BQL Edev ELL and Commissioner of Taxation
[2013] AATA 423
[2013] AATA 423
Division TAXATION APPEALS DIVISION File Numbers
2011/0275-0277, 1704-1719, 1721-1730 and 2012/3817
Re
BQL
Edev
ELL
APPLICANTS
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Deputy President RP Handley
Senior Member PW Taylor SCDate 24 June 2013 Place Sydney Senior Member Taylor SC should not be included in the Tribunal constituted to hear these applications.
..................[sgd]...................................................
Deputy President RP Handley
CATCHWORDS
PRACTICE AND PROCEDURE – proceedings – constitution of the Tribunal – application that a member not be included in the Tribunal to hear these matters – where a member constituted to hear applications has previously presided over proceedings which raised the same issues – where findings of credit or credibility in relation to potential witness have been made in prior proceedings – application granted
CASES
Aussie Airlines Pty Ltd v Australian Airlines Pty Ltd (1996) 65 FCR 215
Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411
British American Tobacco Australia Services Limited v Laurie (2010) 242 CLR 283
Commissioner of Taxation v Rawson Finances Pty Ltd [2012] FCA 753
Dye v Commonwealth Securities Ltd (No 4) [2010] FCA 910
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Ewert v Lonie [1972] VR 308
Fitzgerald v Director of Public Prosecutions (1991) 24 NSWLR 45
Helljay Investments Pty Ltd v Deputy Commissioner of Taxation (1999) 166 ALR 302
Johnson v Johnson (2000) 201 CLR 488
Livesey v NSW Bar Association (1983) 151 CLR 288
McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504
Michael Wilson & Partners v Nicholls (2011) 244 CLR 427
Minister for Immigration and Multicultural Affairs v Jia (2000-2001) 205 CLR 507
R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100
R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546
Rawson Finances Pty Ltd v Commissioner of Taxation (2013) 296 ALR 307; [2013] FCAFC 26
Re Areffco and Commissioner of Taxation (2011) 84 ATR 924; [2011] AATA 628
Re B [1981] 2 NSWLR 372
Re Finance Sector Union of Australia; ex parte Illaton Pty Ltd (1992) 107 ALR 581
Re JRL; Ex parte CJL (1986) 161 CLR 342
Re Mellor and Australian Postal Corporation [2010] AATA 288
The Queen v Watson: ex parte Armstrong (1976) 136 CLR 248Webb v The Queen (1993-1994) 181 CLR 41
REASONS FOR DECISION
Deputy President RP Handley
Senior Member PW Taylor SC24 June 2013
THE REVIEW APPLICATIONS – BASIC FEATURES
The three Applicants have applied to the Tribunal to review the Commissioner’s decisions rejecting their objections to assessments for many tax years. The Applicants, and the decisions under review, share the following basic features:
(a)the affairs of each company concern (with varying degrees of immediacy) the activities of two post-World War II immigrant siblings (Erb and Emb) and, to some extent, the conduct of one or other of their sons, particularly after about mid-2004, Erb’s son Ayb;
(b)the principal focus of the Commissioner’s assessments is the proper characterisation of funds an Israeli bank provided to the Applicants, and payments each of them subsequently made to the bank;
(c)the Commissioner’s reviewable decisions do not accept either that the funds the Israeli bank paid the Applicants were genuine commercial loans, or that any of the Applicants’ subsequent payments to the bank were genuine payments of loan interest;
(d)the documentation available to evidence the genuine character of the contentious loan obligations and interest payments is, to put the matter at its lowest and least contentious, less fulsome than might ordinarily be expected for transactions of the kind in question;
(e)typically the Commissioner’s assessment decisions have treated the payments the Israeli bank made to the Applicants as assessable income, and have rejected the Applicants’ respective claims that later payments they made to the bank were payments of interest due on the loan principal.
SIMILARITY TO THE AREFFCO PROCEEDINGS
These basic features of the decisions under review are similar to those considered in the Tribunal’s decision in Re Areffco and Commissioner of Taxation (2011) 84 ATR 924; [2011] AATA 628. That case concerned another company controlled by Erb which, after about mid-2004, was substantially managed by his son Ayb. Shortly after its incorporation in April 1997, Areffco had received payments totalling $4.75 m from MDB. MDB is a bank subsidiary of the Israeli bank with which the present Applicants claim to have dealt. Between 1998 and 2008, Areffco paid MDB various amounts that were said to be either payments of loan interest or repayments of principal.
The essential similarities between the circumstances involved in the Areffco decision, and the basic details concerning the present Applicants’ contentious loan transactions, is summarised in the following Table.
Entity
Incorporation Date
First Loan
Lending Bank
Loan Totals
approx
Tax Year span
Tax Liability
first
last
Primary
approx
Penalty
approx
Edev 20-Jun-75 1992 ? IDB $6.05m & CHF19.5m 1992 2007 $7m $15m Ell 22-Apr-91 1998 ? IDB $9.8m 1998 2007 $7m $7m BQL 12-Apr-06 5-May-06 IDB $23m 2006 2008 $7.1m $5.4m Areffco 21-Apr-97 Jun-97 MDB $4.75m 1997 2008 $2.45m $ 2m THE AREFFCO DECISIONS
In Re Areffco and Commissioner of Taxation (2011) 84 ATR 924; [2011] AATA 628, in a decision dated 6 September 2011, the Tribunal set aside the Commissioner’s assessments. On 17 July 2012 a judge of the Federal Court of Australia set aside the Tribunal’s decision as involving an error of law: see Commissioner of Taxation v Rawson Finances Pty Ltd [2012] FCA 753. But on 5 March 2013 the Full Court of the Federal Court of Australia allowed an appeal from the judge’s decision. As a consequence, the Tribunal’s decision was reinstated: see Rawson Finances Pty Ltd v Commissioner of Taxation (2013) 296 ALR 307; [2013] FCAFC 26.
THE COMMISSIONER’S DISQUALIFICATION APPLICATION
In the Areffco review application proceedings SM Taylor SC constituted the Tribunal. The present proceedings were begun before the Federal Court’s decisions in the Areffco proceedings. Pending the determination of those proceedings, the present matters were case managed by SM Taylor SC. That management involved detailed directions requiring the parties to outline the scope and details of the contentious transactions, and the evidence available in relation to them. The Commissioner later requested that the Tribunal be constituted by a presidential member. Following that request, the President directed that the Tribunal be constituted by Deputy President Handley and SM Taylor SC. The Commissioner’s current application is that SM Taylor SC should not form part of the Tribunal constituted to hear any of the present review applications. The Applicants oppose the Commissioner’s application.
The Commissioner’s submissions in support of the current application disavowed any contention that SM Taylor SC’s findings or conduct involved actual bias. The Commissioner’s submissions also disavowed any suggestion or apprehension that SM Taylor SC would not, if involved in the hearing of the present applications, determine them in an impartial and proper manner. The submissions made on behalf of the Commissioner stressed that the application was made solely on the ground of apprehended, that is to say, the “appearance” of bias. There is, perhaps, an element of euphemism, dictated by convention, in these formulaic disavowals of actual bias: Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411 at 416-417. Indeed in the same case, Mahoney JA observed that, where the decision maker’s actual bias was disavowed and their actual impartiality was specifically accepted by the parties, the enquiry into an “appearance of bias” was an enquiry into a false appearance: see 26 NSWLR at 438F-G. On the assumption that a rational party will rarely have either a proper interest or motivation in pursuing a complaint about an appearance which they expressly accept is false, there is an obvious suggestion that the language and form of a complaint of apprehended bias is more attributable to ideas of “elegance” and “comity” than to the complaining party’s actual apprehensions. Consistent with that view, in Webb v The Queen (1993-1994) 181 CLR 41 at 71-72, Deane J suggested that the apprehended bias principle, when stated in terms of the reasonable apprehensions that a hypothetical observer might have about the partiality of a decision maker, had a highly desirable tendency of encouraging complaints of prejudgment being appropriately raised and resolved, without undue defensiveness. We proceed on that basis.
The Commissioner’s contention was that a relevant apprehension or appearance of bias would arise in the present review applications because of the nature of the findings the Tribunal made in the Areffco proceedings, and the nature and extent of the similarities involved in the present proceedings. The Commissioner relied on the following matters:
(a)Ayb was a principal witness in the present proceedings, and in the Areffco proceedings SM Taylor SC had made favourable credit findings concerning Ayb, on matters which (according to the Commissioner’s contention) were of importance in those proceedings.
(b)In the Areffco proceedings SM Taylor SC had accepted evidence from Emb, Ayb and from Ayb’s elderly mother, that none of them was aware of any assets Erb held in Israel (assets that might have provided security for the contentious borrowings from the Israeli bank). Most of these people are likely to be witnesses in the present proceedings, and similar questions are said to be likely to arise.
(c)In the Areffco proceedings the Commissioner called various witnesses who gave evidence about aspects of Israeli banking law and practice, but SM Taylor SC had (according to the Commissioner’s contention) rejected their evidence.
(d)In the Areffco proceedings SM Taylor SC had (according to the Commissioner’s contention) accepted Areffco’s evidence as sufficient to explain the unavailability of witnesses and the paucity of documentation.
