Bristrol Custodians Limited v Chief Commissioner of State Revenue
[2012] NSWADTAP 44
•06 November 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Bristrol Custodians Limited v Chief Commissioner of State Revenue [2012] NSWADTAP 44 Hearing dates: 28 September 2012 Decision date: 06 November 2012 Jurisdiction: Appeal Panel - Internal Before: RL Seiden, Deputy President
Professor GD Walker, Judicial Member
C Bennett, Non-judicial MemberDecision: (1)Leave to appeal granted
(2)Leave to extend appeal to the merits refused
(3)Appeal dismissed
Catchwords: State revenue, interlocutory appeal, leave to appeal, leave to appeal the merits, procedural fairness, documents relevant to the determination of the review application Legislation Cited: Administrative Appeals Tribunal Act 1975 (Cth)
Administrative Decisions Tribunal Act 1997(NSW)
Duties Act 1997 (NSW)
Freedom of Information Act 1982 (Cth)
Government Information (Public Access) Act 2009 (NSW)
Income Tax Assessment Act 1936(Cth) Security Industry Act 1997 (NSW)
Taxation Administration Act 1996 (NSW)Cases Cited: AAT Case 10,122 11 April 1995
AEZ v Commissioner of Police, NSW Police Force [2012] NSWADT 199
Australian Prudential Regulatory Authority v VBN (2005) 88 ALD 403
Bausch v Transport Accident Commissioner (1996) 11 VAR 177
Black v Hunter New England Local Health District [2011] NSWADT 295
Bristrol Custodians Ltd v Chief Commissioner of State Revenue [2012] NSWADT 123
C of T v Nestle Australia Ltd (1986) 12 FCR 257
Canadian Pacific Tobacco Co Ltd v Stapleton(1952) 86 CLR 1
Chief Commissioner of State Revenue v Paspaley(2008) NSWCA 184
Commissioner of Police New South Wales v Gray(2009) 74 NSWLR 1
Commissioner of Police v Fortuna [2010] NSWADTAP 51
Commissioner of Police v Tanos(1958) 98 CLR 383
Escobar v Spindaleri(1986) 7 NSWLR 51
Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532
Hall v Department of Premier and Cabinet [2012] NSWADT 46
K Generation Pty Ltd v Liquor Licensing Court (2007) 99 SASR 58
K v K [2000] NSWSC 1052
Mobil Oil Australia Pty Ltd v FCT (1963) 113 CLR 475
Re Fahey and Psychologists Board of the ACT (1996) 44 ALD394
Re KLGL and QCYY and the Australian Prudential Regulation Authority (2008) 104 ALD 433
Re Spicer Axle Structural Components Australia Pty Ltd and Secretary, Department of Industry, Tourism and Resources (2005) 83 ALD 104; [2005] AATA 77
Re Thomas Cook Australia Pty Ltd v Collector of Customs (1994) 34 ALD 301
Simionato Holdings Pty Ltd v Federal Commissioner of Taxation(1995) 95 ATC 4660; (1995) 31 ATR 382
Thomson v Ludwig (1991) 37 IR 437
Transport Accident Commissioner v Bausch [1998] 4 VR 249
Trust Company of Australia Ltd v Skiwing Pty Ltd (2006) 68 NSWLR 366
University of Ceylon v Fernando (1961) 1 All ER 631
Vakauta v Kelly (1989) 167 CLR 568
VEAL v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88Category: Interlocutory applications Parties: Bristol Custodians Ltd (Appellant)
Chief Commissioner of State Revenue (Respondent)Representation: Counsel
IS Young (Appellant)
A Rider (Respondent)
Leonard Legal (Appellant)
Crown Solicitor's Office (Respondent)
File Number(s): 129021 Decision under appeal
- Citation:
- Bristrol Custodians Ltd v Chief Commissioner of State Revenue [2012] NSWADT 123
- Date of Decision:
- 2012-06-22 00:00:00
- Before:
- Revenue Division
- File Number(s):
- 116094
REASONS FOR DECISION
Bristrol Custodian Limited (Bristrol) seeks leave to appeal from an interlocutory decision of the Tribunal concerning the Chief Commissioner's duty under s 58 of the Administrative Decisions Tribunal Act 1997 (NSW) (ADT Act): Bristrol Custodians Ltd v Chief Commissioner of State Revenue [2012] NSWADT 123 (the Interlocutory Decision). Bristrol also seeks leave to extend the appeal to the merits. The appeal was heard on 28 September 2012 and the Appeal Panel received written submissions from the Appellant on 3 October 2012 and from the Respondent on 19 October 2012.
