Commissioner of Taxation v Grbich, Y.F.R

[1993] FCA 516

COMMISSIONER OF TAXATION v. Y.F.R. GRBICH and DAVID SHEN
No. G982 of 1992
FED No. 516
Number of pages - 8
Adminstrative Law
(1993) 93 ATC 4564
(1993) 25 ATR 516
(1993) 18 AAR 74
(1993) 31 ALD 97

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J(1)

CATCHWORDS

Administrative Law - Natural justice - whether proposal by Administrative Appeals Tribunal to take evidence by video conference facility is a denial of procedural fairness.

Administrative Appeals Tribunal Act 1975, ss.33-40.

The King v War Pensions Entitlement Tribunal; Ex Parte Bott (1933) 50 CLR 228 - cons.

Omran v Australian Postal Commission (1991) 14 AAR 51 - cons.

HEARING

SYDNEY, 29 July 1992

#DATE 2:8:1993

Counsel and Solicitors
for Applicant: Mr. A.H. Slater QC with

Miss R.M. Henderson instructed by Ms. L. Wild (Australian Government Solicitor)

Counsel and Solicitors
for Second respondent: Mr. P. Roberts with

Mr. D.B. McGovern instructed by Horowitz and Bilinsky

ORDER

THE COURT ORDERS:

1. Objection to competency overruled.

2. Application dismissed.

3. The applicant pay three-quarters of the costs of the second respondent.

4. No order for the costs of the first respondent.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

INTRODUCTION

BEAUMONT J In these proceedings under the Administrative Decisions (Judicial Review) Act 1977 ("AD(JR) Act"), the Commissioner of Taxation, as applicant, seeks judicial review of alleged proposed conduct of the first respondent, Mr. Y.F.R. Grbich, a Senior Member of the Administrative Appeals Tribunal ("the Tribunal") in proceedings before the Tribunal. The proceedings are a reference to the Tribunal for review of the decision of the Commissioner to disallow the objection of a taxpayer, David Shen, the second respondent, against a default assessment. In the assessment, purportedly made under s.167 of the Income Tax Assessment Act 1936, the total tax and penalties assessed were substantial amounts - $1,617,848.58.

1. Mr. Shen now lives in Hong Kong. He seeks to give his evidence before the Tribunal in Hong Kong by a video conference facility ("VCF"). The Tribunal has indicated, over the Commissioner's objection, that it proposes to permit this. This conduct is sought to be restrained in the present application. It is said, on behalf of the Commissioner, that taking Mr. Shen's evidence in the manner proposed would effectively deprive the Commissioner of his right to cross-examine Mr. Shen and, the argument runs, this would amount to procedural unfairness. The Commissioner seeks an order under the AD(JR) Act that the Tribunal be restrained from receiving any evidence from Mr. Shen on matters involving his credit unless he gives that evidence in person before the Tribunal.

THE COURSE OF PROCEEDINGS BEFORE THE TRIBUNAL
3. On 7 April 1992, Mr. Grbich made a decision, with reasons, to which reference is made below. Some time before this, by letter dated 27 November 1991, the solicitors for Mr. Shen wrote to the solicitors for the Commissioner stating that Mr. Shen -

"can most probably be available for cross examination on a telephone link-up and he can give his evidence and be cross examined by telephone. Our client is unable to be in Australia for the hearing."

1. As has been said, on 7 April 1992, Mr. Grbich made a decision, with reasons. The decision was as follows:
   

"Decision under review held to be prima facie valid. Further hearing with video conference evidence by applicant ordered."

1. In his reasons, Mr. Grbich said:
   

"10. That decision (Case X65 90 ATC) can be distinguished. The assessment in this particular case has a more substantial foundation. While there is no adequate evidence to link the amounts in the applicant's Hong Kong account with his Australian activity there was a large sum in the account to be explained and a reasonable basis for inferring it was taxable income. The distinction, it seems to me, is between a default assessment based, on the one hand, on a genuine conclusion from all the evidence that the sum of money in question constitutes taxable income. It can be based on a reasonable estimate or even informed guess. On the other hand, an arbitrary figure which makes no plausible attempt to approximate the amount of taxable income is a nullity."