(e)In the Areffco proceedings SM Taylor SC had accepted Areffco’s claims about the genuine nature of its contentious borrowings from MDB, despite all the unusual loan features on which the Commissioner relied.
The matters relied on by the Commissioner involve complaints of various kinds. Some involve reliance on the factual similarities between the Areffco proceedings and the present applications. Some involve reliance on the substantial similarity of the witnesses in the various proceedings, and the findings made on particular questions of fact to which their evidence related, without suggesting that those findings were based on assessments of the apparent “honesty” of the respective witnesses, as distinct from the comparative objective cogency of the content of their evidence. Some point to findings in the Areffco proceedings that were characterised as “credit” findings relating to particular witnesses, and specifically in relation to the evidence of Ayb. This diversity in the grounds relied on in the Commissioner’s contentions requires careful attention in the application of the relevant principles.
APPREHENDED BIAS – THE GENERAL PRINCPLE
The apprehended bias principle, as it applies in Australian law, has been consistently stated in decisions of the High Court of Australia. The first decision in which the High Court explicitly endorsed the principle, as it has since been applied, was The Queen v Watson: ex parte Armstrong (1976) 136 CLR 248 (Watson). One of the more recent decisions applying the Watson formulation is British American Tobacco Australia Services Limited v Laurie (2010) 242 CLR 283. In the latter case French CJ referred to statements of the principle in prior judgments of the High Court where the question of apprehended bias had arisen in three different contexts – assertions that the decision maker was financially interested in the outcome of the proceedings, assertions that the decision maker had pre-judged the evidence in the proceedings, and assertions that the decision maker would be unlikely to depart from views formed in other proceedings.
The decision involving apprehended bias arising from an asserted interest in the outcome of the decision was Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337. In that case the plurality judgment in the High Court (Gleeson CJ, McHugh, Gummow and Hayne JJ) identified the fundamental common law principle of independent and impartial judicial decision making. They described it as a basic aspect of the principles of procedural fairness, and one that applied generally to all adjudicative tribunals (subject to any modification or qualification required by their particular statutory functions). The judgment expressed the general principle in these terms (at [6] – we have added the emphasis, footnotes omitted):
Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that, subject to qualifications relating to waiver ... or necessity ... a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.
The High Court went on to emphasise what the apprehended bias principle required, in posing the question whether “a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide” (emphasis added). The High Court said it does not involve any prediction or assessment about the actual probability of the decision maker actually being influenced by the particular circumstance under consideration (at [7]):
... Deciding whether a judicial officer (or juror) might not bring an impartial mind to the resolution of a question that has not been determined requires no prediction about how the judge or juror will in fact approach the matter. The question is one of possibility (real and not remote), not probability. Similarly, if the matter has already been decided, the test is one which requires no conclusion about what factors actually influenced the outcome. No attempt need be made to inquire into the actual thought processes of the judge or juror.
The High Court judgment then went on both to recognise the width of the apprehended bias concept, and to describe the requirements for its principled application. This was set out in the following passage (at [8]):
The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
The High Court decision, to which French CJ referred in British American Tobacco Australia Services Limited v Laurie (2010) 242 CLR 283, involving apprehension of bias arising from the appearance that the decision maker had pre-judged the evidence in the proceedings was Watson. The circumstances in Watson involved remarks made by a judge of the Family Court of Australia in the course of the interlocutory management of a property dispute in which the true assets and means of the parties, and the accuracy of their respective disclosures, were likely to be highly contentious. The remarks were to the effect that he was would not be likely to accept the evidence of either party to the marriage, except to the extent that it was objectively corroborated. The wife then made an application for the judge to disqualify himself from the proceedings. His refusal to do so then resulted in the wife’s successful application for an order prohibiting the judge from hearing the proceedings.
In granting the wife the order she had sought, the High Court stated the relevant question as being “whether it has been established that it might reasonably be suspected by fair-minded persons that the learned judge might not resolve the questions before him with a fair and unprejudiced mind”: at 136 CLR 264. The High Court then went on to say this:
As the cases show, there are some matters on which a judge may have preconceived opinions, and yet be qualified to sit, but speaking generally the credit of an essential witness, where the case may turn on credibility, is not one of them. It is apparent from the facts that have been recited that it is possible, if not probable, that an assessment of the credit of the witnesses may play an important part in the resolution of the proceedings between the husband and the wife.
The decision in Watson is of some relevance to the present application because of its dismissal of an argument that the apprehended bias principle did not require disqualification where the judge or tribunal had been even handed in their criticism of the credibility of the parties. On this point the High Court said (at 265):
It was said that there was no bias because the judge had formed an equal distrust of both parties. The formation of a preconceived opinion that neither party is worthy of belief amounts to bias in the sense in which that word is used in a number of the authorities already cited. To form such an opinion is to predetermine one of the issues in the case, and may operate unfairly against one party, even though both are discredited. A prejudice against the credit of both parties will not necessarily damage both parties equally. It will prove more damaging to that party who wishes to establish a fact by means of his or her own unsupported evidence. A party who believes, on reasonable grounds, that the judge has decided, in advance, to disbelieve her evidence cannot have confidence in the result of the proceedings, even if the judge has decided to reject the evidence of her adversary as well.
The third of the High Court decisions, to which French CJ referred in British American Tobacco Australia Services Limited v Laurie (2010) 242 CLR 283, as illustrating the relevant principle, in the context of prior decisions in other proceedings, was Livesey v NSW Bar Association (1983) 151 CLR 288. The High Court decision in Livesey was the relevant culmination of proceedings concerning Livesey and a Ms B. They arose out of their involvement in obtaining and providing money that Ms B posted as bail for a person charged with conspiracy to effect the escape of prisoners from lawful custody. Ms B was a friend of the accused. Livesey was a barrister who had been briefed to appear for him. After the accused was released on bail he absconded. The bail funds were forfeited.
Two years later Ms B brought proceedings to be admitted as a barrister. Her application was opposed because of a number of matters. They included her numerous convictions, which were typically for offences associated with her activities as a student activist, and the bail matter. Her application failed because of findings the Court made about the bail matter. Ms B claimed that she had borrowed the money from a friend, and was liable to repay it. The New South Wales Court of Appeal rejected this claim. The Court found that the money in fact belonged to the accused, or to persons associated with him, that Ms B well knew that was the case, and that she had falsely claimed to have borrowed the money. The essential basis for these findings was evidence that Livesey had gone interstate to collect the money and had given it to Ms B at his home, during a meeting with her and Ms B’s friend. Although neither Livesey nor Ms B’s friend gave evidence in the proceedings before it, the NSW Court of Appeal held that they knew the actual source of the funds, were both on good terms with Ms B, and that, in the circumstances of urgency in which the funds had been provided, it was incredible that Ms B had neither enquired about, or been told, the true source of the funds. It was also incredible, if she had genuinely believed she had borrowed the funds, that she had never sought either to recover the funds from the accused or to make any loan repayments to her friend. The Court of Appeal held that Ms B had been “party to a corrupt agreement” intended to allow the accused person to “purchase his freedom with his own money”: see Re B [1981] 2 NSWLR 372.
About nine months later Mr Livesey came before the NSW Court of Appeal, constituted by two of the three judges who had determined Ms B’s unsuccessful application. He was facing various complaints of professional misconduct, including his participation in the bail matter involving Ms B. Both Livesey and Ms B gave evidence in these proceedings. In his evidence Livesey conceded he had collected some money on behalf of the accused, and that he had given it to Ms B’s friend. But he claimed that when Ms B’s friend gave her the money she used for bail, he was not aware that it included the cash he had previously collected. The Court of Appeal did not believe him. The Court found that he had been party to a transaction which to his knowledge involved Ms B illegally using money that was not hers as surety for bail. The Court of Appeal ordered that Livesey’s name be removed from the roll of barristers: [1982] 2 NSWLR 231.
In setting aside the Court of Appeal decision, in Livesey v NSW Bar Association (1983) 151 CLR 288 the High Court expressed the apprehended bias principle in the following terms (at 151 CLR 300):
… a fair-minded observer might entertain a reasonable apprehension of bias by reason of prejudgment if a judge sits to hear a case at first instance after he has, in a previous case, expressed clear views either about a question of fact which constitutes a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question of fact. The consideration that the relevant question of fact may be conceded or that the relevant person may not be called as a witness if the particular judge sits would not, of course, avoid the appearance of bias. To the contrary, it would underline the need for the judge to refrain from sitting.
In the present case the Commissioner emphasises both the dual contingency of possibility referred to in the Ebner formulation of the apprehended bias principle (see paragraph 10 above) and the application of that principle in Livesey, to findings, and specifically credit findings, made in other proceedings. On the other hand, the taxpayer Applicants, in opposing the Commissioner’s present application, contend that these statements of principle should not be applied mechanistically. The taxpayer Applicants point to the proposition in Ebner that the apprehended bias principle requires some articulation of the process by which the identified facts gave rise to the apprehension (by the reasonable observer) that the adjudicator “might … possibly [be diverted] … from deciding the case on its merits”: 205 CLR 337 at [30].