Substantive proceedings
The substantive proceeding underlying the Interlocutory Appeal concerns the Chief Commissioner's reassessment to stamp duty of transfers of land at Yennora and Bankstown. Bristrol applied, pursuant to s 96 of the Taxation Administration Act 1996 (NSW) (TAA), to the Tribunal for a review of the decision to reassess. Originally, when the land was transferred, the Chief Commissioner accepted that the transfer was dutiable at a nominal rate, as a transfer from an outgoing trustee to a new trustee: s 54(3) of the Duties Act 1997 (NSW). Subsequently, the new trustee went into liquidation and the liquidator passed on some information to the Chief Commissioner which moved him to reassess the transaction. The Chief Commissioner issued a reassessment on 23 March 2011 requiring payment of duty at ad valorem rates imposing penalty and interest. The taxpayer objected and the Chief Commissioner disallowed the objection by notice issued 21 November 2011.
The Interlocutory Decision
The Chief Commissioner is obliged, by various provisions of the ADT Act and the TAA, to provide the applicant and the Tribunal with documents relevant to the determination of the application. Pursuant to s 93 of the TAA the Chief Commissioner must give written notice to the applicant of the determination of its objection. Reasons must be provided in accordance with that section. By s 93(2A) the reasons must identify the matters referred to in s 49(3) of the ADT Act which provides as follows.
49 Duty of administrator to give reasons on request
...
(3) The statement of reasons is to set out the following:
(a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based,
(b) the administrator's understanding of the applicable law,
(c) the reasoning processes that led the administrator to the conclusions the administrator made.
Further, s 58(1) of the ADT Act obliges the Chief Commissioner to lodge documents with the Tribunal in relation to the decision under review. That section provides as follows:
58 Duty of administrator to lodge material documents with Tribunal where decision reviewed
(1) An administrator whose reviewable decision is the subject of anapplication for review to the Tribunal must, within 28 days afterreceiving notice of the application, lodge with the Tribunal:
(a) a copy of any statement of reasons given to the applicant undersection 49 (or, if no such statement was given to the applicant, a statement of reasons setting out the matters referred to in section49 (3)), and
(a1) a copy of any statement of reasons for a decision in an internal review conducted in respect of the reviewable decision, and
(b) a copy of every document or part of a document that is in the possession, or under the control, of the administrator that the administrator considers to be relevant to the determination of the application by the Tribunal.
Section 58(1) is qualified by s 96(5) of the TAA and it provides as follows:
(5) For the purposes of section 58 (1) (a) of the Administrative Decisions Tribunal Act 1997:
(a) the obligation of the Chief Commissioner under that paragraph to lodge a statement of reasons with the Tribunal in respect of an application is limited to providing the Tribunal with a statement of reasons only in respect of the matters arising from the grounds specified in the application, and
(b) if one of the grounds specified in the application relates to a matter raised in an objection determined by the Chief Commissioner-the Chief Commissioner may rely on reasons previously given to the taxpayer by the Chief Commissioner under section 93 for the determination of the objection in explanation of that part of the assessment or decision to which the objection related.
Note. Section 58 of the Administrative Decisions Tribunal Act 1997 requires an administrator whose reviewable decision is the subject of an application for review to the Tribunal to lodge with the Tribunal certain relevant documents relating to the decision, including statements of reasons.
The Chief Commissioner furnished to the Tribunal and the taxpayer two bundles of documents. Bristrol raised concerns at a directions hearing that the production was inadequate. In response, the Chief Commissioner filed an affidavit sworn 9 February 2012 from an officer, Mr Malcolm Druery, dealing with the extent of the searches for relevant material and the reasons for redacting portions of a document.
Bristrol made a preliminary application to the Tribunal pursuant to s 58(4) of the ADT Act and/or s 49(3) of the ADT Act to direct the Chief Commissioner to produce the following documents:
(a) The index to the compliance file as particularised at paragraph 5(c) of the affidavit of Malcolm Druery dated 9February 2012;
(b) The redacted section of the Confidentiality Statement dated 21 November 2011 at folios 130131of theSupplementary Documents;
(c) The letter dated 21 November 2011 by Mr Druery to Mr Mark Hutchins of CorCordis, Chartered Accountants;
(d) The complete 'Review File' referred to in paragraph 11 of the affidavit of Malcolm Druery ...
(e) In so far as not already included in the Review File any file note of the meeting or contact between Mr Drueryand Mr Hutchins;
(f) [not pressed].
The Tribunal considered that s 49(3) of the ADT Act did not provide an independent right to make an application and therefore proceeded to deal with the application on the basis of s 58(4) of the ADT Act: [20] of the Interlocutory Decision.
Section 58(4) of the ADT Act provides as follows:
(4) If the Tribunal or President considers that other particular documents (or that other documents included in a particular class of documents) may be relevant to the determination of the application, it may cause a notice in writing to be served on the administrator:
(a) stating that the Tribunal or President is of that opinion, and
(b) directing the administrator concerned to lodge with the Tribunal, before a date specified in the notice, a copy of each of those other documents that is in the possession, or under the control, of the administrator.
