Williment v Commissioner of Taxation

REASONS FOR JUDGMENT 1 Earlier today I granted the applicants leave to file in court an application and an affidavit of Ms Ly of 23 July 2010. The applicants are all subject to notices which have been issued pursuant to the provisions of s 353-10 of Schedule 1 of the Taxation Administration Act 1953 (Cth) ("the Administration Act") and s 264 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"). There are a large number of notices attached to Ms Ly's affidavit. They share in common the feature of requiring the applicants' attendance before certain officials of the Tax Office, beginning on Monday morning at 10 am next week. The notices also require, in many cases, the production of certain documents. The gravamen of the application this afternoon is that there have been various procedural and legal irregularities attending the issue of those notices the consequence of which it will be eventually argued is that the notices should be set aside. 2 The present difficulty arises because a failure to comply with a notice either under the 1936 Act or under the Administration Act is an offence and if it should transpire that the applicants' claims to have the notices ultimately set aside should fail, they will have in the meantime, nevertheless, committed an offence. It is for that reason that the present application has been brought, by which it is sought on an interim basis, to prevent or ameliorate the consequences of the hearings beginning on Monday. Each of the notices is an instrument to which the provisions of the Acts Interpretation Act 1901 (Cth) applies. Section 33(3) of that Act provides that an instrument may be rescinded or amended. The Commissioner, who appeared through Mr Kennett of counsel today, accepted that it would be within the Commissioner's powers to amend each of the notices which are subject to suit so that they no longer required attendance or production of documents at 10 am on Monday. 3 I make that observation because it seems to me that it is only through the exercise of that power that the legal consequences of the notices can be avoided. Each of the notices is itself the consequence of an antecedent administrative decision. No doubt pursuant to the provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth) it would be possible to stay the administrative decision which leads to the issuance of the notices. However, so far as I can see, it would not necessarily be possible to stay the notice which results from the exercise of that decision. Once a notice has been issued it takes effect in accordance with its terms. It requires the intercession of no person in order for it to take its effect and, on one view of things, once it is issued there is little that can be done about it. Section 33(3) provides an answer to that problem because it equips the Commissioner with the power - if he thinks its exercise necessary - to alter the return dates on the notices. 4 There is a question, I think, as to whether the Commissioner could be compelled on a final hearing to exercise that power. There may be cases where that is possible. However, it seems to me that in order to preserve the subject matter of the present application it is within the Court's power to make an interim order to compel the Commissioner to exercise the power in s 33(3) in such a way as to adjourn or prolong the time for compliance with the notices which have been issued. Accordingly, I accept that it is possible for interim relief of some kind to be fashioned to achieve the end sought by the applicants. Mr Young, who appeared for the applicants, handed up a proposed amended application for review which included a new second prayer for interlocutory relief, which was as follows: A mandatory injunction requiring the respondent to extend the time at which each applicant is required to attend and give evidence under each respective notice to a time not less than seven days after the final resolution of these proceedings by this Honourable Court. 5 The injunction sought is a mandatory injunction. There are differences in emphasis and degree between the granting of prohibitive and mandatory injunctions. However, I do not think for the purposes of this afternoon's application they are material. The two questions which arise are: first, whether the applicants have established that there is a triable issue or prima facie case or serious question to be tried. I mention each of those expressions not to give any of them a particular imprimatur but just to indicate the broad range of the question which, in substance, is whether there is a case which warrants the interlocutory intervention of the court. The second question concerns where the balance of convenience lies. 6 It is convenient to deal with the second question first. The consequence to the applicants if the interlocutory relief is not granted is that they will be confronted with a choice either between giving evidence, which they may ultimately be successful in proving they did not have to give, or alternatively, in refusing to give evidence and potentially thereby committing a criminal offence. That seems to me to be a serious problem for them to be confronted with and it seems in those circumstances the balance of convenience certainly appears to favour the applicants. The Commissioner did not suggest that there was any particularly special reason why the notices had to be dealt with on Monday, and in those circumstances I conclude that the balance of convenience favours the applicants. 