BRKK and Commissioner of Taxation (Taxation)
[2024] AATA 3607
•11 October 2024
BRKK and Commissioner of Taxation (Taxation) [2024] AATA 3607 (11 October 2024)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2023/7348
Re:BRKK
APPLICANT
AndCommissioner of Taxation
RESPONDENT
File Number(s): 2023/7349
Re:HJCY
APPLICANT
AndCommissioner of Taxation
RESPONDENT
File Number(s): 2023/7350
Re:NZTM
APPLICANT
AndCommissioner of Taxation
RESPONDENT
File Number(s): 2023/7351
Re:TRMB
APPLICANT
AndCommissioner of Taxation
RESPONDENT
DECISION
Tribunal:Senior Member D Benk
Date:11 October 2024
Place:Canberra
The request for a direction or a summons under subsection 37(2) and section 40A of the AAT Act in relation to documents sought by the applicant is refused.
Pursuant to section 33, subsections 37(1) and 37(2) of the AAT Act documents marked T78, T79, T81, T82, T83, be uplifted on the basis that the documents lack relevance and are not necessary for the determination of the dispute and that the respondent file an amended index pursuant to subsection 37(1) of the AAT Act within 14 days.
....................................[SGD]....................................
Senior Member D Benk
CATCHWORDS
RELEVANCE – subjective – objective – privilege – external legal advice – summons
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Income Tax Assessment Act 1936 (Cth)
Taxation Administration Act 1953 (Cth)
CASES
ACN 154 520 199 Pty Ltd and Commissioner of Taxation (Taxation) [2018] AATA 2404
Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214
Comcare v Maganga [2008] FCA 285
Commissioner of Taxation v ACN 154 520 199 Pty Ltd (In Liq) (formerly EBS and Associates Pty Ltd) [2018] FCA 1140
Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504
Dimitropoulos and Australian Securities and Investments Commission [2019] AATA 1775
Douglass v Administrative Appeals Tribunal [2017] FCA 1105
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 30
FYMS and Commissioner of Taxation [2022] AATA 3790
Hooke v Bux Global Management Pty Ltd (No 2) [2018] FCA 836
KLGL QCYY and Australian Prudential Regulation Authority (2008) 104 ALD 433QQRK and WHKY and Commissioner of Taxation [2022] AATA 3399
REASONS FOR DECISION
Senior Member D Benk
11 October 2024
I am tasked with determining two interlocutory applications. The Respondent seeks uplift of various documents filed in these proceedings pursuant to subsection 37(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) on the basis that the documents lack relevance, are unnecessary or alternatively are privileged. The documents in issue are marked T31, T48, T49, T50, T51, T53, T57, T58, T59, T60, T61, T63, T64, T66, T67, T78, T79, T81, T82, T83, T86, T96 and T97.
The Applicants maintain these documents should not be uplifted but also seek the provision of additional documents pursuant to subsection 37(2) of the AAT Act and/or the issue of a summons pursuant to section 40A of the AAT Act, petitioning for the production of eight separate categories of documents relevantly:
(i)the Respondent’s legal advice documents;
(ii)documents containing calculations referred to in a brief to counsel;
(iii)correspondence between the Commissioner and counsel;
(iv)correspondence between the Commissioner’s officers as to the family trust election;
(v)all correspondence between the Commissioner’s officers as to the completed copies of the family trust election;
(vi)all documents prepared by the Australian Tax Office (ATO) including guidelines and practice notes as to the family trust election practices;
(vii)all correspondence regarding the consequences (or lack thereof) of comments made by TRMB during a telephone conversation; and
(viii)production of the documents sought to be uplifted (those contested by the Respondent to remain in the subsection 37(1) documents) including legal advice documents.
THE ISSUE IN THE CASE
The primary issue here is whether the documents either sought to be obtained or uplifted are ‘relevant’ to the statutory function of the Tribunal.