Bristrol submitted that s 58 of the ADT Act promotes wide disclosure of relevant documents and is akin to a discovery procedure. Bristrol relied upon Pacific General Securities v Chief Commissioner of State Revenue [2003] NSWADT 183 (Pacific General) and authority in the Commonwealth and Victorian jurisdictions. On the other hand, the Chief Commissioner questioned the continuing authority of Pacific General submitting that it had been overtaken by Chief Commissioner of State Revenue v Paspaley (2008) NSWCA 184 (Paspaley). Further, the Chief Commissioner submitted that what was relevant and had to be produced pursuant to s 58 was any document that could affect the determination of the issues before the Tribunal: in effect a narrower reading of s 58 than that urged upon the Tribunal by Bristrol.
The Tribunal had before it a confidential exhibit which included the full text of the redacted document and a folder of confidential materials and held a confidential session from which the Appellant and its legal representatives were excluded. The Appellant did not object to this procedure, but inquired of the Tribunal whether the Tribunal meant to exclude the Appellant's legal representatives from the "confidential session". The Tribunal confirmed this was the case.
The Tribunal noted the importance of s 58 stating that the duty of disclosure is "at the heart of the effective operation of the Tribunal's external merits review" and that the Commissioner's duty must be undertaken "conscientiously and lawfully": at [35] of the Interlocutory Decision. The Tribunal highlighted the "important role" played by disclosure and the undesirability that exceptions might facilitate "ambush" of the taxpayer: at [38] of the Interlocutory Decision quoting from the decision of Matthews J in AAT Case 10,122 11 April 1995. Decisions in the Commonwealth and Victorian jurisdictions were reviewed. The Tribunal concluded that the preferable approach was to adopt a notion of relevance that reflected the capacity of the document to influence the determination of the proceedings: at [42] of the Interlocutory Decision. The Tribunal, in essence, preferred the approach adopted by Senior Member Taylor SC in KLGL and QCYY and Australian Prudential Regulation Authority (2008) 104 ALD 433(KLGL)and to similar effect Re Thomas Cook Australia Pty Ltd v Collector of Customs (1994) 34 ALD 301 at 304 (Thomas Cook). The Tribunal did not consider it of assistance to adopt a connotation of relevance that captured material which could apply to the literal meaning of that term: i.e., documents "bearing on, connected with, or pertinent to the matter in hand".
As to the Chief Commissioner's submission that Pacific General, which was decided before Paspaley, put too much emphasis on the relevance of the objection reports,the Tribunal acknowledged that in Paspaley, the Court of Appeal highlighted that it is the original decision that is the subject of review in the Tribunal and not the objection decision, albeit that it is necessary for an objection to have been lodged in order to found the jurisdiction of the Tribunal. Further the Tribunal acknowledged that Pacific General has led to a significant change in the s 58 disclosure practices of the Chief Commissioner: the Chief Commissioner now routinely discloses his confidentiality statements (which may be more accurately described as objection reports). Nevertheless, the Tribunal held that it was likely that Pacific General would have been decided the same today as it was then: [38] of the Interlocutory Decision.
Adopting the approach reflected above, the Tribunal then turned to the individual documents. It was noted that, in this case, the Chief Commissioner had provided a statement of reasons (the objection report also known as the confidentiality statement) which adequately satisfied s 49(3) of the ADT Act and that the basic contentions of the Chief Commissioner had been well exposed to the Appellant: [49] of the Interlocutory Decision. The Tribunal accepted Mr Druery's evidence that, in relation to at least one of the folios, there was no further documentary material in existence. The Tribunal then proceeded to consider the confidential documents to determine their relevance. The Tribunal noted specifically (at [55]) that documents in the nature of internal communications between officers reporting progress or requesting advice and records of communications between compliance officers and external sources such as liquidators, were not relevant in the requisite sense.
The Tribunal made orders in relation to specific items, redacting from the reasons for decision anything that might disclose the content of the document where the Tribunal ordered it not to be for publication.
The application under s 58(4) of the ADT Act to produce further documents was refused.
Grounds of appeal
The Appellant claims it was denied natural justice or procedural fairness by the conduct of the Tribunal in:
a) Excluding the Appellant by its legal representatives and conducting the proceedings in part in confidence and in the absence of the Appellant by its legal representatives;
b) In examining the documents in issue and receiving submissions from the Chief Commissioner in the absence of the Appellant by its legal representatives;
c) In providing reasons for decision which were in a redacted form.
Bristrol also claims that the Tribunal erred in not following the decision of the "leading case in this Tribunal on the nature of s 58 obligation" being the decision in Pacific General and further in not regarding itself as bound as a matter of comity to follow that decision.
Further, the Appellant claims that the Tribunal erred and misdirected itself in construing "relevant" in s 58.
