Hutchins v. Federal Commissioner of Taxation.

Judges:
Jenkinson J

Court:
Federal Court

Judgment date: Judgment handed down 22 August 1986.

Jenkinson J.

Applications for directions in several appeals under the Taxation (Unpaid Company Tax) Assessment Act 1982, in each of which the same person is appellant.

By virtue of the operation of sec. 4(7)(j) of that Act and sec. 196A of the Income Tax Assessment Act 1936, the High Court Rules as in force on 18 June 1973 under the Judiciary Act 1903-1969 apply, so far as practicable, to and in relation to these appeals in like manner as those Rules applied immediately before that date to and in relation to the like proceeding in the High Court.

Each party seeks in each appeal an order that the other furnish particulars, from the respondent Commissioner particulars of the facts justifying his assessment of the recoupment tax payable by the appellant on a promoters taxable amount, from the appellant particulars of the grounds of objection to that assessment.

An order had been made by me on 7 July 1986 for further particulars to be furnished by the Commissioner in the appeal VG71 of 1986. But the appellant was not legally represented on that day, and I may have misunderstood what he sought by way of order for particulars. Having heard counsel for both parties I propose to pronounce an order that on or before a certain date the respondent furnish the appellant with further particulars of the assessment of which notice is numbered 220099/001 and dated 11 July 1985 (and hereinafter called ``the recoupment assessment''):

and in particular, but without qualification or limitation of the requirements specified in para. (a) hereof,

It is a question, concerning which the parties have advanced submissions but I have reached no conclusion, whether the subject of each of the appeals under present consideration is, as the subject of an appeal such as this which had been heard and determined before the commencement of the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986 would have been, the taxpayer's objection against the assessment or the decision of the Commissioner on the taxpayer's objection, which decision will be the subject of any appeal such as this which derives from an objection lodged on or after the commencement of that Act. These appeals all derive from objections lodged and forwarded to this Court before the commencement of that Act. Mr Batt Q.C. who appeared with Mrs Moshinsky for the respondent Commissioner in each appeal, submitted that any requirement of the kind specified in para. (a) of the order for particulars should relate, not to the assessment, but to the decision of the Commissioner on the taxpayer's objection, because it was in Mr Batt's submission that decision which is the subject of the appeal, not the assessment. I therefore make it clear that the terms in which para. (a) of the order is expressed reflect no conclusion about the application to this appeal of the amendments effected by the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986, but were chosen as affording the best means of enabling the issues to be ascertained and the appeal conducted in an orderly and just manner, whether it be the Commissioner's decision on the objection or the objection which is the subject of the appeal.

The respondent Commissioner seeks an order in the appeal VG71 of 1986 for particulars of some of the grounds of objection. Mr Pagone of counsel, who appeared for the appellant in relation to that appeal (but not in relation to all of the appeals with which these reasons are concerned), submitted that the appellant should not be required to particularise grounds of objection, for those grounds had constituted the subject matter of the Commissioner's decision, unqualified by any particularisation, and it was that decision which now fell to be examined in the appeal. Alternatively, Mr Pagone submitted, the appellant should not be required to furnish particulars until after discovery of documents had been made by the respondent. In support of that submission Mr Pagone frankly admitted that one of the objectives which the appellant was pursuing in the appeal was exposure of all the processes which had led the Commissioner and his officers to the making of the assessment against which the appellant had objected, so that any circumstance of which the appellant is unaware and which might negative the appellant's liability to promoters recoupment tax may be disclosed. The objective was a legitimate one for the appellant to pursue, it was submitted, particularly in relation to a liability alleged to arise under provisions described in
MacCormick v. F.C. of T. 84 ATC 4230 at p. 4234 as ``a complex piece of legislation'', and a liability created by reference to a number of circumstances, of some of which a taxpayer is unlikely to gain knowledge, except by discovery and interrogation.

I think the disclosure of the issues between the parties is likely to be best achieved if the respondent's particulars of assessment be followed by particulars of the grounds of objection, before any other interlocutory proceeding. If after discovery by the respondent the appellant desires to amend his particulars, the Court can entertain an application to amend if the respondent will not consent.

The ground of objection numbered 2 in the notice of objection, and in the notice of objection in all the other appeals, is in these terms:

ATC 4552

``The Act is unconstitutional and accordingly the assessment is null and void and of no effect.''

The Act to which reference is there made is the Taxation (Unpaid Company Tax) Assessment Act 1982 and the assessment is that against which the objections are made. The respondent sought no particulars of that ground, but sec. 78B of the Judiciary Act 1903 requires me, I think, to put the appellant now to his election either to give to the Attorneys-General of the Commonwealth and of the States a notice of the kind which that section contemplates or to declare his decision not to rely upon that ground.