The substantive proceedings relate to the tax liabilities imposed upon the Applicants by the Respondent, specifically tax liabilities derived from capital gains from the sale of shares in various entities; whether various family trust elections had been properly made under the Income Tax Assessment Act 1936 (Cth) (the Assessment Act) and whether any distributions were made outside of the trust.
APPLICANTS’ CONTENTIONS
Submissions were exhaustive but when summarised the Applicants maintain all documents are relevant to the ultimate determination of this matter and specifically identifies/labels those documents as follows:
(i)T48 and T50 (the flow of fund documents);
(ii)T49 (the Dwyer Web document);
(iii)T51 and T53 (the Fidelity Trust Documents);
(iv)T57, T58, T59, T60 and T61 (RFI documents);
(v)T78, T78, T81 and 83 (the Claim Documents) (upon which privilege is claimed by the respondent); and
(vi)T96 and T97 (the WP documents).
Further the Applicants contend:
(a)Paragraph 33(1)(c) of the AAT Act allows the Tribunal to inform itself on any matter in such manner as it thinks appropriate, reinforcing the Tribunal’s ability to have access to the relevant material when exercising its function.
(b)The removal or uplift of any document prevents the Tribunal from assessing the relevance and ultimate probative value of any such documents at review hearing thereby possibly hampering its ability to make the correct and preferable decision. It would also result in significant unfairness to the Applicants who have grounded their defence on the basis of the documents currently before the Tribunal.
(c)If the contested documents were not relevant to the determination their inclusion in the section 37 documents should pose no difficulty to the Respondent.
(d)The Respondent cannot maintain its claim for privilege in regards to:
(a) T78 – Brief Materials
(b) T79 – Supplementary brief materials
(c) T81 - Briefing note post counsel’s advice
(d) T82 – Executive brief
(e) T83 – Fidelity Holdings Trust – Advice & Factual Context
because it has failed to establish privilege over each of the documents, or alternatively such privilege has been waived either by the express conduct of the Commissioner or otherwise by operation of the law.
(e)All of the documents sought by the Applicants and to which uplift are opposed are relevant to the review of the decision by the Tribunal, thereby satisfying paragraph 37(1)(b) of the AAT Act.
(f)As an alternative, the documents sought by the Applicant would be captured under the summons provisions found in section 40 of the AAT Act and authorities establish that the Tribunal’s summons power is not expressly confined to ‘relevant’ documents, but documents must only be ‘adjectivally relevant’ to the issues in the proceedings, meaning the documents are likely to throw light on the issues in the main case or are connected with or pertinent to the issues in the case.[1]
[1] KLGL QCYY and Australian Prudential Regulation Authority (2008) 104 ALD 433, 438 [15] (Senior Member P W Taylor) (‘KLGL’).
RESPONDENT’S CONTENTIONS
As regards the Applicants’ request for documents both with respect to subsection 37(2) and section 40A of the AAT Act, the Respondent submitted the following:
(a)documents can only be deemed relevant if they assist with a determination of the taxable facts;[2]
(b)it is the role of the Tribunal to form the opinion of what documents sought are, or may be relevant;[3]
(c)subsection 37(2) of the AAT Act is not a general discovery provision and does not authorise a fishing expedition;[4]
(d)a summons under section 40A of the AAT Act cannot be issued in circumstances where it can be seen to be a fishing expedition;
(e)the Tribunal must be positively satisfied that the documents sought have a capacity to influence or assist the determination of the matters to be determined in the review. There must be a sufficient relationship with the matters that are required to be determined.[5]
(f)generally speaking, the Applicants have failed to advance any argument why the requested documents would be relevant to the Tribunal’s statutory task and hence have failed to establish ‘relevance’. Whilst the Applicants have confirmed the documents may have a connection or pertain to the subject matter of the hearing, this does not satisfy potential relevance of the documents sought on the matters to be determined in the review proceedings; and
(g)the requests are so broad that they are effectively unintelligible and to the extent that they can be understood, fall within the definition of a fishing expedition.
