Austin, B. v Tax Agents Board of New South Wales

[1985] FCA 224

Re: BRIAN AUSTIN
And: TAX AGENTS' BOARD OF NEW SOUTH WALES
No. G 23 of 1985
Income Tax
85 ATC 4303

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Morling J.

CATCHWORDS

Income Tax - tax agent - application for licence as tax agent - refused - disclosure sought of material taken into account by Tax Agents' Board - operation of s.16, Income Tax Assessment Act - duty of members of Board

Income Tax Assessment Act 1936, s.251J

HEARING

SYDNEY
#DATE 7:6:1985

ORDER

1. That the preliminary question of law, namely:
   
   

"Whether the Tax Agents Board of New South Wales, is prohibited by section 16 of the Income Tax Assessment Act 1936 or by any other law from disclosing to the applicant and his legal advisors the material received by it from the Commissioner of Taxation and taken into account by it in the course of making its decision that the applicant had not satisfied it that he was a fit and proper person to be registered as a tax agent.'

be answered in the negative.

1. That the decision of the Tax Agents' Board of New South Wales of 17 August 1984 refusing to grant the applicant's application for registration as a tax agent be quashed.

2. Mater to be re-listed on a date suitable to the parties.

JUDGE1

This is the hearing of a preliminary point of law which has arisen in proceedings brought by the applicant under the Administrative Decisions (Judicial Review) Act 1977. In those proceedings the applicant seeks an order of review of a decision of the Tax Agents' Board to refuse him a licence to practice as a tax agent. Sub-section 251J(1) of the Income Tax Assessment Act 1936 ("the Act") provides that a person desiring to be registered as a tax agent may make application to the Board for registration. If the applicant satisfies the Board that he is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters the Board is required to register the applicant as a tax agent (sub-s. 251J(3)).

1. The question of law which falls to be determined is as follows:
   
   

"Whether the Tax Agents Board of New South Wales, is prohibited by section 16 of the Income Tax Assessment Act 1936 or by any other law from disclosing to the applicant and his legal advisors the material received by it from the Commissioner of Taxation and taken into account by it in the course of making its decision that the applicant had not satisfied it that he was a fit and proper person to be registered as a tax agent."

1. It is sufficient for present purposes to give only the briefest outline of the facts which give rise to the application. In circumstances to which it is unnecessary to refer, the applicant's registration as a tax agent either lapsed or was cancelled in 1983. On 21 February 1984 the applicant applied for a fresh registration. On 17 August 1984 the Board refused the application on the ground that it was not satisfied that the applicant was a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers income tax matters.

2. In making its decision to refuse the application the Board had regard to the contents of a number of documents which were placed before it for its consideration. Taking the view that s. 16 of the Act prohibited it from disclosing the contents of these documents to the applicant, the Board determined his application without giving him notice of their existence or contents. Section 16 of the Act provides, in part, as follows:
   
   

"16. (1) In this section, unless the contrary intention appears -

'officer' means a person who is or has been appointed or employed by the Commonwealth or by a State, and who by reason of that appointment or employment, or in the course of that employment, may acquire or has acquired information respecting the affairs of any other person, disclosed or obtained under the provisions of this Act or of any previous law of the Commonwealth relating to income tax;

(1A) . . .

(2) Subject to this section , an officer shall not either directly or indirectly, except in the performance of any duty as an officer, and either while he is, or after he ceases to be an officer, make a record of, or divulge or communicate to any person any such information so acquired by him."

1. The applicant seeks an order of review upon a number of grounds, one of which is that a breach of the rules of natural justice occurred in connection with the making of the Board's decision to refuse his application. The breach relied upon is the failure of the Board to acquaint him with the contents of the documents which were before it and to afford him a reasonable opportunity to answer material in the documents which may have been adverse to him.

2. On the hearing of the current application the Board, through its counsel, adopted an eminently reasonable stance. Senior counsel for the Board indicated to the Court that if the Court ruled that the provisions of sub-s. 16(2) of the Act did not prohibit the Board or any officer from communicating the relevant material to the applicant or his legal advisors it would not (subject to some qualifications to which I shall presently make reference) seek to withhold the material from the applicant. The first qualification was that the Board did not wish to be seen as conceding that the applicant was entitled to be shown all the material that had been placed before the Board. It was submitted that some of that material may well have no application to the applicant and may well have been disregarded by the Board in reaching its decision. Counsel for the Board indicated to the Court that should it be found that no relevant constraint was imposed on the Board by sub-s. 16(2) the Board accepted an obligation to give to the applicant sufficient particulars of the matters which it proposed to take into account in determining his application to enable him to answer the same and call evidence in relation thereto. The second qualification was that the Board wished to reserve the right to require the applicant to undertake not to disclose to third parties (other than his legal advisers) any material communicated to him by the Board and which could not otherwise be divulged because of the constraints imposed by sub-s. 16(2).