Procedural fairness and a duty of confidentiality
Before we turn to the submissions of the parties, it is useful to set out the context in which the questions on appeal arise. The Tribunal must afford procedural fairness to each party: s 73(2) and (4), ADT Act. "What is fair in a given situation depends upon the circumstances": Mobil Oil Australia Pty Ltd v FCT (1963) 113 CLR 475 at 504.5 (per Kitto J) (Mobil Oil). The content of the duty to observe procedural fairness is affected by the provisions in the ADT Act which regulate how the Tribunal is to go about its task: VEAL v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 at [10] (VEAL). It is clear that Parliament may remove the requirement of procedural fairness, if done by unequivocal language or necessary implication: K-Generation Pty Ltd v Liquor Licensing Court (2007) 99 SASR 58 at 130 (this issue not the subject of the High Court Appeal (2009) 237 CLR 501); Gypsy Jokers Motorcycle Club Inc v Commissioner of Police (2008) 234 CLR 532 (at [182]). This ought not be assumed from "indirect references, uncertain inferences or equivocal considerations": Commissioner of Police v Tanos (1958) 98 CLR 383 at 396 per Dixon CJ and Webb J.
In Trust Company of Australia Ltd v Skiwing Pty Ltd (2006) 68 NSWLR 366 at [54] Basten JA (Handley JA and McDougall J agreeing) noted the Tribunal must act in a procedurally fair way as between the parties. In other words, the content of the duty will vary according to the circumstances.
Relevantly, the Tribunal must take such measures as are reasonably practicable to "ensure that the parties have the fullest opportunity practicable to be heard or otherwise have their submissions considered in the proceedings": s 73(4)(c). Generally, proceedings in the Tribunal are to be conducted in public: s 75(1). However, the ADT Act evinces an intention to carve out some aspects of procedural fairness, in some circumstances: if the Tribunal "is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason, it may ... make ... an order that the hearing be conducted wholly or partly in private": s 75(2)(a). Further, the Tribunal may make "an order prohibiting or restricting the disclosure to some or all of the parties to the proceedings of evidence given before the Tribunal, or of the contents of a document lodged with the Tribunal or received in evidence by the Tribunal, in relation to the proceedings": s 75(2)(d).
Further, the Tribunal is bound by confidentiality where the provisions of another Act prohibit disclosure: s 128 of the ADT Act (and see too s 124 where there is a public interest against disclosure of information under the Government Information (Public Access) Act 2009 (NSW) (the GIPA Act)). Sections 81 and 82 of the TAA are examples of relevant confidentiality provisions.
Sections 81 and 82 relevantly provide as follows:
81 Prohibition on certain disclosures of information by tax officers
A person who is or was a tax officer must not disclose any information obtained under or in relation to the administration of a taxation law, except as permitted by this Division.
Maximum penalty: 100 penalty units.
82 Permitted disclosures-to particular persons
A tax officer may disclose information obtained under or in relation to the administration of a taxation law:
(a) ...
(b) in connection with the administration or execution of the following laws (including for the purpose of any legal proceedings arising out of any of those laws or a report of any such proceedings):
(i) a taxation law,
(ii) ...
(c) (Repealed)
(d) in accordance with a requirement imposed, or authorisation conferred, by or under an Act, or
...
Section 107 of the GIPA Act provides as follows:
107 Procedure for dealing with public interest considerations
(1) In determining an application for ADT review, the ADT is to ensure that it does not, in the reasons for its decision or otherwise, disclose any information for which there is an overriding public interest against disclosure.
(2) On an ADT review, the ADT must receive evidence and hear argument in the absence of the public, the review applicant and the applicant's representative if in the opinion of the ADT it is necessary to do so to prevent the disclosure of information for which there is an overriding public interest against disclosure.
(3) On an ADT review, the ADT must, on the application of the Minister administering this Act or the agency, receive evidence and hear argument in the absence of:
(a) the public and the applicant, and
(b) the applicant's representative if the ADT is of the opinion that it is necessary to do so to prevent the disclosure of information for which there is, or for which there could be or is claimed to be, an overriding public interest against disclosure.
The relevant question for the Appeal Panel, in determining an appeal from an application for further production of documents under s 58(4) of the ADT Act, is - what procedures should have been followed? See for instance VEAL at [19].
The parties' submissions regarding procedural fairness
The Appellant contends that the Tribunal was duty bound to afford it procedural fairness and that s 75 of the ADT Act (which provides inter alia for hearings to be conducted in private) did not override that duty. To the extent that s 75(2)(d) of the ADT Act provides for confidentiality, it relates only to evidence given in the proceedings and has no application to evidence produced pre-hearing or on the voir dire.
