this stated case. They raise for consideration the extent of the "access to buildings, places, books, documents and other papers" to which the Commissioner of Taxation or any officer authorized by him in that behalf is entitled by virtue of the provisions of s. 263 of the Income Tax Assessment Act 1936 Cth (the Act).

Prior to April 1981, Messrs. Cornell and Hughes, who are the third and fourth plaintiffs and were officers of the Australian Taxation Office, were investigating the financial affairs and dealings of Mr. Lawson, the fourth defendant, members of his family, and companies and trusts which were connected with him. It is not disputed that Cornell and Hughes were officers authorized by the Commissioner to have "at all times full and free access to all buildings, places, books, documents and other papers" and to make extracts and copies under s. 263. They were so authorized by the Deputy Commissioner to whom the Commissioner, pursuant to s. 8 of the Taxation Administration Act 1953 Cth, had delegated the exercise of certain powers and functions, including those arising under ss. 263 and 264.

On 30 March 1981, Hughes commenced an examination of the documents held at the South Blackburn branch of the State Bank of Victoria, the first defendant, in relation to an account conducted at the branch by Lawson and others. In his examination of the documents, Hughes was assisted by Mr. Castanelli, the third defendant and the accountant of the branch, who extracted bank vouchers from another room as Hughes required them and handed them to Hughes.

The investigation continued with the co-operation of the officers of the Bank until 6 April 1981, when Hughes returned to the Bank and went to the room in which he had previously examined documents. He was met at the door of that room by Castanelli, who told Hughes that he had been instructed to inform him that the Bank would give Hughes access to the premises but no assistance with his investigations.

Hughes told Mr. Allen, the second defendant and the branch manager of the Bank, that he wished to continue his investigation. He informed Allen that he intended to look for himself in an effort to locate the documents which he required. Both Allen and Castanelli agreed to this proposal. However, upon seeking to locate the documents, Hughes ascertained that the only room which could conceivably have been the records room was locked. The Bank's strongroom was open and it contained many vouchers or documents, but Hughes was unable to find any documents there relating to Lawson.

On 7 April, Hughes returned to the Bank with Cornell. Cornell asked Allen whether bank vouchers were held in the room which Hughes had the previous day found to be locked. Allen replied that bank vouchers were held in that room but said that he could not say whether "the vouchers required by Cornell were, in fact, in the room because he did not know which vouchers Cornell required". Cornell then ascertained from Allen that he did not have physical possession of the key to the room, though he did have custody and control of the key. Cornell said that for the purposes of s. 263 of the Act he formally required Allen to grant Cornell and Hughes access to the vouchers in the room and that if the door to the room was still locked he required Allen to unlock the door and to facilitate their access to the room. After a telephone conversation with the Bank's solicitor Allen refused Cornell's request. Hughes then went to the room and, upon determining that the door was still locked, he and Cornell left the premises. In fact, the key had been in an unlocked drawer of the filing cabinet in Allen's office. Allen did not volunteer this information as to the location of the key, but neither Hughes nor Cornell asked for the key at any stage.

The two outstanding questions are directed to these facts. The questions are:

Did each of the Commissioner, the Deputy Commissioner, Cornell and Hughes have full and free access to the books, documents and other papers situate at the South Blackburn branch of the Bank, on 6 and 7 April 1981, within the meaning of s. 263 of the Act?

Was the Bank obliged and required under s. 263 of the Act:

(a) to tell Hughes and Cornell precisely where the papers and documents for which they had asked, were situated?

(b) physically to deliver to Hughes and Cornell the books, papers and documents for which they had asked?

(c) to take any and if so what steps to facilitate inspection by Hughes and Cornell of the papers and documents for which they had asked?

The answer to the first of those questions turns upon the meaning of the "full and free access" to which s. 263 refers. The second question requires consideration of whether s. 263 imposes a positive duty to assist or facilitate the obtaining or enjoyment of access by the Commissioner or an authorized officer.

Section 263 has a long legislative lineage. Its ancestors were s. 55 of the Income Tax Assessment Act 1915 Cth and s. 96 of the Income Tax Assessment Act 1922 Cth. Identical or similar provisions were to be found in the old State income tax legislation (see, for example, s. 85 of the Income Tax (Management) Act 1928 N.S.W. and, its successor, s. 299 of the Income Tax (Management) Act 1936 N.S.W.; s. 240 of the Income Tax (Assessment) Act 1936 Vict.). In the United Kingdom, statutory provisions have authorized the inspection by taxation officers at all reasonable times of books relating to an assessment and the making of copies thereof and extracts therefrom, whilst making it an offence for any person to refuse or fail to permit such actions (see 5 & 6 Vict. c. 35 (1842), s. 76; s. 114 of the Income Tax Act 1918 U.K.; s. 32 of the Income Tax Act 1952 U.K.). However, with the exception of the comments made inFederal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd. (the A.N.Z. Case) [11] , the aspect of the provisions which concerns us here has never been judicially considered.

In the A.N.Z. Case differing views were expressed about the effect of the section. Those views were not material to the conclusion reached in that case. Nor did the Court have the benefit of argument on the precise effect of the section (see p. 540), the critical issue in the case arising under s. 264. It is therefore appropriate that we should examine the question afresh uninhibited by possible variance between the views we now hold and what was said in that case.

Section 263 needs to be read with its immediate neighbour s. 264. Section 264 provides:

(1) The Commissioner may by notice in writing require any person, whether a taxpayer or not, including any officer employed in or in connexion with any department of a Government or by any public authority -

(a) to furnish him with such information as he may require; and

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