Australia & New Zealand Savings Bank Ltd v Commissioner of Taxation of the Commonwealth of Australia

[1991] FCA 207

IN THE FEDERAL COURT OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	) No. VG314 of 1989
GENERAL DIVISION	)

BETWEEN:	AUSTRALIA AND NEW ZEALAND SAVINGS BANK
LTD.

Applicant

THE COMMISSIONER OF TAXAT I ON OF THE COMMONWEALTH OF AUSTRALIA

Respondent

corn:	Jenkinson J.
PLACE :	Melbourne
-	DATE :	26 April, 1991

MINUTE OF ORDER

THE COURT ORDERS THAT:

1.        On or before 25 May 1991 the applicant file and serve a copy of an affidavit stating whether any and if any what document or documents of either of the following classes namely -

or

(i) a document or a copy of a document by which a communication was made, in or concerning negotiation for the making of any of the instruments specified in sub-paragraphs (i), (ii), (iii), (iv), (v), (vi), (vii), (ix) and (X) of clause A(2)(5) of the further particulars of grounds of disallowance of objection filed 26 November 1990 or for the making of an agreement in performance of which any of the said instruments was made, by or to any person who was a party to any of the said instruments (whether or not a party to the instrument concerning negotiation for the making of which the communication was made) or by or to any officer, servant or agent of such a person;

(ii)   a document or a copy of a document containing a record of any negotiation for the making of any of the said instruments or for the making of any such an agreement or containing information about the occurrence of any such a negotiation or about any statement which had before entry on the document of the information been made, or which was after entry on the document of the information made, in the course of such a negotiation -

is or at any time has been in its possession custody or power; and if any such document is not now in its possession custody or power whether and when it parted with it and what has become of it.

2.        The motion of which notice is dated 21 June 1990 be otherwise dismissed.

1. Consideration of the question of the costs of the said motion be adjourned to a date to be fixed.

   The directions hearing be adjourned until 2 July

   1991.

NOTE :  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRAtIA	)
VICTORIA DISTRICT REGISTRY	) No. VG314 of 1989
GENERAL DIVISION	1

BETWEEN:  AUSTRALIA AND NEW ZEALAND SAVINGS BANK

Applicant

AND:	THE COMMISSIONER OF TAXAT I ON 0 F THE
COMMONWEALTH 0  F
AUSTRALIA

Respondent

CORAM:	Jenkinson J.
PLACE :	Melbourne
M:	26 April, 1991

REASONS FOR JUDGMENT

Motion for particular discovery.

On 6 February 1991 I published conclusions about some of the submissions advanced on the hearing of this
motion, and reasons for those conclusions.	These reasons are

to be read in conjunction with what was previously published.

Nothing that has been filed on behalf of the respondent in my opinion discloses matter of fact - act or other event, physical or mental - alleged to have a tendency to support the conclusion that none of the payments to Narvaez Pty. Ltd. in performance of the B Class Annuity Agreements is within the meaning of the word "annuity" in s.27H as it read at relevant times, except the execution of the instruments specified in my account of the transactions under consideration in the appeal, acts done in performance of provisions of those instruments, and the making of several other documents the contents of which are known to the respondent. But what has been filed, as well as the submissions of counsel, on behalf of the respondent make clear the intention of the respondent to contend on the hearing of the appeal that that conclusion may in law be induced by a consideration of conduct by the parties to the transactions other than their execution of those instruments. For the reasons previously stated I accept the contention to the extent that it proposes for consideration conduct, in negotiation of the transactions and of the instruments, of parties to those transactions and instruments. The circumstance that the respondent does not include in the documents filed of "particulars" any allegation of the occurrence of an act which falls within that description of conduct does not in my opinion necessarily have the result

