Binetter v Deputy Commissioner Of Taxation [2013] HCATrans 32

[2013] HCATrans 32

[2013] HCATrans 032

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S269 of 2012

B e t w e e n -

MARGARET BINETTER

Applicant

and

DEPUTY COMMISSIONER OF TAXATION

Respondent

Application for special leave to appeal

BELL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 FEBRUARY 2013, AT 12.12 PM

Copyright in the High Court of Australia

MR N.C. HUTLEY, SC:   If the Court pleases, I appear with my learned friend, MS R.L. SEIDEN, for the applicant.  (instructed by Signet Lawyers Pty Limited)

MR M.A. WIGNEY, SC:   May it please the Court, I appear with MS K.C. MORGAN for the respondent.  (instructed by Australian Government Solicitor)

BELL J:   Yes, Mr Hutley.

MR HUTLEY:   Thank you, your Honour. As your Honours know, the issue which we submit warrants a grant of special leave is the question of the construction of section 264 of the Income Tax Assessment Act 1936 (Cth), a section, surprisingly, which has not been the subject of consideration as to whether it removes the common law privilege of self‑incrimination at any time, despite the fact that the position has been, at least since De Vonk in the Federal Court, that that conclusion has been arrived at.

That conclusion was arrived at in De Vonk by a consideration of the offence provisions, 8C and 8D, and not section 264 itself. That process of reasoning whereby one determines whether the privilege is removed by reference to the offence provisions is a process of reasoning that this Court found inappropriate in Daniels, and your Honours know the relevant passages and I do not propose to go to them.  Thus, we submit, that De Vonk has not – which is the only superior court which has looked at the question – considered the central question which we say is a very important question for obvious reasons.

We sought, both at first instance and in the Full Court, a declaration as to the true construction of the notice received by my client issued pursuant to section 264. Both at first instance and in the Full Court, that was considered a hypothetical question, and therefore one which should not be embarked on by the court.

Our first point, it is not a hypothetical question.  In our respectful submission, it is a question as to the true construction of a notice, namely its scope, which is a question which is a real question between any person who receives a notice and is under an obligation to answer it.  It is no different in type to determining whether they are under an obligation to answer the notice at all, which has always – since time immemorial in effect, so far as we are concerned – been considered a real question. 

We have in the materials got the decision of Dyson v Attorney‑General, a 1911 decision – that is behind tab 5 – where the question under consideration, the issue for determination whether a declaration should be made as to whether a recipient of a notice from the relevant tax authorities in England was obliged to answer it.  At page 421 in the report in the judgment of Lord Justice Farwell it was determined that that was an appropriate question to be determined by way of, in effect, declaration.

In our respectful submission, my clients are seeking no different.  They received such a notice.  Such a notice obliges an answer.  In fact, what my client has to undertake when it receives a notice is some level of inquiry, the precise level of which is somewhat obscure in the cases, but Justice Robertson at first instance – and your Honours will find this at paragraphs 51 to 59 of the judgment at application book 15 to 16 – considered the extent of inquiry that my client had to undertake.  His conclusion was at paragraph 52, where he said:

I would not construe the notice in the present case as requiring the individual recipient to make exhaustive enquiries.  In my opinion the better interpretation is that the individual recipient is not required to make those inquiries.  The correct construction is to focus on what information an individual recipient can furnish or what documents are in the recipient’s custody or control.

So there seems to be some obligation upon my client to go out to some degree and find out about various things the subject of the notice, the extent to which is a bit blurred.

BELL J:   This argument turns on considerations of the privilege, does it not?

MR HUTLEY:   Quite.

BELL J:   One matter we do not know is whether your client would, in relation to any matter, claim the privilege.

MR HUTLEY:   I accept that completely, your Honour.  Your Honour, in the same way, if one sent a notice that exposed one to large burdens to go out and find answers, one may not know the answers.  One may not know whether one is going to come back with nothing to report.  One would say the legal scope of the obligation is an issue, once tendered, which is not theoretical.  Really, as Justice Heydon recently said in the judgment of this Court in Edwards v Santos, it is a matter that if we obtain the declaration, it would produce foreseeable consequences for the plaintiff.  That was in paragraph 37 of the judgment.  That is at tab 12 of the cases, your Honours.

