BQKD and Commissioner of Taxation (Taxation)

[2023] AATA 2169

BQKD and Commissioner of Taxation (Taxation) [2023] AATA 2169 (19 June 2023)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2022/3423; 2022/3442-3445

Re:BQKD

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:19 June 2023

Place:Adelaide

The request for orders under s 35 of the Administrative Appeals Tribunal Act 1975 is refused.

....................................SGD....................................

Bernard J McCabe, Deputy President

Catchwords

Private hearings – confidentiality orders – public hearings – privacy – public interest – open hearings principle

Legislation

Administrative Appeals Tribunal Act 1975

Taxation Administration Act 1953

Cases

Re DLMD and Commissioner of Taxation [2017] AATA 739

REASONS FOR DECISION

Deputy President Bernard J McCabe

19 June 2023

1. The applicant has asked for a private hearing pursuant to s 14ZZE of the Taxation Administration Act 1953 (the TAA). It has also asked for a range of non-publication orders under s 35 of the Administrative Appeals Tribunal Act 1975 (the AAT Act). For reasons I will explain, I am not disposed to make orders under s 35 at this point in the proceedings.

Background to the application for review and the interlocutory application

1. The applicant is a family trust. A number of the beneficiaries under the trust were able to access and use motor vehicles owned by the trust in the relevant year of income. The Commissioner has determined the provision of vehicles by the trustee amounted to a fringe benefit that was provided to the individuals in their capacity as employees of the trust. The trust - the taxpayer in these proceedings - was assessed as being liable to pay fringe benefits tax (FBT). The dispute about the trustee's liability to pay FBT has now made its way to the Tribunal.

2. The beneficiaries of the family trust are members of a high-profile family with extensive business interests. The applicant (and the family members concerned) are worried their affairs will attract the attention of the organised media and pests on the internet. Counsel referred to routine coverage by established media outlets as well as safety concerns. In written submissions, the applicant referred (at [24]) to:

   …interest of a more sinister kind; repeated instances of harassment and threats to [the] family and business.

The applicant’s request for a private hearing

1. Hearings in the Tribunal are generally held in public. And with good reason: public hearings expose decision-making processes to scrutiny and enhance public confidence, and they enable the Tribunal to better perform its normative role as a model decision-maker. Some enactments which authorise reviews also permit or require that the conduct of the review take place in private. Those enactments effectively modify the general rules.

2. Applicants in reviews conducted under Part IVC of the TAA are entitled to a private hearing. Section 14ZZE says the entitlement to a private hearing arises notwithstanding s 35 of the AAT Act. There is no need for the Tribunal to make an order once the request is made. Those requests are actioned administratively without the need for a direction. That has already occurred in this case.

3. Section 14ZZJ of the TAA modifies s 43 of the AAT Act by adding a provision which applies in reviews conducted under Part IVC of the TAA. Section 43(2D) of the AAT Act (as modified) provides:

   (2D)  If:

   (a)a hearing of a proceeding for the review of a decision or an AAT extension application is not conducted in public; and

   (b)  a notice of appeal has not been lodged with the Federal Court;

   the Tribunal must ensure, as far as practicable, that its reasons for the decision are framed so as not to be likely to enable the identification of the person who applied for the review.

4. That provision helps extend the protection of the applicant’s privacy interest beyond the hearing. It makes clear the Tribunal must do what it can to preserve that privacy when it publishes its decision and reasons.

What is a private hearing?

1. The expression ‘private hearing’ is not actually defined in the AAT Act or the TAA. The conventional understanding of the private hearing concept was explained by Logan J in Re DLMD and Commissioner of Taxation [2017] AATA 739 at [12]. His Honour explained:

   In itself, the statutory requirement that a hearing be conducted in private carries with it much by necessary implication. Save for the parties and their representatives, the member(s) constituting the Tribunal, that member’s personal staff and any other Tribunal staff required for the purposes of the hearing and those charged with the recording of the proceeding, no-one else is entitled to be present in the hearing room. Further, by necessary implication, only those staff in the registry necessary to support the hearing would be entitled to know the name of the applicant or the evidence which was in fact presented at the hearing. Nor would any of the persons mentioned, including me, be entitled to disclose the name of the applicant or the evidence led “in private” to any third party, if that would be likely to disclose the identity of the applicant. To construe s 14ZZE of the TAA otherwise would be subversive of that provision and of the intended operation of s 14ZZJ of that Act.

