Commissioner of Taxation of the Commonwealth of Australia v Schokker, Hank Bernard

[1996] FCA 1065

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA              )
  )
WESTERN AUSTRALIA DISTRICT REGISTRY)
  )
GENERAL DIVISION  )              No: WAG 46 of 1996

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT

B E T W E E N:

COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Appellant
  - and -

HANK BERNARD SCHOKKER AND JACQUELINE M SCHOKKER

Respondents

CORAM            :              BLACK CJ, LEE and CARR JJ
PLACE              :              PERTH
DATE                 :              17 OCTOBER 1996

REASONS FOR JUDGMENT

THE COURT:

This is an application for leave to appeal from a decision of R D Nicholson J made on 30 August 1996 in which his Honour refused a motion by the Commissioner of Taxation ("the Commissioner") to have the principal application summarily dismissed.

The principal application was filed by the respondents on 7 May 1996 and was described simply as an "application for an order of review".  The application was prepared and filed by the respondents

in person and it lacked the precision to be expected of an application prepared by a competent legal practitioner who had had the opportunity of distilling a client’s instructions.

At all material times, the male respondent, Mr Schokker, was employed in the Australian Taxation Office.  On 2 January 1996 the respondents wrote to the Commissioner making various allegations, the principal of which was as follows:

"I am being persecuted by the illegal activities of the senior members of the ATO in Cannington.  There are at least 5 senior officers at the Cannington ATO who have committed several separate breeches (sic) of secrecy provisions in relation to my, my wife's and my daughter's income tax affairs, and used this information and the misuse of ITAA access provisions to conduct an enquiry into my personnel file."

His Honour pointed out in his reasons that two principal categories of breach of secrecy were alleged in the letter. The first was the use by the special audit manager, in a personnel inquiry, of information concerning possession by Mr Schokker of blank medical certificates when the information was said to have come into his possession in consequences of a notice served pursuant to s264 of the Income Tax Assessment Act 1936 (Cth) (‘the ITA’) on the Western Australia Police. Secondly, it was alleged that the auditor also made extensive use of confidential and personal information concerning Mr and Mrs Schokker and their daughter's income tax audits to conduct a personnel evaluation of the leave entitlement of Mr Schokker under the Public Service Regulations.

In substance, the application filed in the Court alleged that in response to this complaint the Commissioner had decided that "no prosecution action against audit staff for these alleged breaches will be instituted". The application did not contend expressly that the Commissioner was

empowered by an enactment to institute the prosecutions that the respondents claimed he should have instituted.

In July 1996 the Commissioner filed a motion to have the application dismissed as incompetent or, alternatively, dismissed pursuant to Order 20 rule 2 of the Federal Court rules.  Mr and Mrs Schokker appeared on their own behalf on the hearing of the motion before his Honour.  When the motion came on for hearing, the respondents’ application was treated as an application for judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and it was not suggested before us that this approach was wrong. It appears that the principal issue litigated on that motion was whether the Commissioner was authorised to institute a prosecution for breach of the secrecy provisions of the relevant taxation legislation. The Commissioner's primary contention was that the Court had no jurisdiction under the ADJR Act because there was no relevant decision under any enactment to which the ADJR Act could apply. The thrust of the Commissioner's submission to his Honour was that the relevant offences were not offences that the Commissioner had any power to prosecute and thus that any decision not to prosecute was not a decision that the Commissioner could make "under an enactment". The ADJR Act is of course limited in its application to decisions of an administrative character made under an enactment: see s3(1).

As can be seen from the terms of the respondents’ application set out above, the decision or decisions about which the complaint was made may not have been so limited and the respondents’ case could be seen to extend to a decision by the Commissioner not to refer the matter to the appropriate prosecution authority for further action.