[2] Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214, 217 (Barwick CJ).
[3] ACN 154 520 199 Pty Ltd and Commissioner of Taxation (Taxation) [2018] AATA 2404 [16] (Deputy President B J McCabe and Senior Member G Lazanas).
[4] Douglass v Administrative Appeals Tribunal [2017] FCA 1105 [7] (Griffiths J).
[5] KLGL (n 1) [17].
As regards the legal advice documents,[6] the Respondent asserts these cannot be said to rationally influence the proper determination of the issues by the Tribunal at any ultimate review hearing because the opinions of counsel were given prior to the commencement of proceedings and were expressed in the context of an entirely different evidentiary matrix. The determination of the proceedings must and will turn on the Tribunal’s application of the relevant facts to be found on its assessment of the evidence and the law and not on any advice obtained prior to commencement of proceedings. Simply put, the argument advanced is that the legal advice documents have no relevance to the Tribunal’s statutory function and on that basis should be deemed irrelevant and uplifted from the documents. In the alternative the documents should be classified as privileged as the Applicants were notified privilege was being claimed and the Commissioner sought the return of those documents shortly after the T-documents were filed. This is especially so because the documents have been inadvertently produced, a request was made to recall them promptly and there is no inherent unfairness demonstrated to the Applicant in returning the documents.[7] In short, the primary contention was that there is no unfairness to the Applicant as the documents are wholly irrelevant to the Tribunal’s statutory function and no prejudice has been or can be established.
[6] T78, T79, T81, T82, T83 of the T-documents.
[7] Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 30.
RELEVANCE
Subsection 37(2) of the AAT Act refers to documents which ‘may be relevant to the review of the decision by the Tribunal’.
Subsection 37(2) of the AAT Act is modified by subparagraph 1477F(1)(b)(ii) of the Taxation Administration Act 1953 (Cth) (the TAA). The modified obligation refers to:
…every other document that is in the Commissioner's possession or under the Commissioner's control and is considered by the Commissioner to be necessary to the review of the objection decision concerned… [Emphasis added]
Any concerns about the adequacy of the Commissioner’s disclosure can be addressed through an application under subsection 37(2) of the AAT Act (or, more unusually, by requesting the issue of a summons). The power and discretion of such provisions is to be exercised against the statutory intention, and that the Tribunal have regard to all matters that should be taken into account for the purpose of the review.[8]
[8] Dimitropoulos and Australian Securities and Investments Commission [2019] AATA 1775 [82] (Senior Member P W Taylor) (‘Dimitropoulos’).
Further, the Tribunal’s decision on a request for documents ultimately involves a practical and logical assessment of the potential utility of the documents which is the core of ‘relevance’. In making that assessment, I am generally dismissive of speculative or poorly targeted requests, that is, those requests that have not been reconciled to my statutory function or where they are so broad as to be derisory. My position is entirely consistent with established authority on this issue.
I now return to the issue of relevance and specifically whether the documents sought by the Applicants and those subject to an application for uplift by the Respondent may be relevant or adjectively relevant to the review, that is, can it be demonstrated positively that the documents may shed light on any question or issue the Tribunal must address in the course of its review and specifically the statutory functions it is burdened in discharging.[9]
APPLICATION OF THE LAW, FINDINGS AND REASONS ON THE RESPONDENT’S INTERLOCUTORY APPLICATION
[9] Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504; Comcare v Maganga [2008] FCA 285; see also QQRK and WHKY and Commissioner of Taxation [2022] AATA 3399. I also note Colvin J in Hooke v Bux Global Management Pty Ltd (No 2) [2018] FCA 836.
The legal advices/claims documents (T78 to T83)
I have noted the submissions and claims of privilege on these documents. Subsection 37(3) of the AAT Act which provides that section 37 “has effect notwithstanding any rule of law relating to privilege or the public interest in relation to the production of documents.” There has been much discussion about the issue of privilege in Tribunal proceedings and specifically that it could not generally be invoked against the Tribunal in any event.[10] However, this is not the primary issue here, overall, I must determine whether the documents, at first instance, may be relevant to the issues in the review.