To underscore the contention that s 75 does not abrogate the need for procedural fairness, the Appellant contrasts s 75 with statutory provisions where the duty to afford procedural fairness is expressly abrogated: for example s 107 of the GIPA Act discussed in AEZ v Commissioner of Police, NSW Police Force[2012] NSWADT 199 at [6] and Hall v Department of Premier and Cabinet [2012] NSWADT 46. See too s 29(3) of the Security Industry Act 1997 (NSW) discussed in Commissioner of Police New South Wales v Gray(2009) 74 NSWLR 1 and s 64 Freedom of Information Act 1982(Cth).
Further, the Appellant contended that the Chief Commissioner's duties of secrecy, do not evince the necessary legislative intention for the Tribunal to shut the Appellant out and relied upon the following cases concerning the Federal Commissioner of Taxation's analogous duty of secrecy, to support its position:
a) Canadian Pacific Tobacco Co Ltd v Stapleton(1952) 86 CLR 1 where the Federal Commissioner secrecy provision did not bar him from assisting the Trustee in Bankruptcy from conducting examinations of the bankrupt;
b) C of T v Nestle Australia Ltd (1986) 12 FCR 257 where the secrecy provisions did not preclude the Federal Commissioner of Taxation from giving information regarding third party taxpayers to the Court in order to prosecute a taxpayer's appeal and review rights in relation to its own notices of assessment; and
c) Simionato Holdings Pty Ltd v Federal Commissioner of Taxation (1995) 95 ATC 4660; (1995) 31 ATR 382 where the secrecy provisions did not preclude the Federal Commissioner of Taxation from assisting a liquidator to increase the potential pool of assets from which the Commissioner's debt could be recovered.
The Appellant emphasises that the secrecy provisions do not preclude the Chief Commissioner from disclosing information obtained during the course of his duties in connection with the administration or execution of a taxation law: s 82(b) of the TAA. This encompasses proceedings in relation to reviewing a decision pursuant to s 96 of the TAA (the underlying substantive proceeding is just such a proceeding). Further, s 82 of the TAA does not preclude the Chief Commissioner from disclosing information obtained "in accordance with a requirement imposed, or authorisation conferred, by or under an Act": s 82(d). Section s 58 of the ADT Act prescribes a requirement, to provide "a copy of every document or part of a document that is in the possession, or under the control, of the administrator that the administrator considers to be relevant to the determination of the application by the Tribunal": s 58(1)(b). Further, the Appellant contends that even if a document is not relevant in the sense required under s 58, it may nevertheless be a document in connection with the administration or execution of the taxation review proceedings and therefore the Tax Officer is relieved of his obligation of secrecy. In other words, the Appellant contends that sub-s (b) is wider than sub-s (d).
The Respondent, on the other hand, contends that s 75 of the ADT Act alone or in conjunction with ss 124 and 128 of the ADT Act evinces the legislative intention for the Tribunal to adopt the course it took. The Respondent pointed to the plain words in s 75 and the low hurdle that preconditions the exercise of the Tribunal's power to override procedural fairness "if the Tribunal is satisfied that it is desirable to do so by reason of the confidential nature of any evidence or matter or for any other reason".
Further, the Respondent pointed to Note 6 to the Table in s 14 of the GIPA Act to demonstrate that if the application had been made under that Act, the Tribunal would have been required, pursuant to s 107 of the GIPA Act, to adopt the course it took: The Note provides as follows:
Note:6 Secrecy provisions (1) There is a public interest consideration against disclosure of information if disclosure of the information by any person could (disregarding the operation of this Act) reasonably be expected to constitute a contravention of a provision of any other Act or statutory rule (of this or another State or of the Commonwealth) that prohibits the disclosure of information, whether or not the prohibition is subject to specified qualifications or exceptions.(2) The public interest consideration under this clause extends to consideration of the policy that underlies the prohibition against disclosure.
The Respondent highlighted the relevance of the nature of the particular application under consideration in this case and went so far as to question the Appellant's entitlement to make submissions on the Respondent's confidential documents before the Tribunal had ruled that they were relevant and therefore had to be produced under s 58. The Respondent highlights that s 58(4) of the ADT Act, in terms, does not refer to the taxpayer and leaves the decision as to whether a document is relevant, in the requisite sense, to the Chief Commissioner or the Tribunal, acting reasonably as objectively determined.
The Respondent maintained that if the document is not relevant, in the sense of s 58(1)(b), the secrecy provisions prevail and the document must not be disclosed. Further, the Respondent contends that s 82(b) of the TAA is no wider than subsection (d), but in any event given the circumstances of the case, where no compulsory process of the Tribunal was evoked (other than s 58) the subsections can lead to no differing results.
The Respondent submitted that, in this case, the secrecy provisions take priority and pointed to the potentially dire or unfair consequences that would result if the information concerned a third party and had to be released to the Appellant before it was determined that it was relevant to the Appellant's taxation review proceeding.