3. I turn now to consider whether sub-s.16(2) prohibits the Board from communicating to the applicant the material which was placed before it when it considered his application. The Act provides that there shall be a Tax Agent's Board in each State (s.251C). Each Board is to consist of three members (at least two of whom must be officers within the meaning of sub-s.16(1) of the Act (sub-s.251D(1)). On the facts of the present case, it is not in doubt that the material in question was acquired by the members of the Board from the Commissioner of Taxation by reason of their employment as officers of the Commonwealth. Further, the information was acquired by them in the course of their employment. The relevant material has been tendered in evidence and it is plain that it contains information respecting the affairs of persons other than the applicant. Accordingly, members of the Board are enjoined from disclosing the material to the applicant unless it can be said that disclosure of it would be in the performance of their duties as officers. The critical question is, therefore, whether it can be said that the disclosure of the relevant material by the members of the Board to the applicant would be in the performance of their duties.

4. It is plainly the duty of the members of a Tax Agents' Board to consider and determine an application made to it for registration as a tax agent. In deciding whether or not to grant an application the Board is required, inter alia, to be satisfied that the applicant is a fit and proper person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters. To enable it properly to discharge its duties in dealing with Mr Austin's application it was necessary for the members of the Board to consider what weight, if any, they should give to the material which was furnished to them by the Commissioner of Taxation. In making that decision they could only have been assisted by having the applicant's comments upon and answers to any matters prejudicial to him in the material. To obtain such comments and answers from the applicant it was necessary to inform him of the nature of the material. Accordingly, in my opinion, officers of the Board were plainly justified, if not required, in the performance of their duties to communicate to the applicant the information and material which had been placed before them. Thus, unless binding authority requires me to come to a different conclusion, I would have no hesitation in answering the preliminary question of law in a manner favourable to the applicant.

5. Such authority as does exist supports the view which I have expressed. In Canadian Pacific Tobacco Co. Limited v Stapleton (1952) 86 C.L.R. 1 Dixon C.J. considered the meaning of sub-s.16(1) of the Act. At p. 6 he said:
   
   

"... I think that the words 'except in the performance of any duty as an officer' ought to receive a very wide interpretation. The word 'duty' there is not, I think, used in a sense that is confined to a legal obligation, but really would be better represented by the word 'function'. The exception governs all that is incidental to the carrying out of what is commonly called 'the duties of an officer's employment'; that is to say, the functions and proper actions which his employment authorizes."

1. In my opinion, on any view of the facts of the present case, disclosure to the applicant by the Board of the material placed before it would be incidental to the carrying out by it of its functions and hence, in accordance with the view of Dixon C.J., not enjoined by the sub-section.

2. In Mobil Oil Australia Pty. Limited v. Federal Commissioner of Taxation (1963) 113 CLR 475 at p 501 Kitto J. said in relation to proceedings before a taxation Board of Review:
   
   

"If the Board considers that for the more satisfactory determination of the reference it is necessary or desirable to disclose to the taxpayer's representatives information which the Board proposes to take into consideration, so that they may adequately present their case before the Board, the disclosure is, in my opinion, in the course of the Board's duty and no infringement of s.16(2)."

1. This dictum is directly in point in the present case and, in my opinion, is equally applicable to proceedings before a Tax Agents' Board.

2. There is therefore the most persuasive dicta supporting the view that, in the present case, the Tax Agents' Board was not prohibited by sub-s. 16(2) from disclosing to the applicant or his legal advisors the material received by it from the Commissioner of Taxation. It not being suggested that any other law prohibited such disclosure, the preliminary question of law should be answered in the negative.

3. Counsel for the Board conceded that if the Board was required to observe the rules of natural justice in dealing with Mr Austin's application it would have been necessary for it to advise him of the nature of the allegations made against him in the material sent to it by the Commissioner. However, he argued that the Board was not under any duty to observe the rules of natural justice. I do not think I should decide the question whether the Board was under such a duty because I have not heard argument on the matter from the applicant and it is unnecessary to decide the point for the purposes of determining the preliminary question of law.

4. Counsel for the Board also conceded that it would be appropriate for the Court to make an order quashing the Board's decision if it is held that it was not prohibited from disclosing to the applicant the material received by it from the Commissioner. Accordingly, I make such an order. It was submitted that the appropriate course is then to remit the matter to the Board for re-determination. This course was opposed by the applicant, who claims that the Court should itself determine the application. I have not heard argument on this matter and accordingly the matter will be relisted on a date suitable to the parties to determine the future course of the litigation.

5. Counsel for the Board submitted that the Court should make declarations as to the nature of the particulars which the Board is obliged to give the applicant and as to the entitlement of the Board to require the applicant not to disclose to third parties any material which the Board might furnish to him in order to enable him to prosecute his application. I do not think it is appropriate that I should make such declarations, if only because I have not determined whether the Board is obliged to observe the rules of natural justice. However, I would have thought it obvious that even if the Board is obliged to observe the rules of natural justice it would still be open to it to impose reasonable restrictions upon the use which the applicant or his advisors might make of material furnished to them. These restrictions may well include a restriction on the dissemination to third parties of information furnished to the applicant by the Board.