Collie and Commissioner of Taxation

[2003] AATA 1092

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1092

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2002/686

GENERAL ADMINISTRATIVE DIVISION		)
Re		IAN DAVID STAFFORD COLLIE

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Senior Member K L Beddoe

Date31 October 2003

PlaceBrisbane

Decision

The Tribunal decides that:

(a)     the decision under review be set aside and the matter remitted to the respondent for reconsideration with a direction to give effect to the Tribunal’s reasons for decision;

(b)     the operation of this decision be stayed for a period of 28 days; 

(c)     liberty to apply is reserved to both parties; and

(d)     these proceedings have terminated in a manner favourable to the applicant.  

(Sgd)  KL Beddoe

Senior Member

CATCHWORDS

FREEDOM OF INFORMATION – request for access to documents - exemptions - whether exemptions properly claimed – whether documents should be released to the applicant

Freedom of Information Act 1992

Income Tax Assessment Act 1936

Re Russell Island Development Association Inc and Department of Primary Industries and Energy (1994) 33 ALD 683

Attorney-General’s Department v Cockcroft (1986) 12 ALD 468
Re Waterford and Department of Treasury (No 2) (1984) 5 ALD 588
Re Zacek and Australian Postal Corporation [2002] AATA 473
Re Hart and Commissioner of Taxation [2002] AATA 1190
Harris v Australian Broadcasting Corporation (1984) 51 ALR 581
Vaugh v Rosen (1975) 523 F(2d) 1136
News Corporation Ltd v National Companies and Securities Commission (1984) 5 FCR 88
Bartlett v Secretary, Department of Social Security (1997) 49 ALD 380
Re Mann and Federal Commissioner of Taxation (1987) 87 ATC 2010
Re Corrs Chambers Westgarth and Commissioner of Taxation [1988] AATA 756
Re Collie and Deputy Commissioner of Taxation (1997) 45 ALD 556
Colakovski v Australian Telecommunications Corporation (1991) 100 ALR 111

Kristoffersen v Department of Employment, Workplace Relations and Small Business [2002] FCA 55

Re Z and Australian Taxation Office (1984) 6 ALD 673

Re Williams and Registrar, Federal Court of Australia (1985) 8 ALD 219

The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49

Re Wallace and Director of Public Prosecutions [2003] AATA 119

REASONS FOR DECISION

31 October 2003 Senior Member K L Beddoe         

1.      This is an application for review of a deemed decision of the respondent to refuse an application by the applicant, under the Freedom of Information Act 1992 (the Act), for access to documents held by the respondent in relation to his taxation affairs. On 5 July 2002, the applicant made a request for access to the following documents (T3, folio 5):

“1.Memoranda, reports, correspondence, emails, file notes and working papers before any officer or delegate of the Commissioner as part of the decision making process relating to any decision of any officer or delegate of the Commissioner to conduct an audit or investigation of tax affairs relating to the applicant for the period 1 July 1992 to 30 June 2001.

2.Memoranda, reports, correspondence, emails, file notes and working papers authored by any officer or delegate of the Commissioner relating to any decision of any officer or delegate of the Commissioner to conduct an audit or investigation of income tax affairs relating to the applicant for the period 1 July 1992 or 30 June 2001.

3.Memoranda, reports, correspondence, emails, file notes and working papers authored by any officer or delegate of the Commissioner relating to any issue arising out of any audit action in relation to or investigation of the applicant’s income tax affairs conducted since 1 July 2001 but excluding any correspondence between the Australian Taxation Office and the applicant or his solicitors since 1 July 2001.

4.Documents evidencing any delegation of the Commissioner’s authority relied on for the purpose of making any decision referred to in paragraphs 1 or 2 above.”

2.      The parties agreed that the respondent would make a decision in relation to the above request by 8 August 2002 (T5). However, on 8 August 2002, the respondent wrote to the applicant advising that it was unable to meet the agreed deadline and that, accordingly, the failure to make a decision meant that the Commissioner was deemed to have refused the request in accordance with section 56 of the Act. On 12 August 2002, the applicant applied to this Tribunal for a review of the deemed refusal decision.