CAUTIONS AGAINST UNNECESSARY APPLICATION OF THE PRINCIPLE
It is important to recognise that even in the decision in Watson the High Court cautioned against too ready acceptance of complaints of apprehended bias. This is apparent from the High Court’s explanation of an earlier decision. In that earlier decision – R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 – the High Court held that a delegate of the Australian Stevedoring Industry Board was not disqualified from holding an inquiry because he had made some comments from which it might well have been inferred that he had prejudged some aspects of the case. Dixon CJ, Williams, Webb and Fullagar JJ said in their joint judgment (at 88 CLR 116):
... when bias of this kind is in question, as distinguished from a bias through interest, before it amounts to a disqualification it is necessary that there should be strong grounds for supposing that the judicial or quasi-judicial officer has so acted that he cannot be expected fairly to discharge his duties. Bias must be “real”. The officer must so have conducted himself that a high probability arises of a bias inconsistent with the fair performance of his duties, with the result that a substantial distrust of the result must exist in the minds of reasonable persons. It has been said that “preconceived opinions—though it is unfortunate that a judge should have any—do not constitute such a bias, nor even the expression of such opinions, for it does not follow that the evidence will be disregarded”, per Charles J, R v London County Council; Ex parte Empire Theatre.
In Watson the High Court remarked upon the wording in this passage, and the apparent suggestion that the apprehended bias principle only applied where there was an actual likelihood, as distinct from a real risk, of prejudgment. The Court said that if the particular passage was open to interpretation, the true position had been authoritatively determined in R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546. That case arose out of the 1967 “National Wage Case”, and an application a union made, some 12 months later, to delete gender based wage differentials from an industrial award. In delivering its reasons in the 1967 “National Wage Case” decision the Commonwealth Conciliation and Arbitration Commission had awarded the same increase to male and female employees. The reasons said that the undifferentiated wage rate increase affirmed the concept of “equal pay for equal work”. But the decision nevertheless retained the existing differential between male and female employee’s respective total wages. The Commission noted the extension of the concept of “equal pay for equal work” to the total wage, and removing the gender based total wage differential, would call for thorough investigation and debate.
In the 1968 proceedings to vary the award, the employers objected to the participation of Commission members who had been involved in the 1967 National Wage Case. The High Court rejected an application by the employers to require the Commission to exclude those members from the hearing of the award variation application. The High Court effectively described the Commission’s remarks in its previous judgment as no more than the expression of an attitude of mind by members of the Commission on a matter of principle. The High Court held that such an expression would not justify a reasonable apprehension that those members might not bring fair and unprejudiced minds to the resolution of the question arising before them. In a joint judgment, delivered by all seven justices, the High Court said (at 122 CLR 553–4: again, we have added the emphasis, footnotes omitted):
The common law principles of natural justice are well understood though they have been variously expressed. It is sufficient here in relation to that aspect of those principles which is called in aid by the applicant to recall the well known passages from Allinson v General Council of Medical Education and Registration, as cited and commented upon by Isaacs J in Dickason v Edwards, and from R v Sussex Justices; Ex parte McCarthy. A recent exposition is to be found in the judgment of the Master of the Rolls in Metropolitan Properties Co (FGC) Ltd v Lannon.
Those requirements of natural justice are not infringed by a mere lack of nicety but only when it is firmly established that a suspicion may reasonably be engendered in the minds of those who come before the tribunal or in the minds of the public that the tribunal or a member or members of it may not bring to the resolution of the questions arising before the tribunal fair and unprejudiced minds. Such a mind is not necessarily a mind which has not given thought to the subject matter or one which, having thought about it, has not formed any views or inclination of mind upon or with respect to it.
In Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352 Mason J remarked upon the amplitude of the “reasonable apprehension of bias” principle as it had been expressed in Watson and Livesey (footnotes omitted):
It seems that the acceptance by this court of the test of reasonable apprehension of bias in such cases as Watson and Livesey has led to an increase in the frequency of applications by litigants that judicial officers should disqualify themselves from sitting in particular cases on account of their participation in other proceedings involving one of the litigants or on account of conduct during the litigation. It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way. In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment and this must be “firmly established”: R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group; Watson; Re Lusink; Ex parte Shaw. Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.
Subsequently in Australian National Industries Ltd v Spedley Securities Ltd (1992) 26 NSWLR 411 Kirby J collected similar statements from a number of authorities: see 26 NSWLR 411 at 417G-418C. In deciding the question of “reasonable apprehension” it is important judicial officers discharge their duty to sit, and do not accede too readily to suggestions of the appearance of bias. The issue in each case is whether there is a reasonable apprehension that the judge appointed to hear the matter might not bring an impartial and unprejudiced mind to its resolution: Aussie Airlines Pty Ltd v Australian Airlines Pty Ltd (1996) 65 FCR 215 at 230.
In Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 the High Court remarked upon the tension between the two requirements of both ensuring the reality and appearance of impartial adjudication, and the proper and efficient discharge of adjudicative functions. Speaking primarily in the context of judicial adjudication, but in terms that have a direct application to the Tribunal (in the light of the Tribunal’s statutory objective and obligations: see Administrative Appeals Tribunal Act 1975 ss 2A and 33) the principal reasons in Ebner said:
[19] Judges have a duty to exercise their judicial functions when their jurisdiction is regularly invoked and they are assigned to cases in accordance with the practice which prevails in the court to which they belong. They do not select the cases they will hear, and they are not at liberty to decline to hear cases without good cause. Judges do not choose their cases; and litigants do not choose their judges. If one party to a case objects to a particular judge sitting, or continuing to sit, then that objection should not prevail unless it is based upon a substantial ground for contending that the judge is disqualified from hearing and deciding the case.
[20] This is not to say that it is improper for a judge to decline to sit unless the judge has affirmatively concluded that he or she is disqualified. In a case of real doubt, it will often be prudent for a judge to decide not to sit in order to avoid the inconvenience that could result if an appellate court were to take a different view on the matter of disqualification. However, if the mere making of an insubstantial objection were sufficient to lead a judge to decline to hear or decide a case, the system would soon reach a stage where, for practical purposes, individual parties could influence the composition of the bench. That would be intolerable.
[21] It is not possible to state in a categorical form the circumstances in which a judge, although personally convinced that he or she is not disqualified, may properly decline to sit. Circumstances vary, and may include such factors as the stage at which an objection is raised, the practical possibility of arranging for another judge to hear the case, and the public or constitutional role of the court before which the proceedings are being conducted. These problems usually arise in a context in which a judge has no particular personal desire to hear a case. If a judge were anxious to sit in a particular case, and took pains to arrange that he or she would do so, questions of actual bias may arise.
The proposition that proper analysis of an apprehended bias contention requires articulation of “the logical connection between the matter and the feared deviation from the course of deciding the case on its merits” has a ready application to the kinds of contentious “financial interest” based allegations of apprehended bias that were unsuccessfully raised in Ebner. But the requirement applies in other contexts and, in particular, to complaints of prejudgment bias. This is readily illustrated by the judgment of Gleeson CJ and Gummow J in Minister for Immigration and Multicultural Affairs v Jia (2000-2001) 205 CLR 507. Their Honours said (footnotes omitted):
[71] ... Decision-makers, including judicial decision-makers, sometimes approach their task with a tendency of mind, or predisposition, sometimes one that has been publicly expressed, without being accused or suspected of bias. The question is not whether a decision-maker’s mind is blank; it is whether it is open to persuasion. The fact that, in the case of judges, it may be easier to persuade one judge of a proposition than it is to persuade another does not mean that either of them is affected by bias.
[72]The test which was applied both by French J and by the Full Court was orthodox. It accords with the decisions of this court in Laws v Australian Broadcasting Tribunal and Johnson v Johnson. The state of mind described as bias in the form of prejudgment is one so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or arguments may be presented. Natural justice does not require the absence of any predisposition or inclination for or against an argument or conclusion…
The taxpayer Applicants placed considerable emphasis on these passages. The Commissioner responded that the reasoning decision in Jia principally involved a complaint of actual bias, and should be distinguished accordingly. This response is not quite accurate. It is certainly not the view taken by Spigelman CJ’s in McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504. In his decision, Spigelman CJ said:
[15] The test for pre-judgment in Australian law is, in my opinion, to the same effect as that identified by the Supreme Court of Canada in Old St Boniface Residents Association v Winnipeg (City) [1990] 3 SCR 1170 where, in the terminology of the majority judgment: the decision-maker must be “capable of being persuaded” (at 1197c); pre-judgment is of such an “extent” that contrary representations “would be futile” (at 1197d-e); statements said to constitute pre-judgment must be an “expression of final opinion ... which cannot be dislodged” (at 1197f); the position of the person must be “incapable of change” (at 1197g). The “incapable of persuasion” test was applied again in Save Richmond Farmland Society v Richmond (Township) [1990] 3 SCR 1213 at 1224g.
[16] A similar approach has been adopted in Australia on pre-judgment issues in Minister for Immigration and Multicultural Affairs v Jia Legeng (at 531 [71], 540 [105]) where, in the joint judgment of Gleeson CJ and Gummow J, their Honours referred to a test of whether the decision-maker “is open to persuasion”, or whether the “conclusion already formed [is] incapable of alteration, whatever evidence or arguments may be presented” (at 531 [72]).