In the appeal VG71 of 1986 I propose to order that the appellant on or before a certain date give:

The appellant seeks in the appeal VG71 of 1986 an order that the respondent give discovery of a number of classes of documents, the descriptions of which are contained in a draft order submitted for the consideration of the Court and of the respondent. Some of the classes of documents of which discovery is expressed to be ordered in that draft would almost certainly include documents containing information respecting the affairs of a person

ATC 4553

other than the appellant, namely Jarlas Pty. Ltd. or ``vendor shareholders'' of that company. That information, contained in those documents (and, perhaps, contained in any description which might be given, in an affidavit of discovery, of such a document), would have been acquired by the respondent's officers in the performance of their duties as officers. Mr Batt submitted that discovery of those classes of documents should not be ordered, having regard to sec. 16 of the Income Tax Assessment Act 1936. But he drew to my attention, among other authorities, the decision of Enderby J. in
Re Fortex Pty. Limited 86 ATC 4351, which as he frankly admitted, contradicts his submission.

Section 16(2) of the Income Tax Assessment Act 1936 expresses a prohibition, but the prohibition is probably not of communication to a court: see
Canadian Pacific Tobacco Co. Ltd. v. Stapleton (1952) 86 C.L.R. 1 at p. 6. Section 16(3) affords an officer a privilege to withhold communication to a court of ``any matter or thing coming under his notice in the performance of his duties as an officer, except when it is necessary'' to make the communication ``for the purpose of carrying into effect the provisions of [the Income Tax Assessment Act 1936]''. The prosecution of such a proceeding as each of these appeals is could not in my opinion be doubted to be carrying into effect those provisions, and compliance with an order of the Court, whether made at or before trial, to divulge to the Court information relevant to the subject of the proceeding is, in my opinion, necessary for the purpose of carrying those provisions into effect. Of course, compliance with orders of the kind commonly made for communication by a party of information to a court involves communication to other parties as well as to the Court. And so it will be if discovery is ordered in this appeal. But if such an order be made, compliance with that order by the respondent or by one of his officers at his direction will be in the performance of his duty as an ``officer'', within the meaning of that word in sec. 16, and therefore will not involve any contravention of the prohibition contained in sec. 16(2). So, too, if the expression ``any person'' in sec. 16(2) were, contrary to my opinion, held to comprehend this Court, the making of an order by the Court for discovery would in my opinion entail the consequence that compliance with the order would satisfy the requirements of the exception in sec. 16(2): ``except in the performance of any duty as an officer''.

Mr Batt advanced other submissions against adoption of particular provisions of the draft order, that the provision was fishing or too wide or comprehended irrelevant documents. But again Mr Batt was punctilious to assist the Court, citing among other authorities
Mulley v. Manifold (1959) 103 C.L.R. 341, wherein Menzies J. observed (at p. 345): ``Only a document which relates in some way to a matter in issue is discoverable, but it is sufficient if it would, or would lead to a train of enquiry which would, either advance a party's own case or damage that of his adversary.'' Where, as here, a very wide range of issues arise upon the notice of objection, the scope of discovery is necessarily wide.

I propose to order that within a certain period after particulars have been furnished on both sides the respondent make and file and serve on the appellant a copy of an affidavit discovering:

The respondent seeks an order that he serve on the appellant a notice for discovery with an annexed schedule specifying the documents and the classes and kinds of documents of which discovery is sought. That order was made in another appeal in which the parties are the same, VG8 of 1986, and the appellant does not oppose the making of such an order in this appeal, VG71 of 1986. I shall pronounce such an order, specifying a time for service shortly after particulars have been delivered on both sides.

In the appeal VG117 of 1986, which concerns Plymouth Investments Pty. Ltd., orders will be made for particulars in the terms, mutatis mutandis, of the orders in VG71 of 1986. Similar orders for particulars will be made in each of the appeals VG174, VG212, VG213 and VG239 and 1986.

In the appeal VG117 of 1986 the order for discovery by the respondent will require an affidavit discovering:

In the appeal VG174 of 1986 the order will comprehend the following:

In the appeals VG212, VG213 and VG239 the order with respect to discovery by the respondent will be of the kind made, in respect of discovery by the appellant, in the appeals VG8 and VG71. So too in all the appeals other than the latter two the order for discovery by the appellant will be in the same terms as in those two.

I will hear the parties, as they requested that I should, concerning the times within which the interlocutory steps discussed in these reasons are to be taken.

 

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