3. The Tribunal heard this matter on 24 March 2003 at Brisbane. The applicant was represented at the hearing by Mr Perkins of counsel, and the respondent by Mr O’Sullivan of counsel. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act), as Exhibit 1. The documents relevant to the freedom of information (FOI) request were produced to the Tribunal (Exhibit 2) and are the subject of a confidentiality order pursuant to section 35 of the AAT Act. The Tribunal also had before it an affidavit by Michelle Lim (Exhibit 3).

4.      The applicant in this case has requested access to a broad range of material relating to the decision to conduct an audit or investigation of his taxation affairs, including material leading up to the making of that decision.  His request relates only to documents and material regarding his taxation affairs, and does not relate to the taxation affairs of others.

5.      The respondent has released a number of documents to the applicant in response to his FOI application.  It has also released edited versions of documents where it believes that the deleted material is irrelevant to his request (pursuant to section 22(1)(a)(ii) of the Act) or that the release of the information is exempted under the Act.  In relation to the exemptions, the respondent claims that certain documents or parts thereof are exempt under sections 38, 37(1)(a), 37(2)(b), 36(1), 41 or 42(1) of the Act. Broadly, these exemptions apply where the material requested relates to another person or entity or where the release of information would be prejudicial to the respondent’s investigations.  As already noted and pursuant to section 64 of the Act the respondent produced 119 documents (1435 pages) to the Tribunal (Exhibit 2).  Each of those documents has been inspected by me.

Legislative Framework

6. A person has an enforceable right of access to documents held by a Minister or agency (such as the respondent) pursuant to section 11(1) of the Freedom of Information Act 1982 (the Act). The right of access is not affected by the applicant’s motive for seeking access (section 11(2)).

7.      The respondent may invoke certain exemptions provided for in Part IV of the Act to deny access to a document, or to provide a document with exempt material deleted.

Exemption – Irrelevant Material

8.      Pursuant to section 22, the respondent is not required to disclose material that is irrelevant.  Section 22 relevantly provides:

“Where

(a)an agency or Minister decides: …

(ii) that to grant a request for access to a document would disclose information that would reasonably be regarded as irrelevant to that request; and

(b)it is possible for the agency of Minister to make a copy of the document with such deletions that the copy: …

(ii) would not disclose such information; and

(c)it is reasonably practicable for the agency or Minister, having regard to the nature and extent of the work involved in deciding on and making those deletions and the resources available for that work, to make such a copy;

the agency or Minister shall, unless it is apparent from the request or as a result of consultation by the agency or Minister with the applicant, that the applicant would not wish to have access to such a copy, make, and grant access to, such a copy.”

9.      In determining whether an exemption has properly been claimed under section 22, it is necessary to consider whether the document contains information that “would reasonably be regarded as irrelevant to that request”.. The Tribunal discussed the meaning of that expression in Re Russell Island Development Association Inc and Department of Primary Industries and Energy (1994) 33 ALD 683. After referring to the decision in Attorney-General’s Department v Cockcroft (1986) 12 ALD 468, Deputy President Forgie said (at 691) the expression "would reasonably be regarded" requires the decision-maker to:

“…consider whether disclosure of certain information might reasonably, as opposed to irrationally or absurdly, be considered or looked on as irrelevant to the request for access made under the Act.”

Exemption – Deliberative Process

10.     The respondent also claims exemptions under section 36(1), which provides:

“Subject to this section, a document is an exempt document if it is a document the disclosure of which under this Act:

(a)would disclose matter in the nature of, or relating to, opinion, advice or recommendation obtained, prepared or recorded, or consultation or deliberation that has taken place, in the course of, or for the purposes of, the deliberative processes involved in the functions of an agency or Minister or of the Government of the Commonwealth; and

(b)would be contrary to the public interest;…”

11.     The Tribunal has interpreted the expression “deliberative processes” as the decision-maker’s “thinking processes”: see Re Waterford and Department of the Treasury (No 2) (1984) 5 ALD 588 at 606; see also Re Zacek and Australian Postal Corporation [2002] AATA 473 at par 55-61. Deliberative processes extend beyond the business of making policy to the design and operation of administrative systems (Waterford), but it does not extend to every document that is prepared by the Minister or agency in the course of discharging its functions: see Re Hart and Commissioner of Taxation [2002] AATA 1190 at par 25. Documents that are merely descriptive or which deal with procedural issues might fall short of forming part of the deliberative process: see Waterford at 606, and section 36(5) which provides that the section does not protect documents containing purely factual material.

