Re Briggs (No. 1) and Australian Taxation Office.

Members:
Sir William Prentice SM
GR Taylor M

Tribunal:
Administrative Appeals Tribunal

Decision date: 30 June 1986.

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The Hon. Sir William Prentice (Senior Member) and G.R. Taylor (Member)

By request under the Freedom of Information Act 1982 (``the FOI Act'') made in August 1984, Mr Peter Briggs sought from the Australian Taxation Office at Perth:

``Copies of all records relating to the assessment of income tax returns for the financial years ending 30 June 1976, 1977, 1978, 1979, 1980 and 1981.''

He added:

``The records requested include all documents in existence relating to decisions with respect to my income tax assessments, including Department memoranda, reports,

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submissions, recommendations and general information.''

In response to that request, the respondent provided copies of certain documents relating to the raising of income tax assessments for the years in question, but refused access to 14 documents on the ground that those documents were considered to be exempt under the FOI Act. In addition, certain information considered to be exempt under the FOI Act was deleted from a further seven documents provided to the applicant pursuant to this request, it being considered by the respondent that the deletions made would not cause these documents to become misleading.

2. As a result of a further enquiry by the applicant's solicitor directed to the respondent's head office at Canberra, it was ascertained that in addition to there being three files relating to the applicant at the respondent's Perth office, there were a further three files relating to him at its head office. As a result, exemption under the FOI Act was claimed in respect of a further five documents considered to come within the terms of the applicant's request. Certain documents on the files at Perth and Canberra were considered to be outside the ambit of the applicant's original request, whereupon the applicant lodged a request for access thereto also, under the FOI Act. As access to some of those documents was refused, that request became the subject of a separate application to the Tribunal, which was heard after the hearing in respect of this application but before this decision was handed down.

3. The documents in contention herein viz. those in relation to the first request, were made available in confidence to the Tribunal, and included investigation reports, submissions and memoranda within the Australian Taxation Office. For the bulk of the documents exemption from release was claimed under sec. 36(1) of the FOI Act - internal working documents; sec. 37(1)(a) - prejudice to the investigation of a possible breach of the law; and sec. 38, 41 and 43 - secrecy provisions of the Income Tax Assessment Act 1936 and disclosure of personal and business affairs. In addition, two documents were the subject of a claim under sec. 42 - legal professional privilege; and one document was claimed to be exempt under sec. 37(1)(b) - disclosure of a confidential source of information.

Initially, exemption in respect of a number of documents was sought in reliance upon sec. 40(1) - substantial adverse effect in relation to personnel. Counsel for the applicant, quite properly in our view, indicated that he did not seek to obtain the names of officers of the Australian Taxation Office where appearing in these documents, and this concession enabled the release to the applicant of a further seven documents with such names deleted where reliance upon sec. 40(1) of the FOI Act was the only ground upon which exemption was sought. Consequently, the Tribunal proposes to affirm the decision in relation to those documents which are set out in Sch. One (A) annexed hereto.

In regard to other documents, those referred to in Sch. One (B), a ground of exemption under sec. 40(1) was also taken (namely that the release of names therein could reasonably be expected to have a substantial adverse effect on the management of personnel and on the proper and efficient conduct of the operations of the agency). Other grounds of exemption were also taken as to these documents. Having regard to the evidence given as to the possible consequences of the release of names of those of the respondent's officers who have been engaged in investigation, report and advising in a particular matter, we form the opinion that this claim (the practical effect of which is that if there were no other ground upheld, release of this group should be effected only after deletion of names) - should be affirmed.

4. The evidence before the Tribunal comprised the documents lodged under sec. 37 of the Administrative Appeals Tribunal Act 1975, affidavits dated 19 September 1985 by Mr K.H. Collins and Mr G.T. Wiggins (both of the Australian Taxation Office), an affidavit dated 24 September 1985 by Mr P.R. Clay (solicitor for the applicant) and oral evidence by Mr Wiggins.

