O'Reilly and Ors. v. Commissioners of the State Bank of Victoria and Ors.

Judges: Gibbs CJ

Mason J
Murphy J
Wilson J
Brennan J
Deane J
Dawson J

Court:
Full High Court

Judgment date: Judgment handed down 19 April 1983.

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Mason, Murphy, Brennan and Deane JJ.

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 sec. 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 time... full and free access to all buildings, places, books, documents and other papers'' and to make extracts and copies under sec. 263. They were so authorized by the Deputy Commissioner to whom the Commissioner, pursuant to sec. 8 of the Taxation Administration Act 1953 (Cth.), had delegated the exercise of certain powers and functions, including those arising under sec. 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.

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ATC 4161

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 strong room 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 sec. 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:

``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 the 6th and 7th days of April 1981, within the meaning of sec. 263 of the Act?

2. Was the Bank obliged and required under sec. 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 sec. 263 refers. The second question requires consideration of whether sec. 263 imposes a positive duty to assist or facilitate the obtaining or enjoyment of access by the Commissioner or an authorized officer.

Section 263 of the Act 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.''

Section 263 has a long legislative lineage. Its ancestors were sec. 55 of the Income Tax Assessment Act 1915 (Cth.) and sec. 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, sec. 85 of the Income Tax (Management) Act, 1928 (N.S.W.) and its successor, sec. 299 of the Income Tax (Management) Act, 1936 (N.S.W.); sec. 240 of the Income Tax (Assessment) Act 1936 (Vic.)). 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) sec. 76; sec. 114 of the Income Tax Act 1918 (U.K.); sec. 32 of the Income Tax Act 1952 (U.K.)). However, with the exception of the comments made in
F.C. of T. v. ANZ Banking Group Ltd. (``the ANZ case'') 79 ATC 4039 ; (1979) 143 C.L.R. 499 , the aspect of the provisions which concerns us here has never been judicially considered.

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ATC 4162

In the ANZ 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 ATC p. 4055; C.L.R. p. 540), the critical issue in the case arising under sec. 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 sec. 264. Section 264 provides:

``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.''

It can be seen that sec. 264(1)(a) expressly covers the case where the Commissioner requires particular information. In terms, it empowers the Commissioner, by notice in writing, to require any person to furnish him with such information. The paragraph is to be read in conjunction with sec. 223(1) which provides that any person ``who fails to duly furnish'' information or to comply with any requirement of the Commissioner shall be guilty of an offence. Section 264(1)(b) expressly provides for the case where the Commissioner requires the attendance of a person to give evidence or the actual production of books, documents or other papers in his custody or under his control. It expressly authorizes the Commissioner to require such attendance or production. It is to be read with sec. 224 which provides that a person who refuses or neglects duly to attend and give evidence or to answer questions put to him or to produce any book or paper required of him shall, unless just cause or excuse for the refusal or neglect is shown by him, be guilty of an offence.

As a matter of ordinary language, access to buildings and places involves availability of entry to them: access to books and documents involves availability of examination of their contents. The express provision that the Commissioner or his authorized officer shall have ``full'' access prima facie conveys, at the least, that the availability of entry or examination to which the Commissioner or an authorized officer is entitled extends to any part of the relevant place or building and to the whole of the relevant books, documents and other papers. The express provision that the access shall be ``free'' conveys, at the least, that access is to be without physical obstruction. Implicit in the grant of full and free access which the section contains is a grant of power to the Commissioner or an authorized officer to take whatever steps are, in all the circumstances, reasonably necessary and appropriate to remove any physical obstruction to that access. Like all statutory powers, that power must be used bona fide for the purposes for which it was conferred and that involves that its exercise be not excessive in the circumstances of the case.