12.     The Full Federal Court, in Harris v Australian Broadcasting Corporation (1984) 51 ALR 581, found that, when considering whether a document was prepared for or in the course of a department’s deliberative process, it not simply a matter of examining the form of words used in the document – the Tribunal must look to the essence of the statements to determine their character for the purposes of the section.

13.     Opinions, advice and recommendations are protected because they agitate the thinking of the Minister or agency concerned. They are “a part of the agency give-and-take – of the deliberative process – by which the decision itself is made…”: Vaugh v Rosen (1975) 523 F(2d) 1136 at 1144, cited in Harris at 585. And see Hart at para 28.

Exemption – Frustrates Enforcement of Law / Discloses Investigative Methods

14. Section 37(1)(a) creates an exemption for documents where disclosure of those documents, or parts thereof, would frustrate the enforcement of the law. The sub-section provides:

“(1) A document is an exempt document if its disclosure under this Act would, or could reasonably be expected to:

(a)prejudice the conduct of an investigation of a breach, or possible breach, of the law, or a failure, or possible failure, to comply with a law relating to taxation or prejudice the enforcement or proper administration of the law in a particular instance; …”

15. In order to succeed in relation to a claim for exemption under section 37(1), the respondent must establish a reasonable expectation that disclosure will prejudice the conduct of the investigation. As Woodward J explained in the Full Federal Court decision of News Corporation Ltd v National Companies and Securities Commission(1984) 5 FCR 88 (at 101-102):

“…the words ‘would, or could reasonably be expected to…prejudice’ mean more than ‘would or might prejudice’.. A reasonable expectation of an event requires more than a possibility, risk or chance of the event occurring… In my view it is reasonable to expect an event to occur if there is about an even chance of it happening…”

16.     Fox J agreed (at 95), stating “that it is not sufficient that there be a mere risk of prejudice to the conduct of an investigation”: see also Bartlett v Secretary, Department of Social Security (1997) 49 ALD 380 at 381 per Heerey J.

17. Section 37(2)(b) relates to documents which would disclose investigative methods. It provides:

“A document is an exempt document if its disclosure under this Act would, or could reasonably be expected to: …

(b)disclose lawful methods or procedures for preventing, detecting, investigating, or dealing with matters arising out of, breaches or evasions of the law the disclosure of which would, or would be reasonably likely to, prejudice the effectiveness of those methods or procedures;…”

Exemption – Secrecy Provisions

18.     Section 38 provides exemption for documents subject to secrecy provisions in an Act. The section provides:

“(1) Subject to subsection (1A), a document is an exempt document if:

(a) disclosure of the document, or information contained in the document, is prohibited under a provision of an enactment; and

(b) either:

(i)   that provision is specified in Schedule 3; or

(ii) this section is expressly applied to the document, or information, by that provision, or by another provision of that or any other enactment.

(1A) A person's right of access to a document under section 11 or 22 is not affected merely because the document is an exempt document under subsection (1) of this section if disclosure of the document, or information contained in the document, to that person is not prohibited by the enactment concerned or any other enactment.

(2) Where a person requests access to a document, this section does not apply in relation to the document so far as it contains personal information about the person.”

19. In this case, the respondent claims that many of the documents sought by the applicant are exempt from production by virtue of section 16(2) of the Income Tax Assessment Act 1936, a provision which is listed in Schedule 3 of the Act. Section 16(2) provides:

“Subject to this section, an officer shall not either directly or indirectly, either while he is, or after he ceases to be an officer, make a record of, or divulge or communicate to any person any information respecting the affairs of another person acquired by the officer as mentioned in the definition of ‘officer’ in subsection (1).”

Sub-section (2A) goes on to say:

“Subsection (2) does not apply to the extent that the person makes the record of the information, or divulges or communicates the information, in the performance of the person's duties as an officer.”

20.     Subsection 16(1) provides:

“Officer means a person who is or has been appointed or employed by the Commonwealth or by a State, and who by reason of that appointment or employment, or in the course of that employment, may acquire or has acquired information respecting the affairs of any other person, disclosed or obtained under the provisions of this Act or of any previous law of the Commonwealth relating to income tax.”