In view of the number of documents involved, we propose to follow the procedure adopted in
Re Lander and Australian Taxation Office (A83/111 of 31 October 1985) and also in
Re Kingston Thoroughbred Horse Stud & A.T.O. (N85/130 of 15 April 1986) [reported at 86 ATC 2030], viz., of setting out our approach to the grounds claimed and to the categories of documents involved, and identifying in schedules the documents which we consider to be exempt and the extent of

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exemption thereof under particular sections of the FOI Act.

5. Section 36 - Internal Working Documents

Section 36(1) of the FOI Act provides:

``Subject to this section, a document is an exempt document if it is a document the disclosure of which under this Act -

• (a) would disclose matter in the nature of, or relating to, opinion, advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of an agency or Minister or of the Government of the Commonwealth; and
• (b) would be contrary to the public interest.''

Subsection (5) then provides that the section:

``does not apply to a document by reason only of purely factual material contained in the document.''

The section has been considered by both the Federal Court and this Tribunal on many occasions, and in his decision in
Re Howard and Treasurer of the Commonwealth (1985) 3 A.A.R. 169, the President of the Tribunal reviewed extensively the earlier decisions in relation to this section. In the course thereof, he referred to the decision of the Tribunal in
Re Waterford and Department of the Treasury (No. 2) (1984) 5 ALD 588 where the Tribunal said at p. 606:

``58 As a matter of ordinary English the expression `deliberative processes' appears to us to be wide enough to include any of the processes of deliberation or consideration involved in the functions of an agency. `Deliberation' means `The action of deliberating; careful consideration with a view to decision': see The Shorter Oxford English Dictionary. The action of deliberating, in common understanding, involves the weighing up or evaluation of the competing arguments or considerations that may have a bearing upon one's course of action. In short, the deliberative processes involved in the functions of an agency are its thinking processes - the processes of reflection, for example, upon the wisdom and expediency of a proposal, a particular decision or a course of action. Deliberations on policy matters undoubtedly come within this broad description. Only to the extent that a document may disclose matter in the nature of or relating to deliberative processes does sec. 36(1)(a) come into play.

59 It by no means follows, therefore, that every document on a departmental file will fall into this category. Section 36(5) provides that the section does not apply to a document by reason only of purely factual material contained in the document (see, in this regard, the Full Court decision in Harris (1984) 51 A.L.R. 581). See also sec. sec. 36(6) relating to reports and the like. Furthermore, however imprecise the dividing line may first appear to be in some cases, documents disclosing deliberative processes must, in our view, be distinguished from documents dealing with the purely procedural or administrative processes involved in the functions of an agency. A document which, for example, discloses no more than a step in the procedures by which an agency handles a request under the FOI Act is not a document to which sec. 36(1)(a) applies.

60 It is documents containing opinion, advice, recommendations etc. relating to the internal processes of deliberation that are potentially shielded from disclosure - documents that might, perhaps, have been more aptly described in the headnote as `Internal Thinking Documents'. Out of that broad class of documents, exemption under sec. 36 only attaches to those documents the disclosure of which is `contrary to the public interest': sec. 36(1)(b) of the FOI Act and cf. sec. 35, 36, 37(1)(b) and 37(2) of the Administrative Appeals Tribunal Act 1975''

See also per Sheppard J. in
Kavvadias v. Commonwealth Ombudsman (1984) 54 A.L.R. 285 at p. 299, and the decision of Deputy President Todd in
Re Burns and Australian National University (No. 2) (1985) 7 ALD 425 at pp. 435 and 437 (para. 26 and 34).

Under sec. 36(1), a document falling within the ambit of para. (a) will not be exempt unless disclosure ``would be contrary to the public interest'' (para. (b)).

After examination of a large number of authorities, the Tribunal in
Re Murtagh v. F.C.

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of T. 84 ATC 4516; (1984) 54 A.L.R. 313 stated at ATC p. 4525; A.L.R. p. 325:

``In our opinion the `public interest' looks to matters such as the overall need for confidentiality within the Australian Taxation Office and the nature of the documents to which access is sought, whether they are documents relating to a purely routine assessment or whether they are documents concerned with the investigation of taxation evasion or like matter in respect of which there is special reason for confidentiality. Broadly speaking, sec. 36 can be seen as an attempt by the legislature to protect the integrity and viability of the decision-making process. If the release of documents would impair this process to a significant or substantial degree and there is no countervailing benefit to the public which outweighs that impairment then it would be contrary to the public interest to grant access.''