It is clear from the facts set out in the stated case (see above) that the first of the above questions must be answered: ``No''. The conclusion is unavoidable that neither the Commissioner nor his authorized officers had full and free access to the relevant books, documents and other papers while such items were held behind a locked door with the key and information as to its whereabouts withheld from them. It follows from that conclusion that the Commissioner and his authorized officers were entitled to take such steps as were, in all the circumstances, reasonably necessary and appropriate to obtain the access to which they were entitled. The second of the above

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ATC 4163

question is, in effect, whether, in those circumstances, sec. 263 imposed upon the Bank or its employees an obligation actively to assist the Commissioner or his authorized officers in obtaining such access. In our view it did not.

Section 263 does not in terms refer to any person other than the Commissioner and an authorized officer. By implication, the provisions of the section affect the rights of others in that they override any rights which, but for the section, others might have had physically to obstruct the full and free access which the section provides that the Commissioner and an authorized officer shall have. There is, however, nothing in the words of the section which would, as a matter of construction, warrant the implication of a positive duty on the part of any person actively to assist the Commissioner or an authorized officer in obtaining such access. To the contrary, the words of the section are quite inappropriate to impose such a duty in that, apart from failing to mention the duty or its content, they fail to identify the range of persons upon whom such an implied duty would be imposed or the occasion on which any such duty would arise.

Other considerations, particularly the contrasting provisions of sec. 264, confirm that sec. 263 should not be construed as imposing, by implication, a duty to take active steps to assist the Commissioner or an authorized officer. Thus, there is no provision of the Act which would appear to be designed to deal with the consequences of a mere failure to perform any such duty in the way sec. 223 and 224 are designed to deal with the failure to perform the duties imposed by sec. 264. Again, if performance of such a duty implied from the provisions of sec. 263 required a person to render assistance of the kind specified by sec. 264, that person would be denied the protections contemplated by sec. 264, namely, notice in writing from the Commissioner and payment of expenses in accordance with the prescribed scale. Counsel for the Commissioner pointed to these requirements as a fetter upon effective investigation. If there be substance in that observation, it is a fetter which Parliament has clearly placed for the protection of members of the public which is not to be circumvented by torturing a duty out of sec. 263.

It follows that the Bank was not ``obliged and required under sec. 263 of the Act'' to take any of the active steps mentioned in the question.

The conclusion that sec. 263 does not impose any implied duty actively to assist or facilitate the obtaining of access by the Commissioner or an authorized officer does not mean that the Commissioner's rights of access under sec. 263 may be deliberately frustrated with impunity. As has been said, the provisions of sec. 263 override any rights which, but for the section, others might have physically to obstruct the Commissioner or an authorized officer from the access which the section says he shall have. More importantly, sec. 232 of the Act expressly provides that any person who obstructs or hinders any officer acting in the discharge of his duty under the Act or the regulations made thereunder shall be guilty of an offence. The Commissioner or an authorized officer who seeks access to a place, document or paper pursuant to sec. 263, is acting in the discharge of his duty under the Act and to obstruct or hinder him in so acting will constitute an offence under sec. 232. Whether the particular conduct amounts to obstructing or hindering an officer acting in the discharge of his duty is a question of fact in the particular case. It is, however, relevant to mention that conduct which is essentially negative in character may, in some circumstances, constitute such obstruction or hindrance. For example, the retention of documents, to which it was known that the Commissioner sought access under sec. 263, in a locked room accompanied by secretion of the key could well constitute such obstruction or hindrance for the reason that the maintenance of a state of affairs may amount to active obstruction or hindrance. Whether, on the facts set out in the stated case, the conduct of the Bank or any of its employees was such as to constitute obstructing or hindering for the purposes of sec. 232 is a question which does not arise for consideration and upon which we refrain from indicating any view.

In the light of the above, the outstanding questions should each be answered: ``No''.

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ORDER

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 the 6th and 7th days of April, 1981, within the meaning of sec. 263 of the Act?

ANSWER

No.

QUESTION

2. Was the Bank obliged and required under sec. 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.