1. He went on to say -
   

"11. I find that there was sufficient basis for the due making of the assessment in this case and the s 167 default assessment is prima facie valid.

12. In the result, the Tribunal is left with evidence of a series of transactions with cash leaving Australia and with cash located in the applicant's Hong Kong bank account. There is no plausible link between the cash leaving Australia and the applicant established by evidence. There is no evidence and no sufficient basis in argument to draw any plausible link between the two amounts. But there is a prima facie basis for the inference that cash in the applicant's Hong Kong account was taxable income."

1. The Tribunal then dealt with the question which is the subject matter of the present proceedings as follows:
   

"13. In a Telephone Directions Hearing (Mr. Shen), through his representative, submitted that, because of an apprehension of 'victimisation' by Australian authorities, he could not come and give oral evidence before the Tribunal. As time was of the essence, at that Telephone Directions Hearing I made a preliminary finding that evidence given by video conference linking the Tribunal and (Mr. Shen) was not admissible. This preliminary finding was strenuously resisted at the hearing. (Mr. Shen) applied, in the alternative, for a telephone hearing of evidence.

14. At the hearing, (Mr. Shen) tendered a statutory declaration executed in Hong Kong. The (Commissioner) did not object to its admission into evidence. (Mr. Shen) submitted that this should be supported by oral evidence on video conference facilities between Hong Kong and a site not far from the Tribunal in central Sydney. The (Commissioner) was not strongly opposed in principle to the admission of such evidence, relying on the fact that its weight would be in issue. Rather, he rested his submission on the basis (Mr. Shen) had not given good and sufficient reasons in this particular case for failing to return to Australia and give oral evidence. Mr. Shen's affidavit stated that he had been charged and spent 16 months in jail in Australia without bail for drug offences and saw the making of income tax assessments as 'part of a victimisation of myself by the Australian authorities because they believe I am guilty of drug offences'. He said 'I will never voluntarily go to Australia'.

15. Counsel for Mr. Shen submitted that refusal to grant the request for video evidence was a breach of the obligation in s39 of the Administrative Appeals Tribunal Act 1975 to ensure that 'every party to a proceeding before the Tribunal is given a reasonable opportunity to present his case."

1. For reasons then given, the Tribunal concluded that Mr. Shen had made out a "case for giving video conference evidence rather than appearing in person". The Tribunal went on to say:
   

"22. If the Tribunal finds that because of limitation of time or the physical capacity to test evidence in cross examination in the video conference is not fully satisfactory this will be directly relevant to the issue whether (Mr. Shen) discharged his onus under s190(b). Issues about the weight of this evidence will obviously loom large. (Mr. Shen) will have to satisfy the Tribunal that conditions of secrecy can be maintained or waive his right to secrecy. He will also have to agree to be directly responsible for all costs of the video conference.

23. A directions hearing will be set down to establish the ground rules for a further hearing."

1. On 3 December 1992, the Tribunal made a further "decision", with reasons. The "decision" was expressed as follows:
   

"Previous decision of Tribunal affirmed."

1. In its reasons, the Tribunal referred to submissions made by the parties at a "Directions Hearing (which) took place on 20 October 1992 to establish ground rules for the formal hearing." The Tribunal said:
   

"2. At that Directions Hearing the (Commissioner) submitted first that, since it was alleged that (Mr. Shen) left Australia illegally, the Tribunal's 'indulgence' (to use the term of counsel for the (Commissioner)) in granting a video conference hearing to hear evidence of (Mr. Shen) should be reviewed. Second, that the evidence to be admitted by video conference should be evidence as to which no issue of credit arises. Since the evidence of (Mr. Shen) manifestly would involve serious testing of credit, and this was implicit in all argument at the earlier Directions Hearing, this submission amounts to an invitation to the Tribunal to reverse its previous finding and to hold that video conference procedures should not be permitted."