The learned primary judge, after reviewing the relevant provisions of the Income Tax AssessmentAct 1936 (Cth) (“the ITA”) and the Taxation Administration Act 1953 (Cth) and the Crimes (Taxation Offences) Act 1980 (Cth), concluded that prosecutions for a taxation offence (which is a defined term) are either instituted by or on behalf of the Commissioner. Consequently, so his Honour held, it followed that the Commissioner must make a decision under those provisions whether or not to occasion a prosecution to be brought. His Honour then reviewed the authorities and concluded.

“A decision by the Commissioner of Taxation not to prosecute pursuant to the ITA is a decision which is authorised by the ITA.  Any decision which is expressly authorised by an Act of the Commonwealth is a decision under an enactment: s3. Such a decision is similar to the decision the Commonwealth DPP must make a prosecuting offence under the Crimes Act.  Further, it is not a decision to conduct an investigation.  It is a decision to prosecute an offence.

The negative character of the decision does not preclude it from being reviewable.  It is final, operative and determinative in its nature because it prevents a further step being taken.  It is not a step taken along the way to a final decision by the Commissioner.

...

In my opinion the decision by the Commissioner is therefore one which is a decision under an enactment which is reviewable.  It follows the respondent’s motion should be refused.”

In reaching his conclusion that the decision in question was expressly authorised by an enactment, and was thus a decision to which the ADJR Act applied, his Honour relied on s15(1) of the Taxation Administration Act, which his Honour said “envisages that in a prosecution arising under or out of a taxation law that the prosecution may be ‘instituted by or on behalf of the Commissioner’.”

Accordingly his Honour dismissed the motion. 

In seeking leave to appeal from his Honour's decision, leave being necessary because the decision is interlocutory in nature, counsel for the Commissioner submitted that leave should be granted, and the appeal allowed, for the reason that Mr and Mrs Schokker’s application was in all respects incompetent.  Counsel argued that it was fatally flawed in that the Commissioner had no power to institute prosecutions for any offence related to secrecy.  In essence, his submission was that any such prosecution would be in respect of an indictable offence and it was not within the Commissioner's power to institute prosecutions for offences of that nature.

To understand this submission fully it is necessary to consider s16 of the Income Tax Assessment Act, and ss3C, 3D, 3E and 8XA of the Taxation Administration Act. Breaches of any of these provisions are "taxation offences" which are indictable offences but not "prescribed offences" or "prescribed taxation offences": see s8A(1) when read with s8ZA of the Taxation Administration Act. In essence that is because the offences are punishable by imprisonment for a period exceeding 12 months. With the exception of s16 of the ITA, all of the above provisions are found in Part III of the Taxation Administration Act.  The Commissioner contended that Part III was a code and that no other provision of any Act empowered him to institute prosecutions in relation to such offences.  Counsel for the Commissioner submitted that there were no other offences, relevant to the complaints made by the respondents in the letter of 2 January 1996, which were punishable by imprisonment for a period not exceeding 12 months.

We agree that Part III of the Taxation Administration Act, the heading of which reads “Prosecutions And Offences”, does constitute a code dealing exhaustively with prosecutions for offences (other than indictable offences) against tax legislation: see R v MacPherson [1996] 1 Qd R 656 and the Explanatory Memorandum to Taxation Laws Amendment Bill 1984, Parts A and B at page 3. Prosecution for such indictable offences can only be instituted by the Director of Public Prosecutions and in some cases the Attorney General: see s69 of the Judiciary Act 1903 (Cth). It was not suggested that s13 of the Crimes Act 1914 had any application; rather, the respondents relied upon an implied power of the Commissioner to institute the proceedings which was said to be derived from s15(1) of the Taxation Administration Act read in conjunction with s8 of the ITA.

We reject that argument. We agree with the Commissioner's submission that s15(1) is not concerned with the power to prosecute but with the quite distinct question of representation. This much, we think, appears from its terms. Moreover, any other conclusion would be contrary to the intention clearly disclosed by the carefully constructed provisions of Part III of the Taxation Assessment Act.  There is no need for, and no room for, the suggested implication.