The Tribunal also drew attention to the object of the Act, as set out in subsec. 3(1), wherein reference is made to ``exceptions and exemptions necessary for the protection of essential public interests''. See also Re Howard (supra) and the authorities there mentioned.

A claim under subsec. 36(1) was made in respect of 12 documents, including five reports (or draft reports) by investigation officers. An edited version of four such reports containing only material regarded as factual and not relating to the affairs of other persons was released to the applicant. In our view, the claim to exemption under sec. 36(1) can be justified as to the remainder of the material contained in these reports and in the other documents for which exemption was claimed under this subsection, on the ground that the documents contain opinion, advice and recommendations for the purposes of the respondent's deliberative processes, and that the granting of access thereto would not be in the public interest, having regard to the principles to which reference is made above. We come to this conclusion more particularly, having regard to the apparent difficulty the respondent has experienced in obtaining returns of income and information as to sources and disposal thereof, as between the application and associated persons and corporations, and in the investigations which have been set in train and still continue as to the applicant's possible attempts at complicated tax evasions over a considerable period.

6. Section 37(1)(a) - Prejudice to Investigation of a Breach of the Law

Under sec. 37(1)(a), a document is an exempt document if its disclosure under the Act would or could reasonably be expected to:

``prejudice the conduct of an investigation of a breach, or possible breach, of the law, or a failure, or possible failure, to comply with a law relating to taxation or prejudice the enforcement or proper administration of the law in a particular instance.''

A claim to exemption pursuant to this provision was made in respect of some 15 documents, 11 of which were also the subject of a claim to exemption under sec. 36(1)(a).

The material in these documents indicates very clearly that the Australian Taxation Officers are engaged in the investigation of what is alleged to be a taxation evasion scheme of very substantial proportions. Investigations into that scheme were stated by Mr Wiggins in his oral evidence to be continuing and this was not challenged by counsel for the applicant. In
News Corporation Ltd. and Ors v. National Companies and Securities Commission (1984) 57 A.L.R. 550, the Full Court of the Federal Court held that for a document to be exempt under sec. 37(1)(a) of the FOI Act, it is necessary to show that there was more than a possibility or chance that the conduct of an investigation would be prejudiced by the disclosure of the document but that it was sufficient if prejudice to the conduct of an investigation could reasonably be expected to result - see per Fox J. at p. 555 Woodward J. at pp. 561 and 562 and Beaumont J. at pp. 578 and 579.

Even though the Australian Taxation Office has issued assessments for the years ending 30 June 1975 to 30 June 1981 inclusive, those assessments have been challenged and investigations are continuing. Further, the applicant has not lodged income tax returns for the years ending 30 June 1982 to 30 June 1985 inclusive, and while the respondent has issued to him approximately 25 notices under sec. 264 of the Income Tax Assessment Act 1936 requiring him to produce documents relating to certain companies with which he is or has been associated, he has apparently refused to supply

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information in respect of some at least of those companies on the ground that it may incriminate him.

In our view, disclosure in the present instance of the documents for which exemption is claimed under sec. 37(1)(a) would disclose the nature and extent of the knowledge of the respondent as to the applicant's affairs, and could therefore be reasonably expected to result in prejudice to the conduct of its investigation into both possible breaches of the law by the applicant and other parties with whom he is or has been associated, and possible failure on their part to comply with the Income Tax Assessment Act 1936 and associated legislation. We would therefore uphold the claim to exemption under this section.

7. Sections 38, 41 and 43 - Secrecy Provisions and Disclosure of Personal and Business Affairs

Exemption under this catena of provisions was claimed in respect of some 14 documents, comprising mainly reports by investigation officers, annexures thereto and internal office memoranda.