21. The expression “affairs of another person” in section 16(2), therefore, would not be limited to information about a person’s tax affairs, it would also include any information about that person that is held by the respondent: see Mann at 2012; see also Re Corrs Chambers Westgarth and Commissioner of Taxation[1998] AATA 756 at paras 13-14 22 AAR 126 at 132; and Hart at para 65.

22. Section 16(2) has the purpose of protecting a person’s privacy in relation to their taxation affairs (see Re Mann and Federal Commissioner of Taxation (1987) 87 ATC 2010 at 2014). A question therefore arises as to whether information in documents can be released if it has been “sanitised” so that the information becomes anonymous. In Corrs Chambers Westgarth, Senior Member Dwyer found that the operation of section 16 could not be avoided just by removing the identity of that taxpayer. Even if the identifying information was removed, the information still related to a taxpayer – albeit an unnamed one: at par 22; see also Re Collie and Deputy Commissioner of Taxation (1997) 45 ALD 556 at 564; and Hart at para 75.

23.     The Tribunal agrees with the approach in Corrs, Collie and Hart.  Section 38 has the effect of denying access to information rather than merely suppressing the identity of the person with respect to whom the information relates.

Exemption – Disclosure of Personal Information

24.     In News Corporation Ltd and Others v National Companies and Securities Commission (1984) 52 ALR 277 (6 ALD 83) the Full Federal Court held that in deciding whether a document was exempt in terms of section 38 of the Act, as it then was, it is necessary to consider the information contained in the document and whether there is an enactment which prohibits persons nominated in the enactment from disclosing that information.

25.     The question is whether information obtained by the respondent about the business entities associated with the applicant is information coming within the exclusion in sub-section 38(2).

26.     Personal information as defined in sub-section 4(1) as follows:

“… unless the contrary intention appears:

‘personal information’ means information or an opinion (including information forming part of a database), whether true or not, and whether recorded in a material form or not, about an individual whose identity is apparent, or can reasonably be ascertained, from the information or opinion;”

27.     In News Corporation the Federal Court distinguished business affairs from personal affairs.  At page 286 Bowen CJ and Fisher J referred to section 41 as a section concerned with documents affecting personal privacy.

28.     In re Williams (1985) 3 AAR 529 at 531 Beaumont J (Presidential Member) said that “personal affairs” of a person was intended to have its ordinary meaning so as to refer to matters of private concern to an individual.

29.     In Colakovski v ATC (1991) 13 AAR 261 the Federal Court considered whether disclosure of details of telephone calls by another person would involve information relating to the personal affairs of any person. At page 268 Lockhart J said:

“… I prefer the view that the ‘personal affairs’ of a person within the meaning of ss 41(1) and 12(2) of the FOI Act connotes information which concerns or affects the person as an individual whether it is known to other persons or not”

and

“… a person’s affairs may be personal to him notwithstanding that they are not secret to him.”

30.     Similar considerations apply, in the context of sub-section 38(2).  While it may well be the case that it would not be unreasonable to release personal information about a partnership or trust of which the applicant is a member sub-section 38(2) applies a different test.  Section 38 does not apply in relation to the document only so far as it contains personal information about the person.

31.     I am satisfied that section 38(2) has no operation in relation to a document that contains personal information about another person or where the document does not contain personal information about the person.

32.     I am not satisfied that information about entities such as a partnership or a trust is not of the character of personal information as defined.

33.     Bearing in mind that granting access to a document means granting access to the public, I am satisfied that the intention of section 38 would be compromised if access was granted to documents containing information about a partnership or trust on the application of only one of the members, for example, of the partnership.  Different considerations may apply if all members sought access or consented to access.  That is not the case here.

34.     Even if the other members so consented I am not satisfied that such consents would have any effect in relation to the operation of section 38.  Sub-section 38(2) only relates to personal information and I am not satisfied that the taxation affairs of entities such as partnerships and trusts can be characterised as personal information.

35.     I am satisfied that the Act draws a clear distinction between information about agencies and personal information and other information obtained by agencies about persons, especially when that information about persons is subject to secrecy provisions in enactments set out in Schedule 3 of the Act.  Section 38 protects from disclosure this information except where the information is personal information about the applicant.