[17] To similar effect are the observations of Hayne J (at 564 [183]), namely, that a decision-maker will apply his or her opinion “without giving the matter fresh consideration in the light of whatever may be the facts and arguments relevant to the particular case” (at [185]). His Honour went on (at 564 [186]) to refer to the test terms of whether “the evidence will be disregarded”.
[18] Also to similar effect are the observations of Gaudron and McHugh JJ in Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 100 that the decision-maker “will not alter that conclusion irrespective of the evidence or arguments presented”. In that case, members of the Tribunal had filed a defence which encompassed a pleading asserting the fact into which the Tribunal was to inquire. Their Honours concluded (at 101) that that act was based on the evidence known to them at the time of the pleading. It was not appropriate to conclude that “the members of the Tribunal will not decide the case impartially when they hear the evidence and arguments ... at the ... inquiry”.
In McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504 Spigelman CJ specifically rejected the proposition that the decision and reasoning in Minister for Immigration and Multicultural Affairs v Jia (2000-2001) 205 CLR 507 was confined to complaints of actual bias. The Chief Justice pointed out that in Jia the members of the Court had addressed the alternative argument of apprehended bias. Hayne J, with whom Gleeson CJ and Gummow J agreed on this point, applied the apprehended bias principle on the basis that it involved an enquiry as to whether or not the hypothetical observer might reasonably suspect that the decision maker might not be “open to persuasion”: see 72 NSWLR 504 at [19]-[23].
THE KNOWLEDGE OF THE FAIR MINDED OBSERVER
The proposition that the circumstances must “firmly establish” a reasonable apprehension of bias, in the sense that a fair minded observer “might” reasonably conclude that the decision maker “might not” bring to bear a mind that was “open to persuasion” in the resolution of the contentious matter, highlights the importance of determining what degree of knowledge and objectivity is to be attributed to the hypothetical observer. In Webb v The Queen (1993-1994) 181 CLR 41 at 51-52 Mason CJ and McHugh J explained the rationale for the “dual contingency” involved in the accepted statement of the apprehended bias principle: see paragraph 10 above. Their Honours said (footnotes omitted):
... the premise on which the decisions in this Court are based is that public confidence in the administration of justice is more likely to be maintained if the Court adopts a test that reflects the reaction of the ordinary reasonable member of the public to the irregularity in question. References to the reasonable apprehension of the “lay observer”, the “fair-minded observer”, the “fair-minded, informed lay observer”, “fair-minded people”, the “reasonable or fair-minded observer”, the “parties or the public” and the “reasonable person” abound in the decisions of this Court and other courts in this country. They indicate that it is the court’s view of the public’s view, not the court’s own view, which is determinative. If public confidence in the administration of justice is to be maintained, the approach that is taken by fair-minded and informed members of the public cannot be ignored. Indeed, as Toohey J pointed out in Vakauta in considering whether an allegation of bias on the part of a judge has been made out, the public perception of the judiciary is not advanced by attributing to a fair-minded member of the public a knowledge of the law and the judicial process which ordinary experience suggests is not the case. That does not mean that the trial judge’s opinions and findings are irrelevant. The fair-minded and informed observer would place great weight on the judge’s view of the facts. Indeed, in many cases the fair-minded observer would be bound to evaluate the incident in terms of the judge’s findings.
In the same case, Deane J expressed his view (at 73-74) that the knowledge to be attributed to the hypothetical “fair-minded observer” was:
a broad knowledge of the material objective facts ... as distinct from a detailed knowledge of the law or knowledge of the character or ability of the members of the relevant court. The material objective facts include, of course, any published statement, whether prior, contemporaneous or subsequent, of the person concerned. If, in the particular case the proper conclusion is that a fair-minded lay observer with a broad knowledge of those facts would not entertain a regional apprehension of bias, that is the end of the issue of disqualification by reason of an appearance of bias.
In Johnson v Johnson (2000) 201 CLR 488 at 508-9 Kirby J also referred to the attributes of the fictitious bystander. His Honour said (at [53], footnotes omitted):
… Such a person is not a lawyer. Yet neither is he or she a person wholly uninformed and uninstructed about the law in general or the issue to be decided. Being reasonable and fair-minded, the bystander, before making a decision important to the parties and the community, would ordinarily be taken to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of all the relevant circumstances. The bystander would be taken to know commonplace things, such as the fact that adjudicators sometimes say, or do, things that they might later wish they had not, without necessarily disqualifying themselves from continuing to exercise their powers. The bystander must also now be taken to have, at least in a very general way, some knowledge of the fact that an adjudicator may properly adopt reasonable efforts to confine proceedings within appropriate limits and to ensure that time is not wasted. The fictitious bystander will also be aware of the strong professional pressures on adjudicators (reinforced by the facilities of appeal and review) to uphold traditions of integrity and impartiality. Acting reasonably, the fictitious bystander would not reach a hasty conclusion based on the appearance evoked by an isolated episode of temper or remarks to the parties or their representatives, which was taken out of context. Finally, a reasonable member of the public is neither complacent nor unduly sensitive or suspicious.
A more specific statement about the hypothetical observer’s knowledge can be made where the complaint of prejudgment involves findings made in a previous decision or judgment. Referring to such a situation, Katzmann J said the following in Dye v Commonwealth Securities Ltd (No 4) [2010] FCA 910 at [94]:
The hypothetical observer would be expected, at least, to have read the whole of the judgment. A reasonable fair-minded observer would not cherry-pick statements and consider them in isolation; rather, s/he would have regard to the context in which they were made and the issues to which they related, for to do otherwise would be neither fair nor reasonable. As the majority observed in Johnson at [14], “the hypothetical observer is no more entitled to make snap judgments than the person under observation”.
But neither the question of what degree of knowledge and discrimination is properly attributable to the hypothetical observer, nor the question of what inferences the observer “might” reasonably draw from that information, can be answered with any precision. Indeed the decided cases exhibit a great degree of variation in the answers that have been given in the decided cases. One ready illustration is provided by Watson, and the strongly expressed dissent of Jacobs J. All the judges proceeded on the basis that the judge in Watson had read the contents of all the affidavits in the proceedings, and was thus fully informed of the factual basis for the critical comments he had made. The majority took the view however that, the judge was not entitled to come to the view that he had on that material alone. It was, in the opinion of the majority, of critically adverse significance that the judge had not seen the parties give evidence and had not seen their evidence tested in cross examination. The majority concluded that “it hardly needs to be said that [the judge] was not at that stage entitled to form the settled view that neither party was worthy of credit, or to impose on them both the extra-legal requirement that their evidence be corroborated, but a reasonable observer would have been justified in thinking that he had done so” (at 136 CLR 264). Jacobs J, on the other hand, was scathingly critical of the disqualification application. His Honour emphatically declared his satisfaction that the judge’s contentious remarks were ones “he was entitled to make without suffering the imputations that have been made” – because he had spent days dealing with preliminary applications and was “no doubt fully apprised of the affidavits and other documents which had been filed by each party”: (at 136 CLR 291-292).
There is a similar diversity of view in Re JRL; Ex parte CJL (1986) 161 CLR 342, although all the members of the court appeared to proceed on the basis that the question of hypothetical reactions of the “fair-minded” observer is to be based upon a reasonably detailed knowledge of the underlying facts and circumstances. In that case Mason J set out a detailed analysis of the functions of the court counsellor, under the provisions of the Family Law Act 1975 and Family Law Rules. Against that background the majority of the court, Gibbs CJ, Mason J and Brennan J, all thought the apprehended bias principle had been contravened because it was not unreasonable to apprehend the counsellor had made influential private remarks to the judge. The dissenting judges (Wilson and Dawson JJ) on the other hand, were quite unconvinced that the apprehended bias principle had been contravened. Wilson J emphasised that “strong grounds” were required and considered that in undertaking an assessment of the circumstances a court had to be “careful not to exaggerate the significance of actions and statements made by a judge in the course of a proceeding” (at 161 CLR 359-360). Wilson J reviewed the contents of the conversation during which the parties’ counsel were present. His Honour effectively concluded that one could comfortably infer from the contents of that conversation that the substance of the comments the court counsellor had made privately to the judge had either been substantially disclosed or could be seen not to have had any influence on the judge in any event. His Honour concluded that neither the parties nor any hypothetical onlooker “could reasonably be concerned that there might have been a denial of natural justice either by reason of the judge failing to be impartial or by reason of the parties either of them being denied a right to be heard”: at 161 CLR 366.
