Canberra Cleaners Pty Limited v Commissioner for Act Revenue

[2017] ACTSC 197

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Canberra Cleaners Pty Limited & ors v Commissioner for ACT Revenue

Citation:

[2017] ACTSC 197

Hearing Dates:

31 July 2017

DecisionDate:

1 August 2017

Before:

McWilliam AsJ

Decision:

1. The subpoena served on the Defendant on 24 March 2017 is set aside.

2. The Plaintiffs are to pay the Defendant’s costs of the application.

Catchwords:

PRACTICE AND PROCEDURE –  Subpoenas  – Application to set aside a  subpoena – whether documents sought to be produced are relevant – no point of principle

Legislation Cited:

Taxation Administration Act 1999 (ACT) ss 14, 54, 99, 134

Court Procedures Rules 2006 (ACT) r 6604

Cases Cited:

Binqld Finances Pty Ltd (in liq) v Tamarama Fresh Juices Australia Pty Limited; In the matter of Binqld Finances Pty Ltd (in liq) [2017] FCA 358

Commissioner of Taxation of the Commonwealth of Australia v Futuris Corporation Limited [2008] HCA 32; (2008) 237 CLR 146

Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd; Deputy Commissioner of Taxation v MA Howard Racing Pty Ltd; Deputy Commissioner of Taxation v Neutral Bay Pty Ltd [2008] HCA 41; 237 CLR 437

DPP vWarren [2015] ACTSC 111

Elmaraazey v Capital Lawyers Pty Ltd [2016] ACTSC 54

Portal Software v Bodsworth [2005] NSWSC 1115

Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90

Parties:

Canberra Cleaners Pty Limited (ACN 142 575 095) (First Plaintiff)

Phillip Arcidiacono trading as Rose Cleaning Service (ABN 28 057 543 242) (Second Plaintiff)

Rose Cleaning Asset Service Pty Limited (ACN 607 365 506) (Third Plaintiff)

Commissioner for ACT Revenue (Defendant)

Representation:

Counsel

Mr M Wells (Plaintiffs)

Mr B Buckland (Defendant)

Solicitors

Kekatos Lawyers (Plaintiffs)

ACT Government Solicitor (Defendant)

File Number:

SC 51 of 2017

McWilliam AsJ:

1. Before the Court is an interlocutory application filed on 17 May 2017 by the Defendant, the Commissioner for ACT Revenue (Commissioner), seeking to set aside a subpoena issued to the Commissioner by the Plaintiffs on 24 March 2017. 

1. The subpoena is issued in the context of judicial review proceedings, which are set down for a final hearing in this Court on 11 September 2017.

1. Rule 6604 of the Court Procedures Rules 2006 (ACT) provides for the Court to set aside a subpoena. The primary basis for the Defendant’s application is that the documents sought under the subpoena are irrelevant to the issues in dispute in the substantive proceedings.

1. The test for relevance of a subpoena is whether production of the documents would be reasonably likely to add in the end to the relevant evidence in the case, including apparent or adjectival relevance, in the sense that the documents could ‘possibly throw light on the issues in the main case’: Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 103, or that it is ‘on the cards’ that they could do so: Portal Software v Bodsworth [2005] NSWSC 1115 at [24]. See also DPP vWarren [2015] ACTSC 111 at [22] and Elmaraazey v Capital Lawyers Pty Ltd [2016] ACTSC 54 at [44] where Mossop AsJ (as his Honour then was) cited in addition Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 926–927 and Re North Coast Transit Pty Limited [2013] NSWSC 1912 at [7]–[9].

1. Accordingly, the application requires an understanding of the issues arising in the main proceedings.

Amended Originating Application

1. The Amended Originating Application filed on 28 July 2017 seeks to set aside specified garnishee notices (23 in all) issued by the Defendant on 10 February, 13 February and 28 March 2017 pursuant to s 54 of the Taxation Administration Act 1999 (ACT) (the Act).

