Federal Commissioner of Taxation v Australia and New Zealand Banking Group Ltd.

(1979) 143 CLR 499

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(Judgment by: Murphy JJ.)

FEDERAL COMMISSIONER OF TAXATION v AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD.

Court:

Judges: Stephen J
Gibbs A.C.J.
Mason
Jacobs

Murphy JJ.

Judgment date: 9 NOVEMBER 1979

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Judgment by:
Murphy JJ.

This appeal concerns the power of the Commissioner of Taxation to have access to papers and to obtain information and evidence. The Income Tax Assessment Act 1936, as amended, provides:

"263. 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.

264. (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 and either verbally or in writing, and for that purpose he or the officers so authorized by him may administer an oath.

(3) The regulations may prescribe scales of expenses to be allowed to persons required under this section to attend." (at p543)

The powers under s. 263 enable the Commissioner to have full and free access. This is a very wide power. In D'Emden v. Pedder (1904) 1 CLR 91 , at p 110 the Full Court said:

". . . where any power or control is expressly granted, there is included in the grant, to the full extent of the capacity of the grantor, and without special mention, every power and every control the denial of which would render the grant itself ineffective. This is, in truth, not a doctrine of any special system of law, but a statement of a necessary rule of construction of all grants of power, whether by unwritten constitution, formal written instrument, or other delegation of authority, and applied from the necessity of the case, to all to whom is committed the exercise of powers of government."

This passage was referred to by O'Connor J. in Jumbunna Coal Mine, N.L. v. Victorian Coal Miners' Association (1908) 6 CLR 309 , at p 356 . (at p544)

Like all powers, it must be exercised in good faith, for the purposes for which it was conferred, and having regard to those affected by its exercise (see British Equitable Assurance Co. Ltd. v. Baily [1906] AC 35 , at p 42 ; Isles v. Daily Mail Newspaper Ltd. (1912) 14 CLR 193 , at p 202 per Isaacs J.). In those cases, the expression used was "having regard . . . to the rights of persons affected". I would not confine the requirement to "rights" in any strict sense and for that reason I omit any reference to "rights". These implied limitations on the power in s. 263 serve to safeguard the extremely important social value of privacy which must be balanced against the necessities of administration of the revenue laws. They moderate what would otherwise be a power capable of oppressive use. The Commissioner of Taxation is not only expected, but bound, to observe those limitations on the power. There is not the slightest indication that he has not done so in this case. (at p544)

There is a long history of the granting of such wide powers to those with duties to carry out revenue laws of the Commonwealth. The Distillation Act 1901 provided that "officers shall at all times have complete access to every part of all distilleries or premises on which a still is kept" (s. 60). (See also: Excise Act 1901, s. 86; Beer Excise Act 1901, s. 50.) A number of primary industry levy collection Acts contained the full and free access provision. An example of the common form of the provision then used is found in the Cattle Slaughter Levy Collection Act 1960, s. 9. See further, Tobacco Charges Assessment Act 1955, s. 41; Wool Tax (Administration) Act 1964, s. 90; Sales Tax Assessment Act (No. 1) 1930, s. 71; Pay-roll Tax Assessment Act 1941, s. 69; Pay-roll Tax (Territories) Assessment Act 1971, s. 68; Estate Duty Assessment Act 1914, s. 44; Honey Levy Collection Act 1962, s. 11. (at p544)

During the 1960s, a controversy arose over the width of such powers (see Parliamentary Debates 1965, Session 32, pp. 1516- 1540 and 1969, Session 41 pp. 1989-1994). Acting on the view that the "full and free access at all times" clause was a "mischief" which gave too much authority to officers authorized under the industry Acts, Parliament declined to allow such access, and limited the power in those Acts. For example, the Meat Chicken Levy Collection Act 1969, s. 9, provides for entry and search at all reasonable times and on production of authority. A power in the same or similar terms is included in the Metal Working Machine Tools Bounty Act 1972, s. 15; Dried Fruits Levy Collection Act 1971, s. 15; Dried Vine Fruits Stabilization Act 1971, s. 26; Export Incentives Grants Act 1971, s. 33; Gold Mines Development Assistance Act 1962, s. 21; Gold Mining Industry Assistance Act 1954, s. 16; Honey Export Charge Collection Act 1973, s. 8; Insurance Act 1973, s. 53; Dairying Industry Act 1962, s. 9. (at p545)

The granting of such wide powers was further restricted by the adoption of a common form which provides for entry by warrant for access to papers (see Pig Slaughter Levy Collection Act 1971, s. 15; and similar powers in Meat Export Charge Collection Act 1973, s. 15; Dairying Industry Equalization Act 1970, s. 15; Dairying Industry Levy Collection Act 1970, s. 17; Dairying Research Levy Collection Act 1972, s. 10). (at p545)