Accordingly, we conclude that the learned primary judge was in error in deciding that a decision not to prosecute in this case was a reviewable decision.  It did not purport to be and could not have been, in our view, a decision under an enactment.

In these circumstances we think that this is a case in which leave to appeal should be granted.

This does not, however, dispose of the appeal. Mr and Mrs Schokkers' application to the Court raised issues wider than the issue we have so far considered. There is, as a live issue in their application, the question whether the Commissioner's decision not to refer the matters complained of to a prosecuting authority, being matters concerning the administration of the Australian Taxation Office, is reviewable under the ADJR Act. This is an issue that was not, it appears to us, argued on the motion for dismissal and although it is obvious that the respondents’ case on that issue will face substantial hurdles, it is not open to this Court on the hearing of this appeal to dismiss the proceeding in relation to that issue. We emphasise that the power to dismiss matters summarily is one that must be exercised with exceptional caution. Such applications should not be embarked upon lightly.

It follows that we would not allow the appeal in full.  We would allow it to the extent that the part of the application that alleges that the Commissioner made a decision not to exercise a power to prosecute be struck out.  We agree that there should be no orders as to costs before the primary judge and there should be no order as to the costs of the application for leave to appeal or the appeal.

In these circumstances, the order of the Court is that leave to appeal be granted and the appeal be allowed.  The order made on 30 August 1996 will be set aside and in lieu thereof there will be orders that the principal application, to the extent that it alleges that the Commissioner of Taxation made a decision not to exercise a  power to prosecute, be struck out and that there be no order as o costs.  On the appeal and on the application for leave to appeal there will be no order as to the costs.

I certify that this and the 6 preceding pages
  are a true copy of the reasons for   judgment of the Court.
  Associate:
  Dated:  17 October 1996

Counsel for the Appellant :              Mr S Owen-Conway QC and Ms L B Price
Solicitors for the Appellant               :              Australian Government Solicitor
Counsel for the Respondents          :              Mr G N Galic
Solicitors for the Respondents        :              Kott Gunning

Hearing Date  :              17 October 1996

CATCHWORDS

JUDICIAL REVIEW - jurisdiction - whether reviewable decision under an enactment - application for leave to appeal  judgment that a decision by respondent not to refer matter for prosecution was a reviewable decision - whether reviewable decision.

Administrative Decisions (Judicial Review) Act 1977 (Cth) s3(1)
Income Tax Assessment Act 1936 (Cth), s16
Taxation Administration Act 1953, s3C, s3D, s3E. s8XA

R v MacPherson [1996] 1 Qd R 656

No: WAG 46 of 1996

COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

- and -

HANK BERNARD SCHOKKER AND JACQUELINE M SCHOKKER

BLACK CJ, LEE and CARR JJ

PERTH
17 OCTOBER 1996

IN THE FEDERAL COURT OF AUSTRALIA              )
  )
WESTERN AUSTRALIA DISTRICT REGISTRY)
  )
GENERAL DIVISION  )              No: WAG 46 of 1996

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT

B E T W E E N:

COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Appellant
  - and -

HANK BERNARD SCHOKKER AND JACQUELINE M SCHOKKER

Respondents

CORAM            :              BLACK CJ, LEE and CARR JJ
PLACE              :              PERTH
DATE                 :              17 OCTOBER 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

The application for leave to appeal from the orders made by the Honourable Justice R D Nicholson dated 30 August 1996 be granted and the appeal be allowed.

The orders made on 30 August 1996 be set aside and in lieu thereof orders that:

(a)   the principal application, to the extent that it alleges that the Commissioner of Taxation     made a decision not to exercise a power to prosecute, be struck out; and

(b)   there be no order as to costs.

There be no order as to the costs of the application for leave to appeal or of the appeal.

Note: Settlement and entry of orders is dealt with in Order 37 of the Federal Court Rules.