1. The Plaintiffs assert that those garnishee notices are invalid for three primary reasons, which may be loosely summarised as follows:

(a)Failure to take into account relevant considerations;

(b)Lack of authorisation to issue garnishee notices under s 54 of the Act (for various reasons related to the recipients, the nature of the entities the subject of the notices and the timing of the notices); and

(c)The inflexible application of a policy without regard to the merits of the Plaintiffs’ case.

1. The Plaintiffs’ second argument concerns the proper construction of s 54 of the Act, which does give rise to any asserted need for the documents sought under subpoena. I did not understand Counsel for either party to argue otherwise.

1. As to the first argument, the Plaintiffs assert further, in particulars set out in the Amended Originating Application, that relevant considerations included (again in summary):

(a)the fact of an internal review being on foot;

(b)the merits of the Plaintiffs’ claim in respect of the review; and

(c)the hardship to the Plaintiffs’ businesses and the prejudice to the Plaintiffs’ rights of objection and appeal, each caused by the issuing of the garnishee notices.

1. The third argument as to inflexible application of a policy is really in the same category as the first, namely that in applying a particular policy, regard was not had to the merits of the Plaintiffs’ case.  

Subpoena

1. The Schedule to the subpoena specifying the documents sought is in the following terms (as ultimately pressed before this Court):

1.The audit file for the audit notified to one or more of the Plaintiffs on or about 10 March 2016, concerning, inter alia, their payroll tax affairs (“2016 audit”);

2....

3.... all documents before the decision-makers(s) at the time of making [determinations pursuant to s 42 of the Act arising out of the 2016 audit] ...

4.All Notices of Assessment and Reassessment arising out of the 2016 audit and all documents before the decision-maker at the time of preparing the said notices;

5.The Assessments arising out of the 2016 audit and all documents before the decision-maker at the time of preparing the said notices;

6.All correspondence (including attachments and emails including attachments) from the commencement of the 2006 Audit to the finalization of the 2016 Audit between the ACT Revenue Office and one or more of the Plaintiffs and/or Sue Price, Peter Farmer, Daniel Olsen, Rick Williams, Michael Lowe, CAP Accounting or Accolade Advisory concerning the payroll tax affairs of the Plaintiff.

Evidence and Submissions

1. Counsel for the Defendant tendered on the application a garnishee notice issued to the ACT Department of Education and Training dated 13 February 2017, as an example of the decisions under review in the substantive proceedings.

1. The garnishee notices are themselves founded upon a Notice of Re-assessment and Assessment dated 29 November 2016, issued (pursuant to s 14 of the Act) to the Second Plaintiff, trading as Rose Cleaning Services, and covering the financial years commencing on 1 July 2009 through to 30 June 2016 (Assessment Notice). 

1. Importantly, the Assessment Notice was issued by a different delegate of the Commissioner from the person who made the decision to issue the garnishee notice in evidence.  There was no suggestion that in respect of any of the other garnishee notices not in evidence, the decision-maker was the same person as the delegate of the Commissioner who issued the Assessment Notice.

1. The Court was informed that the Assessment Notice is the subject of a current internal review taking place, following an Objection that was lodged with the Commissioner on 21 December 2016.

1. The parties also drew the Court’s attention to the court record, and in particular, to the fact that two other subpoenas had been issued to the Defendant, one also dated 24 March 2017 and the other dated 11 May 2017, regarding what may be described as the complete file before the decision-maker and all documents forming reasons for the issuing of the garnishee notices. 

1. The Defendant complied with those other subpoenas and there is no complaint in this application that production in respect of those two subpoenas was incomplete.

1. That is important, as it establishes that the Plaintiffs have been provided with everything that was before the decision-maker whose decisions are under challenge in the main proceedings.  The Plaintiffs also have the reasons for the decisions to issue to the garnishee notices.  That is, the Plaintiffs have already been provided with the entirety of the material that could throw light on the issues calling for judicial review in the main proceedings.