2. It almost goes without saying that a stranger would not be permitted to access a transcript of evidence given in a private hearing. A stranger would also be rebuffed were they to ask for access to the Tribunal’s file in relation to the proceedings.

3. I should say a word about the Tribunal’s file. Even where the proceedings are conducted in public, strangers are not permitted to access the Tribunal’s file without leave. While material tendered into evidence at a hearing is potentially accessible following a public hearing, an inquisitive member of the public is not otherwise entitled to leaf through the contents of the Tribunal’s official file. Indeed, there are parts of the file that may even be ‘off limits’ to the member who conducts the hearing. Notes from alternative dispute resolution conferences and copies of ‘without prejudice’ correspondence, for example, are not shown to the member. The success of the Tribunal’s alternative dispute resolution processes depends on that sort of information management.

4. An order for a private hearing provides robust protection for an individual taxpayer’s privacy – a level of privacy that is not afforded to most other categories of applicant before the Tribunal.

Supplementary orders under s 35 of the AAT Act

1. The applicant in this case has also asked for non-publication orders under s 35 of the AAT Act. In particular, it seeks orders:

   ·under s 35(3) that prohibit or restrict the publication or other disclosure of information that (a) tends to reveal the identity of a party or witness and persons related to or associated with them or (b) information concerning the party or witnesses; and

   ·under s 35(4) that prohibit or restrict the publication or disclosure of information that relates to the proceeding, or information that comprises evidence or information about evidence or documents lodged with the Tribunal.

2. There is no doubt the Tribunal can make such orders where it is desirable to do so. The ‘private hearing’ provisions do not exclude the operation of s 35. As Logan J explained in DLMD at [11]:

   Section 14ZZE of the TAA is expressed to apply, “Despite section 35 of the AAT Act”. I do not read that expression as excluding altogether s 35 of the AAT Act, as opposed to prevailing over s 35 of the AAT Act to the extent of any inconsistency in the event that an applicant makes a request for a private hearing. Thus, s 14ZZE of the TAA leaves intact the discretionary powers vested in the Tribunal by ss 35(2)(b), 35(3) and 35(4) of the AAT Act. It is just that, upon an applicant requesting a private hearing, s 14ZZE requires that the hearing be so held, without any need for the making of a discretionary value judgement by the Tribunal as to whether a private hearing is warranted.

3. While the Tribunal is not required to make a discretionary value judgment following a request for a private hearing under s 14ZZE of the TAA, it is obligated to engage with the decision-making process required under s 35 of the AAT Act where asked to make orders under that section. That decision-making process starts with the proposition set out in s 35(5) which articulates the ‘open hearings’ principle. The effect of s 35(5) is that additional non-publication orders under ss 35(3) or (4) would not ordinarily be made in relation to a private hearing unless it was desirable to do so.

4. It is not hard to imagine circumstances that would make additional orders desirable given the privacy interest recognised under the TAA. Additional orders may be required to preserve the applicant’s anonymity (or that of a witness or a related party) or to restrict the publication of evidence that might be sensitive for some reason, even where it can be anonymised. But such orders must be made on a case-by-case basis as the need arises. The Tribunal should certainly be cautious about making blanket orders at an early stage if more tailored orders might suffice at a later point.

5. Much of the controversy can be avoided if the Tribunal member is appropriately circumspect when drafting the reasons for decision. It is not uncommon for a Tribunal member to publish the decision and reasons to the parties before they are published more widely so either party may seek redactions or further orders without any change to the substance.

6. The applicant already has the benefit of a private hearing. The interests described by the applicant’s director in his affidavit dated 10 May 2023 appear to be adequately protected by the private hearing arrangements, at least for now. It may be necessary to make tailored orders under s 35 of the AAT Act in due course to protect and give practical effect to the applicant’s rights under s 14ZZE of the TAA. But it would be premature and unnecessary to do that at this point.

Conclusion

1. The request for orders under s 35 of the AAT Act is refused, at least for now.

I certify that the preceding 18 (eighteen) paragraphs are a true copy of the reasons for the decision herein of

19.      

..................................SGD......................................

Associate

Dated:  19 June 2023

Date(s) of hearing:

16 May 2023

Counsel for the Applicant

Solicitor for the Applicant:

Lloyd Wicks

Andrew Shaw

Counsel for the Respondent:

Solicitor for the Respondent:

Chris Peadon

Emma Schultz-Boylen