7 I turn then to the question of whether or not there is a triable issue in the requisite sense. Each applicant has received at least one notice and possibly more than four notices. Those notices have either been issued pursuant to s 264 of the 1936 Act or s 353-10 of Schedule 1 of the Administration Act. Mr Young first submits that there is a legal infelicity attending the issuing of notices to a single recipient simultaneously under the provisions of both Acts. I do not think that this, in a vacuum, can be correct. The examination materials which result from the exercise of compulsory powers of the kind involved in ss 264 or 353-10 are ones which are necessarily limited by the purposes for which the notices have been issued and the statutes under which they have been issued. The material which is garnered pursuant to s 264 of the 1936 Act will not be available to the Commissioner for the purposes of the Administration Act, just as material which is garnered under the Administration Act will not be available to the Commissioner for the purposes of conducting inquiries under the 1936 Act. 8 In those circumstances, it does not seem to me to be correct that, in a vacuum, it is not possible to issue notices under both statutes to a single recipient. To the contrary, there are powerful considerations of practicality which support such a practice. Mr Young's principal submission on this regard was, I think, a little more subtle, and it was that the provisions of the Administration Act were to be read as in some way subordinate to the requirements of the 1936 Act; put another way, that s 353-10 should be seen as having a lesser role than s 264. He drew analogy between the relationship between s 263 - which allows the Commissioner to have compulsory access to premises - and s 264. I do not, however, accept that submission. The Administration Act clearly has a relation with the 1936 Act at the level of generality. There may be some circumstances where it can be seen that the particular inquiry conducted under the Administration Act may be seen as being pertinent to an inquiry under the 1936 Act, just as it may be seen that that Act has relations with other legislation. But I do not think that it can be said at the level of generality that the Administration Act is subordinate to the 1936 Act. Hence, I do not think that the suggested difficulty arising out of the issue of two such notices occurs. 9 The second point that Mr Young made was that there were procedural irregularities attending some of the notices consisting of a failure to refer to the year of assessable income under examination. This complaint operated at a number of levels. The first level of the complaint was that some of the s 264 notices did not specify a particular year of assessable income which was being examined. Section 264 of the 1936 Act provides: Commissioner may require information and evidence (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 (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. (2) The Commissioner may require the information or evidence to be given on oath or affirmation and either verbally or in writing, and for that purpose he or the officers so authorized by him may administer an oath or affirmation. (3) The regulations may prescribe scales of expenses to be allowed to persons required under this section to attend. 10 The expression "concerning his or any other person's income or assessment" has been consistently construed as giving rise to words of limitation. The question which immediately arises is whether, granted that those words are words of limitation, it needs to be the case that the notice referred to is concerned with a person's income or assessment. For myself, it seems unlikely that they do but I am not prepared to say on an interlocutory argument that the contrary view is untenable. Therefore, I would accept in relation to the challenge premised on the notice's inconsistency with s 264(1) that there is a triable issue. 11 The second version of the argument put is that there is a similar timing limitation obtaining in the case of s 353-10(1)(b) of the Administration Act. Section 353-10 provides: 353-10 Commissioner's power (1) The Commissioner may by notice in writing require you to do all or any of the following: (a) to give the Commissioner any information that the Commissioner requires for the purpose of: (i) the application of an indirect tax law in relation to you or any other entity; or (ii) the administration or operation of this Schedule (other than Division 340); (b) to attend and give evidence before the Commissioner, or an individual authorised by the Commissioner, for the purpose of: (i) the application of an indirect tax law in relation to you or any other entity; or (ii) the administration or operation of this Schedule (other than Division 340); (c) to produce to the Commissioner any documents in your custody or under your control for the purpose of: (i) the application of an indirect tax law in relation to you or any other entity; or (ii) the administration or operation of this Schedule. (2) The Commissioner may require the information or evidence: (a) to be given on oath or affirmation; and (b) to be given orally or in writing. For that purpose, the Commissioner or the officer may administer an oath or affirmation. (3) The regulations may prescribe scales of expenses to be allowed to entities required to attend before the Commissioner or the officer. 