Dawson J expressed a similarly robust view. His Honour expressed the view that it was “beyond question” that the parties were given a fair opportunity to be heard. He then continued (at 375):
That, of course, is not the point taken, but it is very much related to the point in issue which is whether, having regard to the whole of the circumstances, the parties or one of them could reasonably apprehend that the trial judge could no longer bring an impartial mind to the hearing of the matter. With the greatest of respect to those who have reached a different conclusion, I cannot think that it would be reasonable to entertain such an apprehension. The judge took a step which it may be conceded was taken wrongly. The judge herself realized this and immediately moved to correct the situation. What was a few moments before a private communication by a person in the position of a witness, ceased to be a private communication and was made available to the parties to contest as they saw fit; it was no longer, if it ever was, something done behind the back of either party. If it could be suggested that the judge did not act with the intention of revealing all that had taken place between her and the counsellor in her chambers, then there would be some foundation for an apprehension of bias. No such suggestion was made nor, upon the material before us, do I think it could be made. The course taken by the judge adequately demonstrated, in my view, that she intended to continue the hearing of the matter in an impartial manner. There is no question of her capacity to do so.
The question of what knowledge should be attributed to the hypothetical observer, in the context of a complaint involving apprehensions of partiality, including apprehensions of adverse views about the credibility of a party and its witnesses, was informatively addressed in the decision of the High Court in Michael Wilson & Partners v Nicholls (2011) 244 CLR 427. In that case a trial judge, in the course of a number of interlocutory determinations that were dealt with in the absence of the defendants, had released affidavit evidence of the defendants, for the purpose of that material being used to further other criminal investigations and proceedings concerning the defendants. The defendants’ subsequent complaints of apprehended bias involved a central complaint that the trial judge, on seven separate occasions had made orders adverse to the defendants, without hearing them and without ever providing them with an opportunity to challenge the basis on which the orders were made. Underlying this general complaint were illustrative particular complaints that the judge had, in all probability, (i) acted on the basis of a view of the facts that was adverse to the credibility of the defendants, (ii) accepted the evidence of a particular witness whose credit was likely to be in contest in the substantive proceedings.
As can be seen, the principal complaint in the Michael Wilson case was about the confidentiality and non disclosure of the interlocutory orders. At first impression, the notion that a Court could properly decide any matter without notice to the parties affected, and without giving them any opportunity to be heard, seems quite inconsistent with public confidence in the impartiality and fairness of the adjudicative process. Nevertheless, that High Court endorsed the “two step” process described in Ebner. Gummow ACJ, Hayne, Crennan and Bell JJ said (at [63], footnotes omitted):
In Ebner v Official Trustee in Bankruptcy, the plurality pointed out that application of the apprehension of bias principle requires two steps. First, it requires the identification of what it is said might lead the judge to decide a case other than on its legal and factual merits. And secondly, there must be an articulation of the logical connection between that matter and the feared deviation from the course of deciding the case on its merits. The plurality in Ebner went on to say that “[t]he bare assertion that a judge (or juror) has an ‘interest’ in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated”. So too, in this case, the bare assertion that the judge appeared to be biased through prejudgment would be of no assistance without articulation of the connection between the events giving rise to the apprehension of bias through prejudgment and the possibility of departure from impartial decision making.
More specifically, the High Court judgment addressed the very point about the significance that could properly be attributed to the fact that the judge had repeatedly dealt privately with one of the parties in relation to interlocutory applications. The plurality judgment noted the Court of Appeal’s view that this course of conduct “raised a different and additional concern” but continued with the following passage (footnotes omitted):
[69] That concern was identified as the possibility “in such circumstances that the judge’s mind will become familiar with the character of the plaintiff’s case to an extent that, consciously or subconsciously, there will be a tendency to place the further evidence within the pre-existing mental structure” (emphasis added). But the existence of a “concern” described as the possibility of placing the evidence led at trial into a “pre-existing mental structure” does not demonstrate that the fair-minded lay observer might reasonably apprehend that the judge might have prejudged an issue to be decided at trial. In order to establish such a reasonable apprehension it is necessary to analyse more closely the connection that is asserted between the conduct and disposition of interlocutory applications and the possibility of prejudgment.
[70] The fact that Einstein J made several ex parte interlocutory orders and on each occasion directed that those applications, the material in support, the reasons for making the orders and the orders themselves not be disclosed to one side of the litigation did not found a reasonable apprehension of prejudgment of the issues that were to be fought at trial. It may well be that the directions not to disclose material should not have been left in force for as long as they were. Perhaps they should not have been made at all. But if their making or the failure to limit their duration was wrong, that did not found a reasonable apprehension of bias.
In reaching the view that no appearance of bias could arise the High Court examined the nature of the findings that the trial judge had made in the interlocutory applications. In so doing the Court necessarily credited the hypothetical fair minded observer with knowledge no actual observer could have had at the relevant time – because all the applications had been made ex parte and were dealt with confidentially.
THE APPLICANT’S “NO ARTICULATION” CONTENTION
It is against the background that the taxpayer Applicant’s opposition to the present application, on the basis that the Commissioner has provided “no articulation” of its apprehended bias contention falls to be considered. It is convenient to do so, by reference to the grounds summarised in paragraph 7 above, in three main categories (i) the Israeli banking practice evidence, (ii) the evidence of no overseas assets and (iii) the findings relating to Ayb’s credit. In so doing, it will be necessary to address the evidence and findings that were made in Areffco relating to those matters.
THE ISRAELI BANKING PRACTICE EVIDENCE
In Areffco the Commissioner’s response to the assertedly genuine nature of the contentious loans was to highlight MDB’s apparent passivity in relation to them. That apparent passivity involved the paucity of loan records, other apparent departures from Israeli banking practices, and not insisting upon timely payment of interest. It was said to reflect an awareness that the transactions did not involve genuine loans, and to suggest that MDB had access to Erb-related funds in Israeli that were either the true primary source of the original fund transfers, or were the primarily intended source of any repayment obligations that might exist.
The Commissioner’s evidence of Israeli banking law and practice was extensively reviewed in the Areffco decision. That discussion broadly accepted the evidence about the apparent irregularities in the known loan circumstances and available documentation. However, the ultimate conclusion was that those irregularities did not suffice to contradict the likely reality of the contentious loan obligations, having regard to other objective evidence, including the actual movement of funds and the documentation that had been provided by MDB. The High Court’s discussion of the general “apprehended bias” principle in Ex parte Angliss Group shows a considerable disinclination to apply the principle to a situation that involves nothing more than an apparent adjudicative preference for particular policies or modes of reasoning. The mere apprehension that a court or tribunal will decide a matter in substantially the same manner as it has determined another, relevantly similar, matter is unlikely to provide a proper basis for apprehensions of bias or prejudgment. On the contrary, basic concepts of precedent value and the inherent desirability of consistent decision making, encourage the view that anticipated similarity of outcome in matters that involve materially similar factual scenarios, legislative requirements and, where they are relevant, policy considerations, is inherently desirable. It tends to lead to characterisation of the adjudicative process as predictably principled, fair and consistent.
The proposition that a mere similarity of factual issues, even between the same parties, is not sufficient to give rise to a relevant and reasonable apprehension of bias, was affirmed by the High Court in Re Finance Sector Union of Australia; ex parte Illaton Pty Ltd (1992) 107 ALR 581. That was a case in which a Deputy President of the Australian Industrial Relations Commission, in dismissing an application to certify an industrial agreement, and after 45 days of hearing, expressed strongly worded conclusions on various factual matters. Those matters were germane to issues that arose in subsequent industrial dispute proceedings between the same parties. The circumstances gave rise to an unsuccessful application for the Deputy President to be disqualified from hearing the second proceedings. Deane, Toohey and Gaudron JJ had this to say about the application of the prejudgment bias principle (at 583, footnotes omitted):
In these circumstances, the need for caution which this court has consistently identified in relation to applications for an order preventing a member of a statutory tribunal from participating in the discharge of the functions of that tribunal by reason of apprehended bias is particularly apposite when such an application is directed against a member of the Commission. It is that care must be taken to bear in mind that the basis for disqualification by reason of apprehended bias is that there are grounds upon which a party or the public might entertain a reasonable apprehension that the particular member of the Commission will not decide the case impartially or without prejudice. The basis for disqualification is not merely that the member’s past decisions, on questions of fact or law, might lead to a reasonable expectation that she or he will decide the case adversely to one of the parties. Nor is it that she or he has had previous contact or experience, as a member of the Commission, with the facts involved in the particular matter, with the context in which the particular matter arises, or with one or more of the parties involved in the particular matter.
In Helljay Investments Pty Ltd v Deputy Commissioner of Taxation (1999) 166 ALR 302. Hayne J cited the passage from the judgment of Mason J in Re JRL; Ex parte CJL (set out in paragraph 24 above) – to the effect that the Watson/Livesey principle only applied where “a reasonable apprehension of bias by reason of prejudgment” had been “firmly established”. His Honour then opined that a judge or tribunal’s prior determination on a question of law will:
seldom, if ever, warrant a conclusion of appearance of bias, no matter how important that opinion may have been to the disposition of the past case or how important it may be to the outcome of the instant case. Fidelity to precedent and consistency may make it very likely that the same opinion about a question of law will be expressed in both cases. But that stops well short of saying that the judicial officer will not listen to and properly consider arguments against the earlier holding.