In the Income Tax Assessment Act, Parliament has chosen to continue to grant the Commissioner "at all times . . . full and free access". (at p545)

Section 263 enables the Commissioner to "fish" for information. In Southwestern Indemnities Ltd. v. Bank of New South Wales (1973) 129 CLR 512 , at pp 519-520 Barwick C.J. held that:

". . . s. 263 is not limited in its application to the affairs of a person who in fact is in receipt of assessable income. It suffices that the exercise of the power given by the section is for the purposes of the Act, which of course include an investigation into whether or not a person is or has been in receipt of assessable income. Such an investigation cannot be limited to buildings, books, etc. of a person who is liable to taxation but must extend to any person.

Section 264 authorizes the giving of a notice to any person to furnish information. It was appropriate in such a provision to make it clear that the notice could be given to persons who were not taxpayers as defined in the Act. In contrast with s. 264 in this respect s. 263, in giving to the Commissioner a right to access, gave rise to no similar need. It was quite sufficient to use universal expressions such as 'at all times' and 'to all buildings', etc. No further emphasis was required. No limitation could be suggested. As I have indicated, the sole limitation or qualification is that the access should be sought for 'the purposes of the Act'." (at p545)

It would seem that full and free access extends to the use of reasonable force in order to gain access for the same reason that a power of entry extends to the use of reasonable force to gain entry (see Grove v. Eastern Gas Board (1952) 1 KB 77 , at p 82 ):

"A power of entry conferred by a statute is, prima facie, at any rate, a power of forcible entry if necessary. There would be no need for statutory authorisation if all that the representatives of the gas board were allowed to do was to enter and read the meter if the consumer was willing to admit them to the place where the meter was, so that they could read it."

(See also Fowler v. Taylor (1957) VR 593 , at p 596 and Egg Marketing Board (N.S.W.) v. Cassar [1978] 1 NSWLR 90 .) (at p546)

The Commissioner may invoke the assistance of the courts to enforce his full and free access. Apart from exceptional circumstances, this course would be preferable to any use of reasonable force. (at p546)

The powers in s. 264 are not qualified by s. 263 and their exercise is not conditioned upon a previous attempt to use the powers under s. 263. I agree with Stephen J.'s construction of s. 264 (1) (b) that the Commissioner may require a person to produce papers irrespective of whether he is or has been required to attend and give evidence (see Smorgon v. Australia and New Zealand Banking Group Ltd. (1976) 134 CLR, at pp 485-486 ). (at p546)

The power in s. 264 may be exercised without regard to whether an issue of fact has arisen between the Commissioner and the taxpayer. It empowers the Commissioner to "fish" for information to enable him to ascertain the amount of taxable income of any person and the tax payable on it. As Stephen J. said in Smorgon's Case (1976) 134 CLR, at p 489 :

"Just as s. 263 gives to the Commissioner full and free access to 'all buildings, places, books, documents and other papers' so s. 264 is expressed in no less wide and emphatic terms; any person, whether a taxpayer or not, may be required to furnish information, to attend and give evidence and to produce all books, documents and other papers." (at p546)

On the facts, the Bank has custody of the contents of the safe deposit box on its premises, and also has control of its contents within the meaning of s. 264 (1) (b). The Bank clearly has physical control. It can produce the contents of the box. The contractual arrangements between it and the Smorgons cannot prevail against s. 264 or s. 263 of the Act; it is immaterial whether they are read as subject to the provisions of the Act, or treated as invalid in so far as they are inconsistent with the Act. If the box does not contain any documents to which the notices refer, the notices under s. 264 are not invalid, but simply inoperative. (at p546)

I agree with the conclusions of Mason J. in regard to the notices to the Bank and the Smorgons which are the subject of the appeal by the Commissioner. The Commissioner's appeal should be allowed in respect of the two notices to the Bank dated 23rd February 1977. (at p547)

The appeal by the Smorgons in respect of the notices to attend and give evidence and to produce papers should be dismissed. The notices stated that the papers required to be produced were those "in connection with" the evidence to be given concerning the income or the ascertainment of the taxable income and the tax payable thereon by the persons named in the notice and it therefore sufficiently indicated that the papers required were those relating to those persons' income or assessment within the meaning of s. 264. The notices are valid. I agree with Mason J. in rejecting the other objections to the notices. (at p547)

This would seem to be enough to dispose of the matters really in dispute. I would if necessary (but it does not seem to be necessary) be prepared to make a declaration that the Commissioner is entitled to "full and free access" to the deposit box and its contents, if any, and appropriate orders for giving effect to this access. (at p547)