1. The Tribunal went on to say:
   

"4. Conclusions about the right to present video conference evidence were reached in the earlier decision after the

(Commissioner) was given adequate means to make submissions on this subject. (Mr. Shen) objected to the

(Commissioner's) argument on the basis that the current hearing was merely to set the practical ground rules of the video conference. The Tribunal agrees with (Mr. Shen) and sees no basis or adequate reason to vary them now."

1. The Tribunal then gave further reasons for its direction permitting the use of a VCF facility.

THE RELEVANT LEGISLATIVE PROVISIONS
13. In order to understand the respective contentions of the parties, it is necessary to refer to the relevant provisions of the Administrative Appeals Tribunal Act 1975 ("the AAT Act") as follows.

1. The procedure of the Tribunal is dealt with by s.33 of the AAT Act. Section 33(1) is as follows:
   

"33(1) In a proceeding before the Tribunal -

(a) the procedure of the Tribunal is, subject to this Act and the regulations and to any other enactment, within the discretion of the Tribunal;

(b) the proceeding shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit; and

(c) the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate."

1. A power to give directions as to the procedure to be followed at or in connection with the hearing of a proceeding is conferred upon the Tribunal by s.33(2A). A power to vary or revoke any such direction is given by s.33(3).

2. By s.35A it is provided, inter alia, that the Tribunal -
   

"...in the hearing of a proceeding may allow a person to participate by:

(a) telephone; or

(b) closed-circuit television; or

(c) any other means of communication."

1. By s.39, subject to certain provisions not presently material, the Tribunal -
   

"...shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his case and, in particular, to inspect any documents to which the Tribunal proposes to have regard to reaching a decision in the proceeding and to make submissions in relation to those documents."

1. Further powers are conferred upon the Tribunal by s.40. The following provisions are relevant for present purposes:
   

"40(1) For the purpose of reviewing a decision, the Tribunal may -

(a) take evidence on oath or affirmation;

(b) proceed in the absence of a party who has had reasonable notice of the proceeding; and

(c) adjourn the proceeding from time to time. ...

40(2) The member who presides at the hearing of a proceeding before the Tribunal -

(a) may require a person appearing before the Tribunal at the hearing to give evidence either to take an oath or to make an affirmation; and

(b) may administer an oath or affirmation to a person so appearing before the Tribunal; and

(c) if a person participates by a means allowed under section 35A, may make such arrangements as appear to the member to be appropriate in the circumstances in relation to administering an oath or affirmation to the person."

...

40(5) The power of the Tribunal under paragraph (1)(a) to take evidence on oath or affirmation may be exercised on behalf of the Tribunal in relation to a particular proceeding before the Tribunal by the member who is to preside at the hearing of that proceeding or by another person (whether a member or not) authorized by the first- mentioned member and that power may be so exercised within or outside Australia but the Tribunal may direct that the power is to be exercised subject to limitations specified by the Tribunal.

40(6) Where a person other than the member who is to preside at the hearing of a proceeding is authorized to take evidence in relation to the proceeding in accordance with sub-section (5) -

(a) the person has, for the purpose of taking that evidence, all the powers of the Tribunal under sub- section (1) and all the powers under sub-section (2) of the member who is to preside at the hearing of the proceeding; and

(b) for the purpose of the exercise of those powers by that person, this Act has effect (except where the context otherwise requires) as if a reference to the Tribunal or to the member who is to preside at the hearing of a proceeding included a reference to that person."

