Was There Procedural Unfairness?
42 The applicant's counsel, Mr Ryan, submitted that the applicant had been denied procedural fairness in the conduct of the proceedings before the AAT. He contended that the applicant had been subjected to the "cruel farce" of being subjected to cross-examination on an incomplete document with the consequence that the applicant had been misled and his credit had wrongly been impugned. Mr Ryan argued that the AAT should have acceded to the applicant's request that he have an opportunity to examine his own papers to meet the apparent omissions from his tax return.
43 Mr Ryan also invoked s 39(1) of the AAT Act, which provides as follows:
"39(1) [Subject to presently immaterial exceptions] the Tribunal shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case and, in particular, to inspect any documents to which the Tribunal proposes to have regard in reaching a decision in the proceeding and to make submissions in relation to those documents."
He submitted that, in the circumstances, the applicant had not been given a reasonable opportunity to present his case and had not been given an opportunity to inspect a document, namely the copy tax return for 1997-1998, to which the AAT had regard in reaching its decision.
44 A breach by the AAT of the principles of procedural fairness constitutes an error of law: Kioa v West (1985) 159 CLR 550, at 582-584, per Mason J; Australian Postal Commission v Hayes (1989) 23 FCR 320, at 326, per Wilcox J. If, for example, the AAT refuses to grant an adjournment in circumstances where this would deny the applicant a fair opportunity to present his or her case, the refusal constitutes an error of law: Sullivan v Department of Transport (1978) 20 ALR 323, at 342, per Deane J; Opitz v Repatriation Commission (1991) 29 FCR 50, at 58-59, per Hill J.
45 The first part of s 39(1) of the AAT Act has been said to be a statutory recognition of an obligation which the law would imply in any event: Sullivan v Department of Transport, at 342. The second part (relating to the AAT's obligation to ensure that a party has an opportunity to inspect documents to which regard might be had), depending on the circumstances, might go further. In any event, it reflects a clear statutory policy that a party should have an opportunity of inspecting documents that may play a part in the AAT reaching a decision and should also have the opportunity to make submissions on those documents.
46 It is difficult to resist the conclusion that the applicant was unfairly treated by the manner in which his cross-examination was conducted. He was confronted in the witness box with what he was told was his tax return. The document was presented to him as a complete copy of the return. It was not. He was then cross-examined on a false basis, namely that he had failed to disclose in that return any income derived or losses incurred in the conduct of his practice.
47 While a younger and perhaps more alert person, or one who was legally represented, might have detected the source of the problem, the applicant, not surprisingly in the face of scepticism from counsel and the AAT itself, was not able to explain the apparent anomaly satisfactorily. It is true that the applicant had originally prepared the tax return, but an arrangement had been made following a directions hearing that the respondent would obtain copies of tax returns directly from the ATO. It is clear from the applicant's evidence before the AAT that whether or not he still retained a copy of the return in Canberra, he had not looked at the document for a considerable period. Nor was the applicant given the opportunity, as he requested, to examine his own records in order to resolve the difficulty that puzzled and distressed him and to establish that he had never been in default of his taxation obligations. Since the AAT gave its decision immediately after the hearing concluded, the applicant never saw the complete tax return (which was, of course, for the 1997-1998 year) and thus never had any realistic opportunity to make submissions on the basis of the correct version. Had he seen the complete tax return, doubtless he would have been able to answer the criticisms made of his apparent conduct by the cross-examiner and the AAT: cf Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 195 ALR 502.
48 Ms Ford, who appeared for the respondent, as I understood her, did not strongly resist the proposition that the applicant had been unfairly treated at the hearing because he had been cross-examined on a false basis. But, so she argued, there could be no denial of procedural fairness so as to constitute an error of law where the AAT had not been responsible for the unfairness.
49 It is true that in the typical case of a denial of procedural fairness, the decision-maker is responsible for the breach. That does not mean, however, that the decision-maker must be personally at fault before there can be a denial of procedural fairness. In Hot Holdings Pty Ltd v Creasy (2002) 193 ALR 90, for example, Gleeson CJ expressly stated (at 95) that procedural unfairness can occur without personal fault on the part of the decision-maker.