BELL J:   This is a declaration that the notice issued on 24 February 2012 is invalid ‑ ‑ ‑

MR HUTLEY:   No, no, your Honour.  I accept that is a different point.  We also sought a declaration which is dealt with in ‑ ‑ ‑

BELL J:   I am sorry.

MR HUTLEY:   I do apologise, your Honour, I perhaps leapt in too early.  If your Honours go to the Full Court’s reasons at page 60 of the application book, at paragraph 14, it was the alternative declaratory relief sought which your Honours will see where they considered that – the relief is at paragraph 7 at page 48, the second declaration.

BELL J:   Yes.  I am sorry, I ‑ ‑ ‑

MR HUTLEY:   In effect, that is – I do apologise, your Honour, and I accept that if special leave were to be granted, one would need to amend the notice of appeal because we do not actually seek that relief in the current draft notice ‑ ‑ ‑

BELL J:   I am sorry.  I was directing attention to the orders sought at page 67 in the draft.

MR HUTLEY:   I accept that, your Honour.  I accept, your Honour, that that would be unnecessary.  But our first point of call is, is this a hypothetical question?  We say essentially it is a question about the scope of my client’s obligation and thus is not, upon receipt, a hypothetical question because it has foreseeable practicable results upon my client.

This, of course, is in a context where – and we refer to this in our outline of argument in a manner which is not in dispute – where, from the point of view – and this is at page 72, footnote 26 of our outline of argument – where it was quite clear that the Commissioner took the view that my client engaged in serious dishonesty.  That is what their position was at the time of the notice, and had communicated that to us.

In our respectful submission, it simply is not theoretical to know before you embark upon what is potentially - what is the scope of my obligation to answer a mandatory request.  We say the Full Court was erroneous, wrong, in concluding it is hypothetical.  That itself is a question which would merit special leave.

GAGELER J:   Not if you cannot get over De Vonk.

MR HUTLEY:   I accept that, your Honour, but before I get to De Vonk, I have to persuade your Honour your Honours should speak to De Vonk and therefore I have to prove this – but we would say that question, in our respectful submission, is seriously arguable.  I then have to move to De Vonk, I accept that.  That is my next step.  So the matter is not hypothetical on the declaratory basis, in our respectful submission.

Can I then come to the substantive matter of section 264? It goes without saying that the self‑incrimination privilege is a fundamental common law privilege, and Coco v The Queen says that general words will rarely be sufficient to abrogate the privilege.  We submit that De Vonk was wrong, and could I take your Honours to De Vonk – that is at tab 10 in the materials.  There were two judgments, that of Justice Foster, who in substance agreed in the reasoning of Justices Lindgren and Hill.  Can I take your Honours to the important passages, if I might?

Their Honours took up the privilege against self‑incrimination at 579 at letter F and turned to the question of construction relevantly at 581, I think, where they said, after dealing with the matter – they referred to Pyneboard.  If your Honours then move over to 582 at letter D, it says:

It may be noted at this point that it has now been established as the law in Australia that the privilege against self‑incrimination is not confined to judicial proceedings.  Rather, it has been held to apply to administrative proceedings –

Then there is a reference to Pyneboard.  It says –

As Hill J pointed out in Stergis, prior to 1984 the sanction for a failure to answer a question put under s 264(1) was to be found in s 224 of the Act which was in the following terms –

Then it sets it out, and then the reference, the important words being “unless just cause or excuse”, et cetera.  Then it is said –

No doubt the availability of a defence of “just cause or excuse” left a serious argument to be made that the privilege against self‑incrimination had not been abrogated –

That necessarily implies, in our respectful submission, that one could not take from 264 itself an intention that the privilege be abrogated, because the offence provision left open the non‑abrogation.  Then one turns to –

Section 224 was repealed in 1984 and replaced by the present provisions of ss 8C and 8D –

and their Honours then set it out, and then move on –

As Wilcox J points out in Donovan, ss 8C and 8D were inserted shortly after the judgment of the High Court in Pyneboard.  As his Honour suggests, it is quite likely that the drafter of the amendment regarded Pyneboard as authority for the proposition that the words “to the extent that the person is capable of complying with it” evidenced the intention to exclude the privilege against self‑incrimination.  Certainly the change of formulation from “just cause and excuse” to “capable” would seem to have been deliberate and to reveal an intention on the part of Parliament to exclude as a defence, inter alia, the privilege against self‑incrimination.