12 Here I think Mr Young's argument is confronted by greater difficulties. Unlike the provisions of s 264, there is no overt necessity for the person issuing the notice to relate the issue of the notice to any person's income or to the assessment of any person's income. Rather, the focus of section 353-10(1)(b)(ii) is upon the administration or operation of the schedule. Those are words of wide scope and in those circumstances I am unable to see how the suggested limitation upon timing is one which is really arguable. 13 The third argument which was put was that there was a disconformity between the nominated officials under some notices with the nominated officials under others. I was taken in particular to the notice which had been issued pursuant to s 264 to Mr Scanlon which was set out at page 20 of Ms Ly's affidavit. This notice required him to attend before two officers; however, a notice issued to him pursuant to s 353-10 required him to attend before three officers (two of which were the same two officers nominated in the s 264 notice). 14 The language used in the notice makes it clear that each of those officers is in alternate to the other. There are a line of cases which suggest that a notice will be invalid where it requires a person receiving it to be placed in a position of confusion as to what they are to do. I do not see that having an additional nominated examiner on the one notice gives rise to any difficulties from the examinee's point of view and I do not think there is a triable issue in that regard. 15 An additional point was pursued in relation to Dr Williment's notice. In his case, the notice which appeared at page 6 of Ms Ly's affidavit was, in terms, addressed to him at the premises of a company, Williment Orthodontics Nominees Ltd at 1799 Pittwater Road. It required him to attend and to give evidence. It also required him to produce certain documents. The relevant documents were said in the notice to be set out in schedule A, which began with the words "for the period of the operation of the entity nominated in the Notice." The point was, as I understood it, that no entity had been nominated in the notice so that there were difficulties in understanding what it was that the notice was seeking to do. When one reads the notice as a whole, it is apparent I think, particularly from schedule A, that the notice seeks documents relating to the affairs of Williment Orthodontics Nominees Ltd. The practice name, Williment Orthodontics Nominees Ltd, also appears immediately under Dr Williment's name on the notice. In practical terms, I do not think that a person receiving the notice, such as Dr Williment, would be under any confusion as to what it was that schedule A was requiring him to produce. 16 In those circumstances I do not think that there is established a triable issue in relation to that point. I have therefore concluded that there is a triable issue in relation to only one point. However, despite the fact that I have reached that conclusion, it is to be noted that the present application was commenced before me at 11.30 this morning and I eventually embarked upon a hearing of it at 3.30 this afternoon. It is now 5.45 pm. These notices, which are the subject of the proceeding, were all issued on 7 July 2010, 16 days ago. The affidavit of Ms Ly does not disclose why it is that it was left until the working day before the notices had to be complied with before moving the Court urgently for relief. 17 There is no explanation in Ms Ly's affidavit as to why that happened. I do not mean to be critical of her in saying that. Mr Young informed me that the position was that the present legal team had only very recently come into the matter and I accept that. But the position is, however, that there is a very substantial delay of over two weeks in the time taken to approach the Court for the purpose of obtaining interlocutory relief. A number of cases have established that a delay by itself is a sufficient reason for rejecting urgent interlocutory relief. The Full Court of this Court (Bowen CJ, Beaumont and Foster JJ) held as much in Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing Company New South Wales Ltd (1987) 76 ALR 633 at 638-639; see also Network Ten Ltd v Fulwood (1995) 62 IR 43 at 47 per Young J. 18 But the principle is not in anyway an unusual one. It is not necessary to establish prejudice because the point of the principle, as a matter of procedural law, is to encourage people who have urgent claims to bring them on quickly. Even a delay of two or three days in the bringing of an urgent application is, in some circumstances, a sufficient reason for refusing the relief. Here what appears is a delay of 16 days without any explanation as to why that has been the case. Although I otherwise would have been minded to grant an injunction relating to the triable issue to which I have referred, in the circumstances, the appropriate course is to dismiss the application. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.