The Respondent asserts that the secrecy provisions provide the necessary warrant for the Tribunal to act as it did. He argues this must be so for otherwise the Appellant or other taxpayers could simply, by putting the s 58 documents and the sufficiency of their production in issue, subvert the confidentiality provisions. If the Appellant (even simply by his legal representative) is entitled to look at the documents to make submissions on whether or not they are relevant, their confidentiality and secrecy is necessarily destroyed.
Consideration regarding procedural fairness
In determining this appeal we must keep the nature of the application firmly in mind. We must consider what it was that the Tribunal was required to do, not in the abstract, but in the course of determining the application before it: VEAL at [14].
This was not a substantive hearing, but a preliminary hearing concerning the adequacy of the Chief Commissioner's disclosure of documents: documents that were prohibited from being disclosed other than in accordance with s 82 of the TAA. Only those documents that are relevantly "in connection with" the underlying taxation review proceedings, or those required to be produced by a requirement imposed by another Act (in this case s 58 of the ADT Act) may be disclosed.
In our view, the expression "in connection with" in sub-s 82(b) of the TAA is not to be read so widely as to include any document that touches upon the internal processes of the Chief Commissioner which ultimately culminated in the issuing of an assessment or the determination of the objection to the assessment. The nature of the underlying review proceedings affects the scope of the exception to the duty of disclosure. In this case the review, pursuant to s 96 of the TAA, is one in which the Tribunal must, ultimately, on the material then before it, decide what is the correct and preferable decision by having regard to any relevant factual material or any applicable law: s 63 of the ADT Act. The taxpayer has the onus of proving his case: s 100(3) of the TAA. Plainly, the taxpayer is entitled to have any information or material adverse to or supportive of his case. However, absent reliance upon some specific compulsory process of the Tribunal, or some articulated cogent reason, in this case, we do not consider that subsection (b) widens the exception to the duty of secrecy beyond that required by s 58(4) of the ADT Act and sub-s 82(d) of the TAA. In our view, the duty of secrecy excepts only those documents that are required to be produced under s 58(4) of the ADT Act. The scope of the exception therefore depends upon the scope of the expression "relevant" in that sub-sec, a matter which we consider below.
Further, we do not consider that the cases concerning the Federal Commissioner's duty of secrecy advance the position. Mobil Oil concerned the question of whether the Board of Review had the power to, in effect, divulge information about a third party's commercial activities, that was relevant to the determination of the taxpayer's income tax liabilities. In a stated case to the High Court the question was whether or not s 16 of the Income Tax Assessment Act 1936 (Cth) precluded the Tribunal from divulging such information. McTiernan and Taylor JJ noted that whether or not the Tribunal should receive the evidence in the presence of the objecting taxpayer's representatives or whether they should be excluded or whether the evidence should be received at all were matters within the discretion of the Board and did not involve questions of law which it was appropriate for the High Court to consider (at 494.8). Kitto J noted that it was beyond question that in the usual case the Board of Review was not legally bound to conform to the principles of natural justice. However, the taxpayer had contended that in that particular case the Board had a quasi-judicial character. His Honour did not decide the point but noted that even if the Board was bound in law to act with procedural fairness "the requirement of natural justice must depend on the circumstances of the case, the nature of the enquiry, the rules under which the Tribunal is acting, the subject that is being dealt with and so forth". Kitto J was there quoting Tucker LJ in Russell v Duke of Norfolk [1949] All ER 109 in a passage approved in University of Ceylon v Fernando (1961) 1 All ER 631 at 118 (Mobil Oil at p 504).
His Honour noted that even if the Board was legally bound to determine the matter in accordance with the requirements of natural justice, it did not follow that it must disclose all that it has learned about the affairs of other companies to the taxpayer.
As is apparent from the brief synopsis of the cases relied upon by the Appellant (referred to above at paragraph 29), it appears to have been accepted, in each case, that the documents in question could genuinely assist in the determination or resolution of the issues before the court. Here we are at an anterior stage.
How then is the Tribunal to determine what documents properly fall within s 58(4) keeping in mind the Tribunal's duty to afford procedural fairness and preserving secrecy as required by s 82 of the TAA and s 128 of the ADT Act? Unless a balance is struck, the taxpayer could destroy the confidentiality of the documents merely by putting in issue the adequacy of the Chief Commissioner's disclosure.