50 One of the cases cited by Gleeson CJ for this proposition was R v Criminal Injuries Compensation Board; Ex parte A [1999] 2 AC 330. In that case, the applicant applied to the Board for compensation claiming that in the course of a burglary at her home she had been assaulted and buggered. She had first complained of the buggery some days after the event. An investigating police officer gave evidence to the Board that a doctor who examined the applicant had said that the only trauma in the applicant's rectum was due to haemorrhoids. In fact there was a report from the police doctor, which the Board did not see, recording that the anal findings were consistent with buggery.
51 The House of Lords quashed the Board's decision on the ground that the applicant had been denied natural justice. Lord Slynn, with whom the other Law Lords agreed, said this (at 345):
"It does not seem to me to be necessary to find that anyone was at fault in order to arrive at this result. It is sufficient if objectively there is unfairness. Thus I would accept that it is in the ordinary way for the applicant to produce the necessary evidence. There is no onus on the board to go out to look for evidence, nor does the board have a duty to adjourn the case for further inquiries if the applicant does not ask for one.
…
Nor is it necessarily the duty of the police to go out to look for evidence on particular matters.
But the police do have a special position in these cases…. [T]here is no doubt that in the 10,000 or so decision hearings a year, the board is very dependent on the assistance of and the co-operation of the police who have investigated these alleged crimes of violence."
Lord Slynn went on to say that the police and the Board knew that the applicant had been taken by the police to see the police doctor. It was not sufficient for the police officer to give her oral statement without further inquiry when it was obvious that the doctor was likely to have made notes and probably a written report. Accordingly, his Lordship considered (at 347) that
"on the special facts of this case and in the light of the importance of the role of the police in co-operating with the board in the obtaining of evidence there was unfairness in the failure to put the doctor's evidence before the board and if necessary to grant an adjournment for that purpose. I do not think it possible to say here that justice was done or seen to be done."
52 It is fair to say that the High Court has not greeted Ex parte A with unalloyed enthusiasm. In Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte S134/2002 (2003) 195 ALR 1, the joint judgment of five members of the High Court (at 10) distinguished Ex parte A and expressed the view that it was "unnecessary to decide the particular questions that were examined" in that case. Nevertheless, their Honours went on to express doubts as to whether the case would be decided on procedural fairness grounds in Australia. After observing that the Board was a body set up, not under statute, but by the executive acting under the prerogative, their Honours said this (at 11):
"There appears to have been no denial by the board itself of procedural fairness but it would have been obvious to the police authorities that the police doctor was likely to have made (as was the case) a written report. The board had been entitled to rely upon the police to obtain relevant evidence. Seen in the light of the provisions of s 5 of the ADJR Act respecting applications for judicial review, the English case may perhaps best be characterised as one where, in the terms of para (b) of s 5(1), 'procedures that were required by law to be observed in connection with the making of the decision were not observed'."
53 In my view, the present is a stronger case of want of procedural fairness than Ex parte A. One critical additional element is that the AAT was under a statutory duty to "ensure" that the applicant was given a reasonable opportunity to inspect documents to which the AAT proposed to have regard in reaching its decision. In Ex parte A, the Board owed no specific obligation to the applicant in relation to the medical report prepared by the police doctor. In the present case, the AAT, assuming it proposed to have regard to the tax return in reaching its decision, was under a statutory obligation to ensure that the applicant had a reasonable opportunity to inspect the tax return and to make submissions in respect of it. The applicant was not given an opportunity to inspect the tax return on which he was cross-examined. It is, of course, true that the applicant was given an opportunity, albeit belated and under pressure, to inspect the incomplete copy of his 1997-1998 tax return while he was in the witness box. But the significance of the document depended on it being a complete tax return for the relevant year (which was incorrectly taken by all concerned to be 1998-1999). In these circumstances, I think that s 39(1) of the AAT Act requires that the applicant have a reasonable opportunity to inspect the complete document. Otherwise, the statutory safeguard would be empty of content in circumstances where it is most needed.
54 What I have said in the previous paragraph assumes that the AAT proposed to have regard to Exhibit R3. I think it clearly did. The tax return was the subject of detailed cross-examination and submissions and prompted comments and questions from the Senior Member. The AAT's reasons specifically refer to Exhibit R3 and draw inferences from the apparent absence from the return of any reference to income derived from the appellant's practice as a barrister. Thus the pre-condition for the application of s 39(1) of the AAT Act was satisfied.