possible on the hearing of the appeal, or that discovery of	that consideration of that description of conduct will not be
documents disclosing the occurrence of that description of conduct ought not to be ordered. For good or ill, pleadings in the legal sense have not been had in this proceeding. If they had, the inability of the respondent to allege the occurrence of a particular act within that description would not necessarily have prevented him from raising an issue to which evidence of such acts would have been relevant. Nor does that inability at this stage necessarily preclude the court from making now an order for discovery of documents relating to that issue. That it is inability and not unwillingness has sufficiently appeared.
The position of the respondent as applicant for an order for particular discovery of documents relating to negotiations is in my opinion analogous to the position of a defendant as applicant for an order for discovery before defence or before particulars under a defence, The ordinary practice being that discovery follows definition of issues by completed pleadings, there is an extraordinary power to grant discovery at an earlier stage where justice requires that
course : Lvons v. Kern Kons t ruc t ions ITownsvilleJ P t v . L t d .
(1983) 47 A.L.R. 114 at 126-131; M i l l a r v . Harper (1888) 38
Ch. D. 110; Eau and Eau Pulp Marketina Board v . K . H . Korr,
Tocumwal Tradina C o . P t v . L t d . [l9631 V.R. 378 at 381-2;
v. Blakes Motors L t d . [l9511 2 ALL E.R. 689; Waxman v. Groth
(1888) 10 A.L.T. 13. In the exercise of that discretionary
power substantial weight is to be accorded the consideration succinctly stated by Bowen L.J. in M i l l a r v . Harper 38 Ch. D .
at 112: "It is good practice and good sense that where the Defendant knows the facts and the Plaintiffs do not, the Defendant should give discovery before the Plaintiffs deliver particulars." That the respondent might have known the facts if he had before assessment exercised the powers conferred on him by ss. 263 and 264 of the Income Tax Assessment Act 1936 is a circumstance the significance of which for present purposes was not the subject of submission on behalf of the applicant, nor the subject of evidence. That being so, I give the circumstance no weight in the exercise of the discretion. The exercise of the discretion is greatly influenced by reference to the degree to which the party seeking discovery may be said to be "fishing". The provisions of the B Class Annuity Agreements, and particularly clause 5 of each of them, may be thought to manifest a determination in the parties to expose all that animated their contracting minds and every communication by which the contract was made. But from another point of view those provisions may be thought to suggest that there were other communications, not disclosed in the instruments, by reference to which the true nature of the transaction for fiscal purposes is to be discerned. I do not consider that the respondent's claim, in respect of which discovery is sought, can be characterised as mere fishing.
On balance I think that an order should be made for discovery of documents disclosing negotiations for the making
under consideration in this appeal. I think that the order of the instruments which carry into effect the transactions should extend to all the instruments, because the respondent's claim is that they are the means of effectuating the loan and repayment of loan with interest which is said by the respondent to be the reality behind the written documents. I
am not prepared to express the order in terms which would
comprehend a document not containing information about any negotiation but merely providing information which might induce inquiry leading to information about negotiation. Some documents of that description would be likely to furnish the respondent with a good deal of information to which justice as between the parties does not require that he have access without adding significantly to the sum of information to which justice does require that he have access and which compliance with the limited order I propose to make will afford him. In my opinion an order of the extraordinary kind here in question - for discovery in relation to an issue before the party seeking discovery has fully pleaded the facts by which he seeks to raise the issue - may properly be limited so as to give that party no more at the stage at which the order is made than can then be seen to be necessary to do justice between the parties.

I certify that this and the 4 preceding pages are a true copy of the Reasons for Judgment of the Honourable Mr. Justice Jenkinson.

Associate

Dated: 26 April, 1991 e

Counsel for the Applicant	Mr. D.H. Bloom P.C. and Mr. R.F. Edmonds
Counsel for the Respondent	Mr. G.A.A. Nettle
Solicitors for the Applicant	Freehill Hollingdale & Page
Solicitors for the Respondent	Australian Government
Solicitor
Date of Hearing	22 April, 1991