In our view, the procedure adopted by the Tribunal at first instance was appropriate. The Tribunal adopted a method in accordance with the GIPA Act (albeit that this was not an application under that Act) and gave the Appellant the opportunity of making submissions and cross examining the person who conducted the searches for relevant documents. That witness had deposed to his process of reasoning in selecting documents and why certain documents were held back. The Appellant was in a position to make submissions as to why certain categories of documents may be relevant to the underlying proceedings. The Appellant had the benefit of the Commissioner's reasoning process in relation to the underlying decision (most of the objection report was disclosed) and was aware of the taxable facts (which are often uniquely in the taxpayer's knowledge). True it is that the Appellant would have been in a better position to make submissions in relation to disclosure of documents, if it had access to all of the documents and was present during the confidential session. Nevertheless, we are satisfied that the Tribunal has power to relax the procedural fairness rules "if it is desirable to do so by reason of the confidential nature of any evidence or matter": s 75(2) of the ADT Act. The reason to do so, in this case, was found in ss 81 and 82 of the TAA. We are therefore satisfied that the Tribunal had power to do what it did. Different considerations would arise if during the substantive hearing the Tribunal closed the hearing room to an applicant and its legal representatives.
We therefore conclude that there was no error in the Tribunal's approach at first instance.
Failure to object
As noted above, at first instance, the Appellant failed to object to the course adopted by the Tribunal in excluding it from part of the hearing. On the assumption that a decision that is vitiated by want of natural justice is voidable and not void, a person can waive the right to procedural fairness, if the waiver is undertaken voluntarily and with knowledge of the entitlements waived: see for instance In Escobar v Spindaleri (1986) 7 NSWLR 51 at 62 Samuels JA, (but note this was a dissenting judgment); Thomson v Ludwig (1991) 37 IR 437 (appeal allowed (1992) 34 AILR 344, but not on this issue); Vakauta v Kelly (1989) 167 CLR 568 concerning the right to an unbiased Tribunal). We do not consider that, in this case, the mere fact that an objection was not taken amounts to a waiver: see for instance K-Generation Pty Ltd v Liquor Licensing Court (2007) 99 SASR 58 where it was noted that the failure by counsel to make a further application for access at the substantive hearing did not establish "any intention to renounce" a possible entitlement to access the material.
Relevance as contemplated by s 58
We turn now to consider the meaning of "relevant" as contemplated by s 59(4) of the ADT Act.
There are two competing views. The Appellant described these as the "facilitative" versus the "adjectival" view. As set out in the Appellant's submissions dated 3 October:
Adjectival relevance refers to a document having probative value that is likely to inform the review process, whereas "facilitative relevance" requires that the document had a bearing on; was connected with or pertinent to the matter at hand.
The decision of Deputy President Forgie in Re Spicer Axle Structural Components Australia Pty Ltd and Secretary, Department of Industry, Tourism and Resources (2005) 83 ALD 104; [2005] AATA 77 is an example of facilitative relevance and adopts a broad view of the expression, where "relevant" refers to a document that could reasonably lead to a chain of enquiry that is objectively open. See too Re Fahey and Psychologists Board of the ACT (1996) 44 ALD 394. These decisions receive some tacit support from the decision of Ryan J in Australian Prudential Regulatory Authority v VBN (2005) 88 ALD 403. However, his Honour there determined the application on the basis of an assumption that the identified documents satisfied the requisite test of relevance.
Adjectival relevance is exemplified by the decision of Senior Member Taylor SC in KLGL where "relevant" is limited to documents strictly necessary for review in the Tribunal. See too the decision of Senior Member Handley in Thomas Cook.
The Appellant supports the facilitative view and the Respondent supports the adjectival view. Both parties accepted that under s 58 of the ADT Act, the administrator must act objectively reasonably and lodge with the Tribunal the relevant documents: Transport Accident Commissioner v Bausch [1998] 4 VR 249 at 268. It is not appropriate to pick and choose between relevant documents: Bausch v Transport Accident Commissioner (1996) 11 VAR 177. The Commissioner cannot hold back documents which he may rely upon at the substantive hearing and he cannot hold back documents or material that support the taxpayer's case. Nevertheless, it is not necessary to lodge with the Tribunal every document in the Commissioner's possession.
We agree with the learned Tribunal below that a balance is required. The taxpayer must be in a position to understand the case he must answer as he bears the onus (s 100(3) of the TAA),but he is in the unique position of being aware of the taxable facts. Accordingly, requiring the Commissioner to provide every document that bears any connection to the taxpayer or the Commissioner's process of investigation or his journey towards his conclusion goes too far and detracts from the goal of s 58 of the ADT Act.
The expression "relevant" in s 58 of the ADT Act is meant in the sense that the document or material could logically affect the determination of a fact or issue in the proceedings. Since the disclosure requirement must be complied with at an early stage of the proceedings, it is necessary to not overly restrict or confine the range of documents to be produced. Nevertheless, there must be some discernible forensic purpose or detectable connection to the determination of the issues. Section 58 therefore refers to "relevant" in narrower sense. Like the learned Tribunal at first instance, we prefer the approach adopted by Senior Member Taylor SC in KLGL.
Accordingly, we do not see any error in the way the Tribunal approached the decision at first instance.
