Australian Securities Commission v Zarro, P.

[1992] FCA 120

JUDGMENT No .,,........ &:l... .?&S

I	IN THE FEDERAL COURT OF AUSTRALIA )	NO. QG 3018 of 1991	l
i	QUEENSLAND DISTRICT REGISTRY	1	!
GENERAL DIVISION	1

BETWEEN: AUSTRALIAN SECURITIES COMMISSION

Applicant

AND :  PASOUAL ZARRO

First Respondent

AND :  MICHELLE GAY ZARRO

Second Respondent

AND :  DOUGLAS CHALMERS BURGESS

Third Respondent

AND :  HAROLD WALLACE WOODS

Fourth Respondent

AND :  SPRING COIL PTY LTD

Fifth Respondent

AND :  TRENGATE PTY LTD

Sixth Respondent

AND:  POINTBLANK PTY LTD

Seventh Respondent

WESTPAC BANKING CORPORATION

Eighth Respondent

19 MAR 1992

FEDERAL COURT U

AUSTRALIA

i	PRINCIPAL
REGISTRY MINUTES OF ORDERS

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDER:	11 February, 1992
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

1.        The objection taken by the Australian Taxation Office to the production of documentary material

IN THE FEDERAL COURT OF AUSTRALIA ) No. QG 3018 of 1991

QUEENSLAND DISTRICT REGISTRY	1	I
GENERAL DIVISION	1

I

l BETWEEN: AUSTRALIAN SECURITIES COMMISSION

i Applicant

AND :  PASOUAL ZARRO

First Respondent

! AND : MICHELLE GAY ZARRO

Second Respondent

AND :  DOUGLAS CHALMERS BURGESS

Third Respondent

AND :  HAROLD WALLACE WOODS

Fourth Respondent

AND :  SPRING COIL PTY LTD

Fifth Respondent

AND :  TRENGATE PTY LTD

Sixth Respondent

AND :  POINTBLANK PTY LTD

! Seventh Respondent

AND :  WESTPAC BANKING CORPORATION

Eighth Respondent

i	Coram:	Drummond J
Date :	11 February, 1992
I	Place:	Brisbane
i

!	EX TEMPORE REASONS FOR JUDGMENT
I	W. Michael, an officer of the Australian Taxation
I
I

1. Office, has been subpoenaed by the Respondents to produce all

!
!	documentary material regarding information given by Peter John Buchanan regarding or concerning Respondents r any of them or the Witan Group of Companies in 1991 or 1992.
Counsel for the Australian Taxation Office has objected to the production of the documentary material in question. Section 16(2) of the Income Tax Assessment Act 1936 (Cthl ("the Act") contains a general secrecy provision binding on all officers of the Australian Taxation Office. However, it contains an exception which permits an officer to disclose information if such disclosure is "in the performance of any duty as an officer".
What can amount to a disclosure "in the performance of any duty as an officer" within the meaning of those words in the exception in S. 16(2) has been discussed in Canadian Pacific Tobacco Companv Limited & Anor. v Stapleton (1952) 86 C.L.R. 1. At page 6 of the judgment, Dixon CJ, who heard the matter at first instance, said of the exception:

"In a case of this description I should think that did

proceeding for the ultimate obtaining of revenue, even if	include the making of an affidavit in this Court in a
the word Ndivulge" is used in the sense which includes the giving of evidence."

In Federal Commissioner of Taxation v Nestle Australia Ltd. (1986) 69 A.L.R. 445 at 450, the Full Court, in a joint judgment, said of the provision:

"The 'duty' of an officer extends beyond the performance of work of an administrative nature such as processing

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returns, making assessments, considering and dealing with objections, conducting investigations into the affairs of taxpayers and matters of this nature. It includes the occasions on which he is required by the judicial process to produce documents, or give evidence in courts, by affidavit or viva voce, concerning the affairs of some other person which he has acquired as an officer where the proceedings are referable to the imposition, assessment or collection of revenue."

Section 16(2) may be of relevance to the affidavit that Miss Horton, an Australian Taxation officer, has sworn at the request of the Applicant, the Australian Securities Commission, and to her evidence, when she comes to give it. Section 16(2) may give rise to a question as to the admissibility of her affidavit and her evidence, and that will be dealt with, if it is raised, at the appropriate time. That question will require an examination of the proper characterisation of the proceedings brought by the Applicant under S. 1323 of the Coroorations Law.

However, given that objection is taken on behalf of the

taxation authorities to the disclosure of the information

sought by the subpoena, it is S. 16(3) of the Act which has	first to be considered. Even if the exception in S. 16(2)
would authorise the taxation authorities to disclose the material sought if they were willing to do so, objection is taken to making such disclosure. Hence the need to consider
S. 16(3) first.
If the taxation authorities can sustain the objection to production by relying on S. 16(3), that will defeat the

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subpoena. The effect of S. 16(3) was described in $tapleton's case by Dixon CJ at page 7 as follows:

"I think that this provision gives only a protection to the officer against compulsion, and does not make inadmissible evidence which the officer is prepared to give under instructions from his superiors or the commissioner."

On appeal to the Full Court of the High Court, Williams J at page 11 said:

"In express terms the sub-section only protects an officer from being required to do those things, it does not forbid his doing them."

Assuming that the taxation authorities are permitted by the exception to S. 16(2) to disclose the material subpoenaed, they are still entitled to refuse at their election, to disclose that material by reason of S. 16(3) unless the disclosure would fall within the exception to S. 16(3), that is, unless it can be said that it is necessary to make the

Assessment Act or of any previous law of the Commonwealth	disclosure of the material subpoenaed "for the purpose of carrying into effect the provisions of the Income Tax	relating to Income Tax.
The disclosure of material sought by the subpoena is plainly in my view not within the wording of the exception in S. 16(3), that is, it is plainly not sought or required for
the purpose of carrying into effect any provision of any of the designated statutes. The taxation authokties ' objection to production is upheld and I will not order production of the material.
I should say that a submission was made on behalf of the Respondents, that it would be unfair for the law to be construed to operate so as to allow the taxation authorities to selectively disclose information on the same issue, to one party in litigation but not to the other. I am not sure, in view of Miss Horton's affidavit which I have read, that this is in truth the factual situation here, although I make no final pronouncement on the matter, even given the objection taken by the taxation authorities to answering the Respondents' subpoena. But in any event, with respect to the Respondentst submission as to unfairness if the law were to work in the way postulated, that is precisely the position, it seems to me, that Parliament has authorised the taxation authorities to adopt, unless the case is one in which disclosure is both authorised by the exception to S. 16(2) and
compellable because it is also covered by the exception to S. 16(3). In that case only, both sides would be able to get
access to all information held by the taxation authorities relevant to the particular issue.
I certify that this and the four preceding pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Drummond.
Associate: PhTlb0/"'
Date :  11 February, 1992