[10] FYMS and Commissioner of Taxation [2022] AATA 3790 (Deputy President B J McCabe).
The Respondent emphasises that the above documents cannot shed light on or assist the Tribunal’s task on review, where the Applicants must establish the taxable facts and the correct amount of tax it should pay on the assessments. see s 14ZZK(b) of the TAA.
I consider any opinions provided by counsel which may have informed the original decision-maker are irrelevant and have no bearing on my statutory function in objective fact finding.[11] It stands to reason that any legal advice, particularly sought in an environment prior to litigation is subjective and irrelevant to the Tribunal’s ultimate task. There was no cogent argument raised by the Applicant about how those legal advices may be relevant to my enquiry or shed light on the issues for determination. In short, the evidence and key issues in review need to be evaluated by the Tribunal objectively. Legal opinions or advice have no bearing on my any ultimate decision making. I would reach the same conclusion about any other aspect of my statutory obligations including the interpretation of the law, assessment of credibility of witnesses or any other matter where objective analysis is required.
[11] Commissioner of Taxation v ACN 154 520 199 Pty Ltd (In Liq) (formerly EBS and Associates Pty Ltd) [2018] FCA 1140.
In summary, I find that the subjective opinions of counsel at the initial stages of the decision-making process have no relevance to the questions that will ultimately be resolved at hearing and nor has it been established that these documents may suggest appropriate lines of enquiry or throw light on the issues in dispute. As I have determined these documents are irrelevant to discernment of the issues in dispute, they are to be excluded from the T-documents and I direct they be uplifted (documents T78, T79, T81, T82, T83).
I find that the documents found at T31, T48, T49, T50, T51, T53, T57, T58, T59, T60, T61, T63, T64, T66, T67, T86, T96 and T97 have a sufficient relationship with the matters that ultimately must be determined and find there is no cogent basis upon which to exclude those documents despite the Respondent’s protests. The documents pertain generally to the structure, arrangements and transactions of the Applicants during the relevant period which ultimately, more likely than not will assist in the ultimate issue to be determined.
Application of the law, findings and reasons on the Applicants’ interlocutory application
The Applicants’ request for documents both with reference to subsection 37(2) and section 40A of the AAT Act have been documented above.
I have determined in paragraph 18 above, that all but the legal advice documents are relevant to the matter and are not to be uplifted. Overall, as regards the balance of the claims, I am not satisfied that the Applicants’ requests fall within the definitions of ‘relevance’ or ‘adjectival relevance’ as defined by the authorities. This is because the Applicants have failed to advance any argument why the requested documents would be relevant to the Tribunal’s statutory task. Whilst I accept the documents may have a connection or pertain to the subject matter of the hearing, this does not satisfy the tests of potential ‘relevance’ of the documents sought on the matters to be determined in the review proceedings.[12]
[12] Dimitropoulos (n 12).
Further, I find that the requests are broad and non-specific, likely to produce even further delay and burden on both parties. The delays have already been significant. I direct that an amended index be filed by the Respondent within 14 days and that the matter be returned to the Registry for appropriate case management and listing.
For these reasons, the Applicants’ request for a direction or a summons under subsection 37(2) and section 40A of the AAT Act is refused.
I certify that the preceding 22 (twenty-two) paragraphs are a true copy of the reasons for the decision herein of Senior Member D Benk
...................................[sgd].....................................
Associate
Dated: 11 October 2024
Date(s) of hearing: Counsel for the Applicant: Ms I Sethi, Counsel Solicitors for the Applicant: Mr Z Mason, Adero Law Counsel for the Respondent: Mr M O'Meara SC, Counsel and Mr T Arnold, Counsel Solicitors for the Respondent: Ms H Phillips, Gaden Lawyers
0
11
0