Hayne J then referred to a Victorian Supreme Court decision in Ewert v Lonie [1972] VR 308 at 311–12, where an allegation of apprehended bias arose in the context of an planning approval dispute. In an earlier set of proceedings, constituted by two of the same members of a statutory planning tribunal, the approval had been set aside on technical grounds, but the tribunal had also ruled on, and rejected, some of the other grounds of objection to the approval. Those grounds of objection were again pursued in the second set of proceedings, in which the apprehension of bias complaint was unsuccessfully made. In a passage that Hayne J later set out with approval in Helljay Investments Pty Ltd v Deputy Commissioner of Taxation (1999) 166 ALR 302, Lush J said:
Every reasonable man knows that consistency in decision is one of the aims of judicial or quasi-judicial institutions, but if he is exercising his quality of reasonableness he does not suppose that a tribunal will refuse to entertain or will fail to give proper attention to a submission opposed to its former decision merely because it is so opposed. In this case, the reasonable onlooker might have thought that the appellants would not have much chance of succeeding, but this is not the same thing as feeling or believing that they would not get a proper hearing. It is not a characteristic of the law’s reasonable man either to be irrationally suspicious of every institution or authority or to think that every cynical appraisal represents an absolute truth.
A graphic example of a situation where the predictability of the outcome of contested issues was insufficient to give rise to a relevant apprehension of bias is provided by in Fitzgerald v Director of Public Prosecutions (1991) 24 NSWLR 45. Mr Fitzgerald had been charged with two counts of false pretences involving two unrelated incidents. On the day the charges were listed for trial there was a successful application to have them separately tried. The basis of this application was the judge’s ruling that some flawed identification evidence would not be admissible on one of the charges. The judge then heard the first count and ultimately directed an acquittal, apparently on the alternative grounds that the identification evidence was inadequate and that the circumstantial evidence (of the accused’s possession of both the goods and the cheque book from which the dishonoured payment cheque had been drawn) was insufficient to discharge the onus of proof. When the hearing moved to the trial of the second charge, the Crown sought to have the judge disqualify himself, on the ground of apprehended prejudgment arising from the determination of the first charge. The Crown had agreed not to adduce the contentious identification evidence on the second charge. This had the practical result that the second charge depended principally on the circumstantial evidence. Although this evidence was uncontradicted, the judge had not regarded it as sufficient to discharge the onus of proof on the first charge, and was highly likely to come to the same result on the second charge.
The NSW Court of Appeal rejected the contention that the circumstances revealed relevant prejudgment bias. Samuels JA, with whom Meagher JA agreed said:
The fact that a judge has decided an issue in a particular way, and is likely to decide it in the same way when it arises again, does not, in my view, indicate pre-judgment of the kind which was perceived in R v Watson; Ex parte Armstrong or in Livesey v New South Wales Bar Association (1983) 151 CLR 288. In R v Watson; Ex parte Armstrong, the apprehension was that the judge had already made up his mind about the credit of a witness before he had heard the whole of the relevant material; and in Livesey it was that members of the court in other proceedings and on different evidence had determined adversely to the appellant an issue vital to the current proceedings in which he was involved. The essence of the principles which regulate disqualification for apprehension of bias are based upon the reasonable perception that justice will not be done because a party will be unfairly tried. I cannot see that in this case the Crown could argue with any cogency that there was any fear of that kind.
The Commissioner’s complaints of apprehended bias in the present matters, in relation to the outcome in Areffco, involved nothing more than reference to the general similarity of circumstances with the Areffco proceedings, an asserted similarity of evidence about Israeli banking practice, and the fact that in those proceedings the Tribunal accepted the taxpayer’s evidence about the contentious loan transaction – notwithstanding the Commissioner’s reasoned scepticism. Those complaints involve nothing more than the Commissioner’s disappointment in the outcome of a difficult case that has relevant similarities to the present matters. Neither the outcome, nor the similarity, provide a proper or acceptable basis for the application of the apprehended bias principles. As we have indicated, mere similarity and predictability of outcome is not probative, to a fair minded observer, of a reasonable apprehension that a decision maker “might not” approach the decision making task with an open mind. Whatever grounds might exist, in such a situation, for a reasonable apprehension of prejudgment bias would depend on the existence of reasonable apprehensions based on the integrity and cogency of the previous decision making process and any reasons given for the decision. In the present case, the Tribunal’s Areffco decision could not provide a basis for any reasonable apprehension of prejudgment bias relating to the apparent similarity of the circumstances involved in the underlying transactions. In expressing that conclusion we attribute to the hypothetical observer knowledge of the careful and detailed reasons of both the Tribunal in the Areffco proceedings, and of the Full Federal Court. We specifically note that in Rawson Finances Pty Ltd v Commissioner of Taxation (2013) 296 ALR 307; [2013] FCAFC 26 at [68] the Tribunal’s Areffco decision was described as being the result of “detailed and careful – and, it must be said, wholly conventional – inferential reasoning”.
THE OVERSEAS ASSETS ISSUE – THE FINDING OF FACT
As we indicated in paragraph 42, the Commissioner’s response to the objective evidence of the fund transfers from and to MDB, and the other evidence suggestive of the genuine nature of the contentious loans, was to suggest that MDB had access to other funds that were controlled by Erb and located overseas. In response to that suggestion, there was evidence from Emb that neither he nor his brother ever had any overseas assets. Erb’s wife gave evidence that she knew of no such assets, and believed that Erb would have told her about any that did exist. Ayb also gave evidence that he had been closely involved in Areffco’s affairs after about March 2004, and was also unaware of any such overseas assets. In Areffco the Tribunal accepted that evidence.
In the present cases the Commissioner’s assessment decisions are again based on a view that the apparent irregularities associated with the contentious loans, including the loan documentation, payments by the Applicants, and apparent lack of co-operation by the Israeli bank, demonstrate the uncommercial nature of the asserted loans, and preclude satisfaction that the assessments are excessive. The Commissioner contends, or is likely to contend, that none of the Applicants has fully and accurately disclosed the circumstances and details of the contentious loans. It is reasonable to expect, in those circumstances, that the Applicants will seek to adduce evidence again disavowing knowledge of overseas assets held by any entity associated with Erb. That evidence might be regarded as involving a mere question of fact (including the apparent objective reliability of evidence), or also a question of credibility. In what we are about to say, we confine ourselves to the question of the objective reliability of the evidence. We deal with credibility in the next section of these reasons.
The relevance, and ultimate significance, of the evidence about the existence (or non-existence) of overseas assets of any of the taxpayers (or of any other entities associated with Erb) is a matter on which minds may differ. The position the Commissioner took in the Areffco proceedings was that the taxpayer had to disprove the existence of any such assets. Areffco said it did not. In the Full Federal Court’s decision Jessup J said that the relevance of the matter did not need to be explored in order to determine the review proceedings: (see (2013) 296 ALR 307; [2013] FCAFC 26 at [41]). Jago J said that the Tribunal was correct to conclude that the taxpayer did not have to prove the absence of overseas assets (at [117]) and did not have to disprove the Commissioner’s related hypothesis of some kind of “back to back” arrangements in which “overseas assets” served as some kind of security for the contentious loan(s): (at [107] and [108]). Nicholas J agreed with Jago J. The Full Federal Court’s decision therefore establishes that disproof of the existence of overseas assets was not a pre-requisite to Areffco’s ability to demonstrate that the assessments were excessive.
But Jago J noted that the Tribunal had in fact dealt with the Commissioner’s “overseas assets” hypothesis and, in the course of so doing, had accepted Ayb’s evidence that he was not aware of any overseas assets and (in particular) had not received any indication from MDB that it had released any security following repayment of the contentious loan principal. Her Honour said, however, that Ayb’s evidence was not necessarily decisive; reasonable and rational minds could differ about the relevance of his evidence. It could be regarded as merely “equivocal about the character of the fund transfers rather than persuasive of their character as loans”: at [122]. Jagot J dealt with the evidence of Mrs Erb in a similar fashion – at [124].
There is an apparent likelihood that the “overseas assets” evidence, at least evidence of the kind given by Ayb and his mother in Areffco, would have an even less clear materiality in the present matters. Ayb and his mother’s evidence had a possible value in Areffco’s circumstances for two main reasons – the nature of Areffco’s corporate existence, including the short period between its incorporation and the first fund transfer from MDB, and Erb’s deteriorating cognitive functioning after 2004. In the present matters the circumstances of at least two of the taxpayer Applicants differ significantly from those involved in the Areffco proceedings. The potential differences emerge, readily enough, from the details outlined in the Table in paragraph 3 above. The details indicate that two of the taxpayer Applicants (unlike Areffco) had been trading for many years before Ayb had any active involvement in Erb’s affairs and, in particular, for many years before the first contentious loan transaction. The latter circumstance, in particular, provides a potentially important point of difference from the situation that arose in Areffco – where the proximity of Areffco’s date of incorporation to the first contentious loan transaction tended to contradict the likelihood that the contentious loan transfers from MDB could in any reasonable conclusion, be characterised as the taxpayer’s income.