1. Counsel for the Plaintiffs submitted that the entire decision-making process was relevant to the challenge to the garnishee notices, such that documents that were before the decision-maker who issued the Assessment Notice were required, because they could throw light on the underlying merits of that decision.

1. However, as the Plaintiffs reasonably accept, they cannot challenge the merits of the underlying decision to issue the Assessment Notice in these proceedings. As noted before, that process of challenge is presently being undertaken internally with the Defendant. Counsel for the Defendant referred the Court to two decisions which bear upon the proper construction of the Act: Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd; Deputy Commissioner of Taxation v MA Howard Racing Pty Ltd; Deputy Commissioner of Taxation v Neutral Bay Pty Ltd [2008] HCA 41; 237 CLR 437 at [40]-[50] and Commissioner of Taxation of the Commonwealth of Australia v Futuris Corporation Limited [2008] HCA 32; (2008) 237 CLR 146 at [22]. Those decisions dealt with the Federal equivalent of s 134 of the Act. They are to the effect that because the Assessment Notice is conclusive evidence of the due making of the assessment and reassessment, and the amount of the assessment and all particulars thereto are correct, the Court cannot go behind the Assessment Notice to consider its merits. 

1. Accordingly, all that is before the Court on judicial review is the decisions to issue the garnishee notices. If the Plaintiffs are correct in their argument that on the proper interpretation of the Act, the decision-maker(s) were required to have regard to the 2016 audit file (including whether it merited the issuing of the Assessment Notice), and there is no record of the 2016 audit file being considered in the documents that were before the decision-maker(s), then the Plaintiffs will succeed. However, the Plaintiffs already have the file that was before the relevant decision-maker; they do not require the contents of the 2016 audit file to make that legal argument.

1. The consequence of that reasoning is that paragraphs 1 and 6 of the subpoena seek documents that lack apparent relevance to the main proceedings.

1. Similarly, in light of s 134 of the Act, documents that were before a different decision-maker who prepared any notices of assessment and reassessment arising out of the 2016 audit (sought in paragraph 4 of the subpoena) are not relevant to these proceedings. Such documents were not before the decision-maker(s) in respect of the garnishee notices that are under challenge. It is not necessary to obtain extraneous documents in order to make the legal arguments the Plaintiffs raise in their Amended Originating Application. Again, the terms of s 134 of the Act mean that in the main proceedings, the Court can not consider any documents that would be produced in answer to paragraph 4 of the subpoena, because the Court cannot go behind Assessment Notice.

1. The documents sought in paragraphs 3 and 5 of the subpoena relate to different decisions, made under different sections of the Act. Production of those documents could not touch upon the decisions to issue the garnishee notices.

1. For completeness, Counsel for the Defendant also relied upon s 99 of the Act, which restricts disclosure of ‘protected information’, defined as information in the administration or execution of a tax law, ‘unless its disclosure or production is necessary for the purpose of the administration or execution of a tax law’.

1. Counsel for the Plaintiffs drew the Court’s attention to Binqld Finances Pty Ltd (in liq) v Tamarama Fresh Juices Australia Pty Limited; In the matter of Binqld Finances Pty Ltd (in liq) [2017] FCA 358, and in particular at [44], [90]–[93], [98]­–[114]. Again, the decision was considering the Federal equivalent of the non-disclosure provision in the Act. It seems to me that what is ‘necessary’ under s 99 of the Act will be determined by what is relevant in proceedings before the Court, with the test for relevance being in accordance with the authorities I have set out above. Counsel for the Defendant sought to argue that the terms of that provision meant that the Court had to find the documents were more than simply adjectively relevant, before disclosure would be required under s 99 of the Act. However, as I have found that the documents sought were not relevant at all, the issue does not arise for determination on this application.

Orders

1. The subpoena served on the Defendant on 24 March 2017 is set aside.

1. The Plaintiffs are to pay the Defendant’s costs of the application.

I certify that the preceding twenty-eight [28] numbered paragraphs are a true copy of the Reasons for  Judgment of her Honour Associate Justice McWilliam

Associate:

Date: 1 August 2017