55 I accept that the members of the AAT cannot be said to be personally at fault for the unfairness sustained by the applicant. Like the applicant, they were misled by the mistake of the respondent or its representatives even though, as I have noted, it seems somewhat surprising that no-one picked up the error at the hearing. But it is trite law that, where a decision-maker is bound to accord procedural fairness, the content of procedural fairness will be influenced by the terms of the applicable statute. Thus in National Companies & Securities Commission v News Corporation Ltd (1984) 156 CLR 296, Brennan J said (at 326):
"The terms of the statute which creates the function, the nature of the function and the administrative framework in which the statute requires the function to be performed are material factors in determining what must be done to satisfy the requirements of natural justice…".
See also Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation (1963) 113 CLR 475, at 503-504, per Kitto J; M Aronson and B Dyer, Judicial Review of Administrative Action (2nd ed, 2000), at 395-396.
56 In determining the content of the AAT's obligation to accord procedural fairness to the applicant, it is necessary to take account of the unequivocal terms of s 39(1) of the AAT Act. This provision imposed an obligation on the AAT, if it proposed to have regard to the tax return, to ensure that the applicant had a reasonable opportunity to inspect the document and make submissions on it. For reasons I have given, that obligation extended to the complete tax return. The applicant was denied that opportunity. He was treated unfairly as a consequence, by being cross-examined on the false assumption that Exhibit R3 was a complete copy of the tax return. I should add that, in my view, having regard to the circumstances of the applicant, including his age, the fact that he had not been shown the tax return prior to giving evidence and his obvious confusion in the witness box, the applicant cannot be said to have been responsible for what occurred: cf R v Secretary of State for the Home Department; Ex parte Al-Mehdawi [1990] 1 AC 876 (a litigant deprived of the opportunity to have a case heard because of the default of his or her own advisers cannot complain of a denial of procedural fairness). Indeed, the applicant specifically requested an opportunity to consult his own papers to formulate a measured response to the allegations.
57 A second element in the present case that makes it stronger than Ex parte A is that the applicant specifically requested the AAT to give him an opportunity to consult his own papers to respond to the allegation that his claim to have earned income as a barrister was incompatible with the contents of his tax return. The AAT refused the applicant that opportunity. Accordingly, this is not a case where the AAT could have done nothing to address or ameliorate the procedural unfairness suffered by the applicant. The AAT could have ascertained that the return was missing a critical page had it scrutinised the document carefully. In any event, the AAT could have acceded to the applicant's request, in effect, for an adjournment of the proceedings. Had it done so, the applicant would have been given a reasonable opportunity to inspect the complete tax return (since the likelihood is that he would have been able, given time, to identify the source of the problem) and to make submissions in respect of it.
58 In my opinion, the applicant was denied procedural fairness before the AAT because he was cross-examined unfairly on a tax return that had been obtained by the respondent pursuant to statutory authority and that the applicant had not had a proper opportunity to inspect. The unfairness arose because the respondent, although receiving a complete copy of the tax returns from the ATO, presented to the AAT and cross-examined on a materially incomplete version of that return. Although the mistake was innocent, it led to the applicant being cross-examined, to his disadvantage, on a false basis.
59 It is true that the AAT members were not personally at fault in creating or allowing the unfairness to occur. But in determining the content of procedural fairness in the circumstances of the present case, it is necessary to have account of the AAT's statutory duty to ensure that the applicant had a reasonable opportunity to inspect the tax returns and to make submissions in relation thereto. The AAT did not comply with that duty. It could have complied, either by detecting at the hearing the fact that the tax return had a missing page, or by acceding to the applicant's request for an adjournment. It did neither. Accordingly, the denial of procedural fairness constitutes an error of law.
60 An alternative way of looking at the present case is to characterise what occurred simply as a contravention of s 39(1) of the AAT Act, albeit one that occurred without personal fault on the part of the AAT members. Accordingly, the AAT failed to comply with its statutory duty. In other words, to use the language of s 5(1)(b) of the Administrative Decisions (Judicial Review) Act 1977 (Cth), referred to by the High Court in Ex parte S134/2002, procedures required by law to be observed in connection with the making of the decision were not observed. Of course, the present is not an application under that Act. Nonetheless I see no reason why a failure to observe procedures mandated by legislation, at least when the failure might have affected the outcome of the proceedings, cannot be an error of law.