Against this background, we doubt the accuracy of the proposition, implicit in the Commissioner’s contention, that the Tribunal’s findings in Areffco about the absence of overseas assets, was a finding on a “live and significant issue” for the present proceedings, in the sense in which the expression was used in Livesey. More significantly, we do not accept the proposition that a fair minded observer “might” apprehend that SM Taylor SC “might not” approach evidence about “overseas assets” with an open mind in the present proceedings. In so concluding, we regard it as important to emphasise that, whatever scepticism the Commissioner expressed in the Areffco proceedings, there was simply no evidence that any Erb-related entity had overseas assets. The fact that, in the absence of any evidentiary contradiction, the Tribunal accepted Areffco’s evidence, cannot justify a reasonable apprehension that the Tribunal might not approach any similar matter in the present proceedings with an open mind.
THE TRIBUNAL’S CREDIT FINDING IN FAVOUR OF AYB
Credit findings are, in a sense, merely a kind of prejudgment opinion analogous to expressions of opinion or preference of the kind involved in Angliss and Jia. Opinions of that kind have to be evaluated, in the light of the relevant circumstances, to assess whether they give rise to an apprehension the decision maker might not be “open to persuasion”. But the Commissioner, emphasising the passage in Livesey to which we have referred in paragraph 19 above, suggests that credit findings, at least on a “live and significant issue in the subsequent case”, necessarily require a conclusion that there is a reasonable apprehension of prejudgment bias.
That passage in the Livesey judgment, although it only refers to “credit”, is probably to be understood as referring both to “credit” and “credibility”. An earlier passage in the High Court’s judgment recorded the fact that in the earlier proceedings two members of the Court of Appeal, in their respective judgments had expressed adverse views “both as to the credibility and credit of [Ms B] as a witness and on the circumstances surrounding the lodging of the [bail] surety”. The deliberate use of the disjunctive expression, understood against the background of the reasons and findings made in Re B [1981] 2 NSWLR 372, suggests that the Court was intending to refer not only to findings about the apparent general honesty of the person concerned, but also about the objective unreliability of their evidence.
This apparent distinction between “credit” and “credibility” is of some importance to bear in mind. If an adverse finding, although identified as one of “credit” generally, really involves no more than an assessment of the objective unreliability of the person’s evidence, it may have little significance in suggesting a reasonable apprehension of prejudgment in a subsequent case involving materially different factual circumstances. (We regard the Tribunal’s acceptance of Ayb’s mother’s evidence in Areffco as being in this category.) But where the “credit” finding relates to the witness’s apparent honesty and truthfulness, a finding of that kind may contribute to a reasonable apprehension of prejudgment bias, depending on the particularity of the finding and the nature and significance of the issues in contention.
Given the circumstances involved in Livesey (see paragraphs 16 to 18 above), it can readily be seen that the evidence of Ms B was of central significance in determining both Ms B’s and Livesey’s knowledge of the source of the contentious funds, and the character of Ms B’s personal proprietary interest in them. A similarly significant “credit” finding, that provided a basis for a reasonable apprehension of bias, was evident in Australian National Industries Ltd (in liq) v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411. That was a case where there were between 10 and 16 sets of related proceedings in which the solvency of Spedley Securities was likely to be a critical matter for determination. In interlocutory proceedings a judge had made findings that were critical of the “recollection, credit and commercial conduct” of two of the three directors of the company. Those findings were (i) directly relevant to one of the substantial points in issue in the principal proceedings, (ii) patently critical of the honesty of a principal witness, and (iii) included a finding that the witness had given “false” evidence.
It is apparent from the various judgments in Spedley Securities that there were differences of opinion as to how the requirement that an apprehension of bias must be “firmly established” applied to findings involving the credit of a witness. Mahoney JA referred to the statement in Livesey to which we have already referred. His Honour also referred to the following passage in Watson at 264:
As the cases show, there are some matters on which a judge may have preconceived opinions, and yet be qualified to sit, but speaking generally the credit of an essential witness, where the case may turn on credibility, is not one of them. It is apparent from the facts that have been recited that it is possible, if not probable, that an assessment of the credit of the witnesses may play an important part in the resolution of the proceedings between the husband and the wife.
Mahoney JA then continued to explain that he had referred to these matters because in his opinion they required the conclusion that (at 26 NSWLR 442):
… it is, in my opinion, proper to approach a question of this kind upon the basis that, where decisions of fact or credibility have been made, the pre-judgment principle will apply unless it appears that there is a “necessity” for the judge to sit or that the case is “an extraordinary case” or one which involves “special circumstances”.
This statement that credit findings, in the dual sense of findings of fact based on the objective reliability of evidence and the apparent honesty of a particular witness, stand in a special situation when applying the apprehended bias principle is consistent with a suggestion to the same effect in Michael Wilson & Partners v Nicholls (2011) 244 CLR 427 at [73]. There, in rejecting the apprehended bias contention the High Court emphasised that the applications as determined by the judge did not involve any determination of the favourable credibility of the supporting evidence, nor any adverse finding of the credibility of the defendants (other than the implicit satisfaction that the evidence used to support the various interlocutory applications was apparently credible).
The decisions in Livesey and Spedley Securities involved adverse credit findings. In the present case the Commissioner complains about a credit finding that was favourable to Ayb. The question arises as to whether this is a difference without a relevant distinction. A closely related point arose in British American Tobacco Australia Services Limited v Laurie (2010) 242 CLR 283. In that case a judge, in an interlocutory decision in other proceedings, had made a finding that a party had engaged in a deliberate policy of document destruction for the purpose of fraudulently concealing relevant information. In so doing the judge had accepted the evidence of a witness whose credibility had been attacked, but whose substantive evidence had not been contradicted by other evidence – despite the inherent probability that if that evidence was inaccurate, it ought to have been within the power of the company to adduce the contradictory evidence.
In upholding the complaint that the circumstances revealed a reasonable apprehension of bias the majority judgment in the High Court was obviously influenced by the seriousness of the misconduct finding the judge had made. One passage in the judgment suggests that the principle would apply because of the credibility nature of the finding, rather than because it was determinative of any particular fact. A later passage suggests, however, that the propriety of drawing a conclusion that there was a reasonable apprehension of bias cannot be divorced from the content of the finding and, in particular, the language in which it is expressed. Those two passages appear at 242 CLR 283 [139] and [145] – and were as follows (footnotes omitted):
[139] It is fundamental to the administration of justice that the judge be neutral. It is for this reason that the appearance of departure from neutrality is a ground of disqualification. Because the rule is concerned with the appearance of bias, and not the actuality, it is the perception of the hypothetical observer that provides the yardstick. It is the public’s perception of neutrality with which the rule is concerned. In Livesey it was recognised that the lay observer might reasonably apprehend that a judge who has found a state of affairs to exist, or who has come to a clear view about the credit of a witness, may not be inclined to depart from that view in a subsequent case. It is a recognition of human nature.
[145] Whenever a judge is asked to try an issue which he or she has previously determined, whether in the same proceedings or in different proceedings, and whether between the same parties or different parties, the judge will be aware that different evidence may be led at the later trial. Judge Curtis’s express acknowledgment of that circumstance does not remove the impression created by reading the judgment that the clear views there stated might influence his determination of the same issue in the Laurie proceedings. Allsop P’s conclusion was correct. In addition to the possibility of the evidentiary position changing, a reasonable observer would note that the trial judge’s finding of fraud was otherwise expressed without qualification or doubt, that it was based on actual persuasion of the correctness of that conclusion, that while the judge did not use violent language, he did express himself in terms indicating extreme scepticism about BATAS’s denials and strong doubt about the possibility of different materials explaining the difficulties experienced by the judge, and that the nature of the fraud about which the judge had been persuaded was extremely serious. In the circumstances of this unusual case, a reasonable observer might possibly apprehend that at the trial the court might not move its mind from the position reached on one set of materials even if different materials were presented at the trial — that is, bring an impartial mind to the issues relating to the fraud finding…
Underlying the potential sensitivity of credit related findings in the application of the apprehended bias principles is the assumption that the credit or credibility of Ayb is a matter that is “a live and significant issue in the subsequent case”: Livesey v NSW Bar Association (1983) 151 CLR 288 at 300. Whether that assumption is justified in the circumstances of the taxpayer Applicants’ objections merits examination.
According to the evidence given in the Areffco proceedings, none of the taxpayer entities associated with Erb lodged tax returns after about April 2001. That change followed the retirement of a tax agent and accountant who had previously prepared the tax returns and who had a long association with Erb. The change also coincided with a noticeable deterioration in Erb’s cognitive functioning. In about March 2004 the significance of Erb’s apparent neglect of his financial affairs, at least in relation to taxation obligations, came to a head after the Commissioner issued notices requiring the submission of tax returns. In the dealings that ensued, and having regard to his father’s previous neglect and deteriorating health, Ayb became directly involved, and on at least one view, principally responsible for, regularising Erb’s financial affairs, and those of his associated entities. Erb died in 2009. The general thrust of Ayb’s evidence was that (i) he had no involvement in Areffco’s original loan arrangements with MDB, (ii) he was present at a 2004 meeting with his father and an MDB bank officer where the loan arrangements were discussed, but did not otherwise have any dealings with MDB, (iii) he had been responsible for Areffco’s attempts after 2004 to bring its tax affairs up to date, and (iv) he was not aware of any overseas assets of Erb or any entities related to him.