36.     Consideration of section 41 is therefore otiose in the context of information which is exempt in terms of section 38 of the Act (Re Murtagh and FCT (1984) 84 ATC 4516; FCT v Swiss Aluminium Australia Ltd (1986) 66 ALR 159). I am not satisfied that section 41 applies to any of the documents for which exemption is claimed under that section because those documents do not contain personal information as defined or because the document is exempt in terms of section 38 of the Act so that it is not necessary to consider the application of section 41.

Exemption – Legal Professional Privilege

37.     Section 42(1) provides an exemption where a document would be privileged from production in legal proceedings on the ground of legal professional privilege.

38.     The rule as to the existence of legal professional privilege was concisely explained by the High Court in The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 the majority said (at paragraphs 9 and 10):

“It is now settled that legal professional privilege is a rule of substantive law [Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 490 per Deane J] which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. …

Being a rule of substantive law and not merely a rule of evidence, legal professional privilege is not confined to the processes of discovery and inspection. … Rather, and in the absence of provision to the contrary, legal professional privilege may be availed of to resist the giving of information or the production of documents in accordance with investigatory procedures…”

39.     In order to succeed in a claim for legal professional privilege it must be shown that there was, at the relevant time, a relationship of client and legal adviser, and that the document in question was made for the dominant purpose of giving or obtaining legal advice (see also, Re Wallace and Director of Public Prosecutions [2003] AATA 119 at pars 77-78).

40.     In this case, the respondent only claims the exemption under section 42 in relation to two documents: documents 28 and 29.  I am satisfied that, at the time the relevant parts of the documents were created, the respondent was in a relationship of client and legal adviser with the Australian Government Solicitor.  The relevant part of document 28 (pages 209-210) is an email from an officer of the respondent to the Australian Government Solicitor which I am satisfied was prepared for the purpose of obtaining legal advice.  It is therefore exempt under section 42 of the Act.

41.     The respondent also seeks to exclude one paragraph from document 29 (page 211) from production on the basis that it is exempt under section 42.  In that paragraph an officer from the respondent advises another officer of the substance of legal advice received from the Australian Government Solicitor.  I am satisfied that this communication was prepared for the dominant purpose of giving and disseminating legal advice, and that that part of the document is exempt under section 42 of the Act.

Consideration

42.     Having regard to the principles set out above, the Tribunal has considered each document in turn to determine whether the exemptions claimed by the respondent are properly available under the Act. 

43.     The Tribunal is satisfied that the exemptions claimed by the respondent, in relation to the various documents described in Exhibit 2, are appropriate with the exception of the claims in respect of the following documents to the extent noted as explanation.

Document No

Explanation

20 (page 143 only)

There is no reasonable basis to justify a claim under paragraph 37(1)(a).

47 (p 273-357)

This document is an internal report based on public information and internal information so far as it refers to the affairs of any person covered by secrecy provisions section 38 applies.

Pages 273-275 are not exempt.  The rest of the document is irrelevant (s 22) except for three entries which are exempt under section 38 and those parts of the document in respect of which access has been allowed.

69 (pp 486 – 519)

This document is an internal report based on public information.  So far as it refers to the affairs of any person section 38 applies.  Pages 486-487 are not exempt.  The rest of the document is irrelevant (s 22) except for one entry referring to the applicant’s firm which is exempt (ss 7(1)(a)).

72 (pp 558-606)

This document is irrelevant except for one entry which is exempt s 38.

74 (pp 1012 – 1070

As for no 72.

75 (pp 1071 – 1088)

As for no 72.

80(pp 1099-1106)

Page 1106 first entry for 15/11/01 – first four words are not exempt.

98 (pp 1205-1263)

As for No 72.

108 (pp 1335 – 1339)

Page 1335 – 10.16 email – deleted portions exempt section 36 and/or section 38.

Decision

44.     The Tribunal sets aside the decision under review and remits the matter to the respondent for re-consideration with a direction to give effect to the Tribunal’s reasons for decision. 

45.     The operation of the Tribunal’s decision will be stayed for 28 days, liberty to apply will be reserved to both parties and I will certify that these proceedings have terminated in favour of the applicant.

I certify that the 45 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member K L Beddoe

Signed:         Sarah Oliver  
  Associate

Date of Hearing  24 March 2003
Date of Decision  31 October 2003
Counsel for the Applicant         Mr Perkins

Solicitor for the Applicant          Damien Bourke and Associates
Counsel for the Respondent     Mr O'Sullivan
Solicitor for the Respondent     Australian Government Solicitor