Pacific General
The Appellant contended that the decision of Pacific General was not only correct, but was on all fours with the present case and ought to have been followed. In Pacific General the whole of the Commissioner's confidentiality statement (the objection report) was originally held back. It was concluded that the Commissioner's objection report ought to have been provided to the taxpayer in compliance with the Commissioner's duties under s 58 of the ADT Act. The Tribunal there noted, that so far as parts of the documents referred to "speculation, submissions and inferences drawn from the facts as the Commissioner's officers perceive them to be and the potential breach of other provisions of the Duties Act 1997" these parts could "reflect whether the decision-maker had the proper understanding of the facts of the case and [are] therefore relevant in any review of the objection decision before the Tribunal."
The Respondent contends that Pacific General has been surpassed by the decision of the Court of Appeal in Paspaley which highlighted that the original decision and not the objection decision was the subject of review. Whilst an objection is necessary to found the jurisdiction of the Tribunal, it is nevertheless review of the Commissioner's original decision that is before the Tribunal: Paspaley at [28] per Basten JA (Giles and Campbell JJA agreeing). To the extent that Pacific General suggests that it is the objection decision that is the subject of review, it has been overturned by Paspaley. Nevertheless, we are of the view that the objection report may be a "relevant" document under s 58, to the extent that it discloses the facts that the Commissioner relies upon, the issues that he sees arising and his contentions: these will all be relevant to the taxpayer understanding the case he has to meet in the review proceedings. We agree with the Tribunal at first instance that the outcome in Pacific General would be the same today. What is necessary to consider is whether the particular document is relevant to the Tribunal's task of arriving at the correct and preferable decision.
Unlike the case in Pacific General, here the Appellant has most of the objection report. The Appellant is able to test whether the Respondent has a proper appreciation of the facts, which was not the case in Pacific General.
We see no error in the Tribunal's approach.
Leave to appeal
The appeal raises an important question of law as to the proper construction of the word "relevant" in s 58 of the ADT Act. An unresolved conflict appears to exists in the Administrative Appeals Tribunal as to whether this is to be narrowly or broadly construed in relation to a similar provision under the Administrative Appeals Tribunal Act 1975(Cth)(s 37). There is little or no guidance in this jurisdiction. In our view, the question is one of some general importance. Further, questions of procedural fairness are also of general importance.
Accordingly, leave to appeal is granted.
This is consistent with the guidance given in K v K [2000] NSWSC 1052 at [15] by Young J at [15]:
15 It would seem to me that s 67 of the Guardianship Act operates so that broad questions of administration and policy and the applicability of policy to individual cases, even if they are not questions of law, may well be subjects on which the Court will grant leave to appeal. On the other hand, it is very unlikely that the Court will grant leave to appeal when there is a problem with a fact finding exercise unless there are clear indications that the Tribunal has gone about that fact finding process in such an unorthodox manner or in a way which is likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
Leave to extend to the merits
The Appeal Panel of this Tribunal in Commissioner of Police v Fortuna [2010] NSWADTAP 51 at [44] said as follows:
44 It is not necessary for the Appeal Panel to first identify an error of law before granting leave for an appeal to be extended to the merits of the Tribunal's decision: Lloyd v Veterinary Surgeons Investigating Committee [2005] NSWCA 456. The onus of proof lies on the party applying for leave and the standard of proof is on the balance of probabilities: World Best Holdings Ltd v Sarker&Anor [2004] NSWSC 935 at [25] per Sully J. The discretion is open and unfettered but must be exercised in a fair and just manner having regard to the purpose of the relevant legislation: Jones v Ekermawi [2009] NSWSC 143 at [13]. Certain inferences can be drawn from the fact that leave is required. They include the fact that the need for leave is a 'control filter' designed, among other things, to protect respondents from the cost of a full hearing of appeals which should not properly be entertained: World Best Holdings Ltd v Sarker&Anor, per Sully J at [25]. Circumstances which may justify leave being granted include where the Tribunal has gone about its fact finding process in an unfair or unorthodox manner: K v K [2000] NSWSC 1052 at [10] to [15].
The Appellant alleges that by holding part of the hearing in confidence and precluding the Appellant from seeing certain documents, the Tribunal failed to afford the Appellant procedural fairness, in breach of its duty. For the reasons we have set out above, we disagree. Furthermore, both confidential hearings and hearings that exclude parties from seeing some of the evidence are not uncommon: see for instance, Black v Hunter New England Local Health District [2011] NSWADT 295; AEZ v Commissioner of Police, NSW Police Force [2012] NSWADT 199.
In our view, the Tribunal did not go about its fact finding process in an unfair or unorthodox manner and there are no other factors that would weigh in favour of exercising the discretion. Therefore the appeal should not be extended to the merits.
Decision
For the reasons expressed above:
a) leave to appeal is granted;
b) leave to extend the appeal to the merits is refused; and
c) the appeal is dismissed.
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Decision last updated: 06 November 2012
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