The Commissioner attacked Ayb’s credit in the Areffco proceedings. That attack was principally based on a scepticism of Ayb’s claim that he had little knowledge of the circumstances involved in arranging the contentious loans, and little involvement with MDB in relation to the loans. The Commissioner also criticised Ayb’s evidence on the basis that, in an interview in June 2007, he had not fully disclosed Areffco’s use of the funds provided by MDB. The Commissioner contended that by June 2007 Ayb had been involved for several years in obtaining information about, and in attempting to regularise, the tax affairs of Erb’s various entities. That involvement provided good reason, according to the Commissioner, to believe that Ayb would have become well aware of the detailed circumstances of Erb’s dealings with MDB.
It can be seen that Ayb’s evidence in the Areffco proceedings went largely to events that occurred a long time after the contentious transactions. As the details we have summarised earlier in the Table in paragraph 3 suggest, it is highly likely that the same can be said in relation to the contentious loans involving Edev and Ell, but not BQL.
We are inclined to the view that Ayb’s credit and credibility had, in reality, little ultimate significance in the resolution of the review application proceedings in Areffco. Our inclination is based on essentially the same reasoning as that involved in the following passage from the judgment of Jessup J in the appeal proceedings:
[66] … it was submitted on behalf of the Commissioner that the Tribunal’s error lay in its having drawn an inference by reference to material which was no more than consistent with the factual conclusion for which the appellant pressed. It was put that the material before the Tribunal was “evenly balanced” …
[67] …. The case was not one of evenly balanced evidence. All of the evidence, with respect to the actual communications and records of the appellant and the Bank at least, pointed to the conclusion that the transactions of 1997 were loans. The “balance” to which counsel for the Commissioner were apparently referring was not between evidence of that kind and evidence that suggested that the transactions were of some other character. Rather, the so-called “balance” was between the evidence relied upon by the appellant on the one hand, and the omissions which that evidence involved and the commercial improbability of the Bank having been prepared to lend money in the circumstances disclosed only by that evidence, on the other hand. The Tribunal was faced with a situation in which the positive evidence which it had suggested (and, limited though the evidence was, suggested unambiguously) that the transfers were loans, but in which there were quite powerful arguments why that evidence should not be taken at face value.
[68] That was a normal fact-finding situation. Any submission that the Tribunal resolved the factual issues that were before it on the basis that the evidence was so evenly balanced that the ultimate finding turned, in effect, on the toss of a coin, or upon speculation or conjecture, would be quite inconsistent with the detailed and careful – and, it must be said, wholly conventional – inferential reasoning which supported its decision in the case. …
The point of this extract, for the purpose of the present reasons, is to highlight the peripheral relevance of Ayb’s credit in the Areffco proceedings. There was no suggestion, and no basis for a suggestion, that he was involved in the original loan negotiations and fund transfers. Consequently, his professed inability to provide detailed explanation of those circumstances, could operate as no more than as a reason to suspect that he was concealing information he had subsequently acquired from his father (and perhaps from the MDB). But even so, a suspicion of that kind could lead only to a view that there was an absence of relevant evidence. It could not provide a positive basis to disbelieve, or discount the significance of, the objective evidence to which Jessup J referred.
The hypothetical assessment of what apprehensions a fair-minded observer might reasonably embrace, and in particular whether they might reasonably apply that the decision maker might not be “open to persuasion”, is difficult. It is made more difficult, in the present case, by the generality of the Commissioner’s complaint, the apparently marginal relevance of Ayb’s credibility in the Areffco proceedings, and the uncertainty about the scope of the potential evidence in the present proceedings. However, we proceed on the basis that the Commissioner’s challenge to the evidence of Ayb and the taxpayer Applicants in the present proceedings will at least involve the proposition that the Applicants cannot discharge the onus of proof, because they cannot produce evidence that adequately explains the totality of the contentious transactions. At least one suggestion the Commissioner is likely to make is to repeat the suggestion that Ayb has deliberately withheld information he is likely to know, because of his close involvement with Erb (at least in the years after 2004). In addition, it is reasonable to anticipate that the Commissioner will maintain the stance he took in the Areffco proceedings, that Ayb should not be believed in his disavowal of knowledge of any relevant overseas assets, and that the permissible inference about their existence precludes the taxpayer Applicants from discharging their onus of proof.
The circumstances apparently common to Areffco and those of the taxpayer Applicants include objective evidence of the fund transfers, and the involvement of an apparently reputable major Israeli banking institution, as both the source of the contentious loan funds and the recipient of subsequent payments. On the other hand, there is an incompleteness, and apparent irregularity about the transactions, that is not consistent with ordinarily encountered banking practices.
In resolving the difficulty presented by this conflicting evidence, we accept that a fair-minded observer might reasonably form the view that an opinion about the credit or credibility of Ayb, is likely to influence assessment of the evidence, and any inferences properly to be drawn from it. But the more important question is whether the hypothetical fair-minded observer might also reasonably form the opinion that SM Taylor SC might not be “open to persuasion” in relation to those credit or credibility matters. This question is not, we think, amenable to a rigorously articulated evaluation of the kind emphasised in Ebner. In a situation where it is difficult to predict the significance and weight of the matters that may be relied upon to impugn the evidence of Ayb, his mother and Erm, we can foresee the potential for the fair-minded observer reasonably to conclude that a favourable prior assessment of their respective credibility might survive to influence the assessment of the evidence in the current proceedings.
We recognise that there is a sense in which the credibility findings made in Areffco concerning Ayb have been based upon inference from primary evidence which is unlikely to change and which the Commissioner is unlikely to be able to contradict directly, if at all. In such a situation there is every possibility, if not an actual likelihood, that any surviving favourable view about the credit and credibility of Ayb derives from the similarity of the evidence, rather than from the previous findings themselves. As the President of the Tribunal observed in Re Mellor and Australian Postal Corporation [2010] AATA 288 (speaking in the context of the rehearing of a matter that had been remitted following a successful appeal to the Federal Court):
[28] … just because a member makes an observation relating to credit, a fair-minded lay observer would not apprehend that the member might not bring an impartial and unprejudiced mind to the resolution of the matter. That is not to say that the member may not come to the same conclusion as the member came to the first time, but that is far from not bringing an impartial and unprejudiced mind to the resolution of the question. It is important to note that the fact alone of coming to the same conclusion a second time, or the prospect of that, is not the test. The test relates to the mind of the member and not whether the decision might or might not be the same.
However, we accept that the distinction between the repetition of a favourable finding, because of the essential identity of the underlying evidence, and the residual significance of a previously made finding, is inherently difficult to draw. It is a distinction about which minds may reasonably differ. In the complexity of the circumstances that exist in the present cases, it is a distinction which a reasonable and fair-minded observer might not readily draw. Given the special sensitivity that the cases, to which we have referred above, display towards previous credit and credibility findings, we are not satisfied that the hypothetical fair-minded observer “might not” apprehend the influential survival of the original credit conclusion. On the contrary, given the essentially impressionistic nature of the “dual contingency” assessment required, and the sensitivity associated with credibility findings, we conclude that in the circumstances of the present cases a fair-minded observer “might” reasonably conclude that SM Taylor SC “might not” bring to bear in the determination of the present review applications a mind that was “open to persuasion” in relation to the credit and credibility findings about which the Commissioner complains.
In arriving at that conclusion we have taken into account the state of the proceedings. The decided cases, in emphasising that decision-makers should not too readily disqualify themselves from hearing a matter, point out that decision-makers should not abdicate their decision making function merely on the grounds of convenience or of avoiding contention. But it is inherent in the nature of the assessment required in the application of the apprehended bias principle, that minds may reasonably differ. It is also readily apparent that the consequences for the parties, and the decision-making institution, may involve significant adverse consequences (in terms of disruption, wasted time and avoidable expense) if a different view about the bias apprehension is taken by a review or appeal authority at a later stage. That reality does not justify making unprincipled decisions, but must inevitably be taken into account by a decision-maker in determining whether or not they are sufficiently satisfied they are correct in concluding that there is no reasonable possibility that the hypothetical fair-minded observer might apprehend the decision involves bias. (Here we take into account the observations of Gleeson CJ, McHugh, Gummow and Hayne JJ that we set out in paragraph 26 above.) That consideration is particularly appropriate where there is a considerable diversity of opinion about the extent of knowledge and discrimination that can properly be attributed to the hypothetical observer. As we have indicated, an accurate understanding of the potential relevance of the credit and credibility of Ayb requires a detailed knowledge of the circumstances of the contentious transactions, and of the nuances of argument relied upon by the Commissioner, on the one hand, and the taxpayer Applicants, on the other. Given the complexity, and the “nicety” of the respective arguments we are satisfied that it is proper to accept the Commissioner’s contention.
DECISION
Senior Member Taylor SC should not be included in the Tribunal constituted to hear the present matters.
I certify that the preceding 77 (seventy-seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President R P Handley and Senior Member P W Taylor SC ...........[sgd].............................................................
Associate
Dated 24 June 2013
Date of hearing 22 April 2013 Counsel for the Applicant Ms R Seiden and Ms S Kaur-Bains Solicitors for the Applicant Signet Lawyers Counsel for the Respondent Mr M Wigney SC Solicitors for the Respondent Maddocks Lawyers
18
0