That, in our respectful submission, makes our point.  It seems to be that the intention to exclude comes with the offence provision.  Nobody has directed their attention to the notice provision, and one only gets to the offence provision if the notice provision has excluded, because if the notice provision has not excluded, you do not have to answer, so you never get to the question of “just cause”.

GAGELER J:   But why is not section 264 to be read in an overall legislative context that includes the relevant provisions of the Taxation Administration Act?

MR HUTLEY:   Your Honour, that is the question which has never been addressed by any court for the reasons I have just said.  I accept that they go on in De Vonk and speak about sterilisation and the like, and one has to confront that problem.  All I wanted to make – the first point is that the reasoning in De Vonk suffers from, in our respectful submission, implicitly accepts that there is no intention in 264, but the intention is to be derived from the offence provisions which Daniels says is heterodox.  So therefore, one has to, in effect, start anew ‑ ‑ ‑

BELL J:   It might be, Mr Hutley, that to the extent that one is divining their Honours’ views in that respect, you would have a look at page 581 at point G and the expression of opinion that in:

the context of a coercive power to require the answer to questions in a revenue statute would ordinarily abrogate the privilege –

So that the analysis that follows is against that statement of broad principle which seems to find some acceptance.

MR HUTLEY:   Your Honour, I understand there is a really live issue about the question, and one cannot by any means say it is clear. But what one can say is that a very important question has never been addressed squarely by any court, because the real question is section 264, not 8C, and the relevant offence provisions now were passed after 264, obviously enough, and the amendment to 224 was undertaken because it was considered that 224 did not adequately leave open that the privilege had not been entrenched upon. In effect, implicitly, there was an acknowledgement that 264 simply was not directed to the problem.

That is why I opened my submissions by saying that a very important section has never been addressed by any court directly, and we submit it is an important question of law that this Court do so.  Then I make the argument, there is going to frustrate the regime.

GAGELER J:   Is that not what Justice Hill was saying in Stergis at the bottom of that page in De Vonk at page 583 that you took us to?

MR HUTLEY:   I accept that, your Honour, but the interesting thing that Stergis said is that there was a live question because of the use of the then‑current words, and then he turns of the question of whether it would frustrate.  We submit, with respect, what his Honour said is wrong.  Firstly, it would not in any way – can I now take you to 264?

BELL J:   You are about to take us to the various matters in your submissions that illustrate there is room for 264 in circumstances in which the privilege could not be engaged.  Is that right?

MR HUTLEY:   Yes, it has a large continuing operation.

BELL J:   What about its operation in relation to those for whom the privilege, were it to exist, would be available?

MR HUTLEY:   I have to accept if the privilege is available it would affect and materially affect the operation of the section.  I do not for a moment suggest otherwise.  But Coco says just because there is a material effect on the operation of a section does not mean that the privilege should be concluded to be waived.  It has to render the section, to use the words in Coco – it says words to the effect of “it should render the section inoperative or meaningless”.

BELL J:   But you need to get around the line of authority to which reference is made in De Vonk and by Justice Hill in Stergis respecting revenue statutes.

MR HUTLEY:   With respect, there is obviously a tension there, and I accept that tension, but many of those statements have been made in history, not against, as it were, the increased elevation of the status of the common law provisions which have been reflected in the decisions in this

Court, their summit being in Coco, which said a fundamental right will only be displaced, and I quote – I will not take your Honours to it, your Honours are no doubt so familiar with it:

if it is necessary to prevent the statutory provisions from becoming inoperative or meaningless –

and we say the statutory provisions have a vast operation still, and we say as a matter of legislative history, the indication is that the legislatures thought that 264 did not remove the privilege, and that through misconception or otherwise, that it was to be done through the offence provisions. 

The court’s approach to the construction cannot be affected by that misapprehension, and that is an important question, in our respectful submission, which the Court should look at.  In other words, the whole history of this legislation has presumed that 264 does not remove the privilege as a matter of legislative history.  Those are our submissions, if your Honours please.

BELL J:   In this application we are of the opinion that the decision of the Full Court was plainly correct.  For that reason, special leave will be refused with costs.

The Court adjourns until 27 February 2013 in Canberra.

AT 12.35 PM THE MATTER WAS CONCLUDED