In dealing with the claim under sec. 38 relating to the secrecy provisions contained in sec. 16 Income Tax Assessment Act 1936, the Tribunal must now be guided by the decision of the Full Bench of the Federal Court in
F.C. of T. v. Swiss Aluminium Australia Limited & Ors (No. 2) of 26 May 1986 [86 ATC 4364]. In that special case, it was decided that sec. 16 of the Income Tax Assessment Act 1936 (``the ITA Act'') is an enactment applying specifically to information of a kind contained in a document and prohibiting persons referred to in the enactment from disclosing information of that kind. It follows therefrom that sec. 38 of the FOI Act can be prayed in aid of a claim for exemption from disclosure where disclosure would...

``divulge or communicate to any person any information respecting the affairs of another person acquired by (an) officer as mentioned in the definition of `officer' in sub-section (1)''

[sub-section 16(2) ITA Act].

The Tribunal is of the view therefore that it should affirm the claims to exemption relying upon sec. 38 of the FOI Act - the relevant documents containing information clearly coming within the category set out in subsec. 16(2) of the ITA Act.

In relation to sec. 41, the information contained in the documents in issue, so far as it concerns persons other than the applicant, relates to their personal affairs including their financial and business transactions. That information concerns activities of those persons similar to the activities allegedly engaged in by the applicant which are the subject of investigation by the respondent. The activities of those persons are of current relevance, and bearing in mind that disclosure under the FOI Act is disclosure to the world at large, it is our view that those persons would not wish knowledge of their activities to be made public. We consider that the public interest in making public, knowledge of those activities on their part is outweighed by the public interest in protecting their personal privacy, and that the exemptions claimed in respect of the documents specified in Sch. Seven attached, so far as those documents relate to the activities of third parties should be affirmed.

So far as subsec. 43(1)(c)(i) and (ii) are concerned, perusal of the documents leads us to the conclusion that disclosure of the information contained in the documents and supplied by third parties, could reasonably be expected to affect those parties adversely in relation to their business, commercial and financial affairs, and would also operate to prejudice the future supply of information to the respondent for the purpose of administering the taxation laws of the Commonwealth. To the extent that these documents contain information supplied by those parties, we consider that they are protected from disclosure under the FOI Act.

8. Section 37(1)(b) - Documents Affecting Enforcement of the Law

A claim under this section was made in respect of one document - T25 dated 8 April 1983. Section 37(1) provides:

``A document is an exempt document if its disclosure under this Act would, or could reasonably be expected to -

• (a)...
• (b) disclose, or enable a person to ascertain, the existence or identity of a confidential source of information in relation to the enforcement or administration of the law; or
• (c)...''

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Having regard to the nature of the information contained in document T25 and to the manner in which that information became available (namely by an anonymous phone call), we conclude that the information was transmitted in confidence and it clearly comes within the exemption provided for by this section - see
Re Jephcott and Secretary Department of Health (1985) 7 ALD 215. We propose therefore to affirm the decision made in regard to this claim for exemption.

9. Section 42 - Legal Professional Privilege

A claim under this section was made in respect of two documents - T23 and T24. The matters giving rise to this claim for exemption are contained in the first complete paragraph on the second page of document T23 and the third paragraph of document T24 which are clearly exempt under this section, those documents having been prepared as advice for the sole purpose of pending litigation. We consider it would be difficult to delete these sections as provided for by sec. 22 of the FOI Act without producing a misleading document. We would therefore affirm the claim for exemption under this section. These two documents are in any event exempt in their totality under other provisions of the FOI Act dealt with above.

10. We consider that claims to exemption from disclosure should be affirmed in accordance with the attached schedules.

11. This application was heard by Sir William Prentice, Mr G.D. Grant and Mr G.R. Taylor. Subsequent to the hearing, Mr Grant's term of office had expired. The parties having agreed in writing to the remaining Members completing the determination pursuant to sec. 23(1)(b) of the Administrative Appeals Tribunal Act 1975, and no Presidential direction under sec. 20 of that Act having been given, the remaining Members have decided to proceed to determination accordingly.

[CCH Note: Schedules 1-7 are not reproduced.]