1. Before going to the merits, reference should be made to a preliminary point taken by the Commissioner.

THE OBJECTION TO COMPETENCY
20. An objection to competency has been filed by Mr. Shen. Two grounds are relied on by Mr. Shen. First, he contends that the Commissioner's application is out of time since the relevant "decision" was made on 7 April 1992. Secondly, Mr. Shen says that, for AD(JR) Act purposes, there was no "decision" in the sense explained, e.g. by Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, even in the "decision" made in December 1992.

1. As I have already indicated in the course of argument, these grounds are without substance and should be rejected accordingly. It is plain that the Commissioner puts his case, as has been noted, on the basis that it is Mr. Grbich's conduct, and not his "decision", which is sought to be judicially reviewed. It is equally clear that this conduct occurred as late as 3 December 1992 and is continuing. The application was thus within time.

2. The objection to competency will be overruled.

3. I turn next to consider the merits.

THE COMMISSIONER'S CLAIM FOR RELIEF IN THE PRINCIPAL PROCEEDINGS
24. In essence, the Commissioner's case is as follows.

1. First, the Commissioner submits that cross-examination of Mr. Shen is essential as a matter of procedural fairness. In support of this contention, the Commissioner relies upon statements by Bentham and Wigmore that the policy of our legal system has been to regard the necessity of testing by cross-examination as a vital feature of trial procedure (see Bentham, Rationale of Judicial Evidence, b.11, c.1X; Wigmore on Evidence, 3rd ed. Bk. 1, Part II, para.1367).

2. Reliance is also placed, for the Commissioner, upon the reasoning of Evatt J in dissent, in Botts' Case (1933) 50 CLR 228 where (at 255-7), Evatt J was of the opinion that, in proceedings before a pension Tribunal, the applicant for a pension had been denied procedural fairness by the Tribunal when it refused the applicant's request to cross-examine medical practitioners who had been retained by the Tribunal to report.

3. Secondly, the Commissioner says that the use of a VCF facility in Hong Kong for this purpose would, effectively, deprive the Commissioner of the benefit of cross-examination because (a) no oath could be effectively administered in Hong Kong; (b) the Tribunal would not be able to observe closely the demeanour of the witness; (c) there would be difficulties, in practical terms, in cross-examining counsel in Australia showing documents to the witness in Hong Kong; and (d) the "court-room" formality would be absent from the conference room in Hong Kong.

CONCLUSIONS
28. As has been noted, the Commissioner's claim is for an order "restraining (the Tribunal) from receiving any evidence from (Mr. Shen) on matters as to which the credit of (Mr. Shen) is in issue unless (Mr. Shen) gives such evidence in person before the Tribunal." By s.16(2) of the AD(JR) Act, it is provided that, on an application for review in respect of conduct that has been, is being or is proposed to be engaged in for the purpose of making a decision, the Court may, in its discretion, make, inter alia, an order directing any of the parties to refrain from doing any act or thing, the refraining from the doing of which, the Court considers necessary to do justice between the parties. Whilst it may be accepted that s.16(2) empowers the Court, in an appropriate case, to make an order of the kind now sought, such an order is plainly discretionary. In my view, there are strong discretionary reasons why the Court should not now intervene in the manner proposed by the Commissioner.

1. In the first place, this is not a case where, for instance, it is suggested that the Tribunal lacks the power, as a matter of legal capacity, to take the evidence by the VCF method. If that had been the case, it may have been appropriate for the Court to intervene at this stage (cf. Young v Quin (1985) 4 FCR 483). Generally speaking, there are strong policy considerations against the Court's intervening under the AD(JR) Act in other proceedings on evidentiary questions (see, e.g. Seymour v Attorney-General (1984) 4 FCR 498; cf. Yates v Wilson (1989) 168 CLR 338).

2. Next, even if it be accepted in the Commissioner's favour(as again I am inclined to do) that no particular onus falls upon him by reason only of the "quia timet" nature of his claim (see e.g. Copyright Agency Ltd. v Haines (1982) 40 ALR 264 per McLelland J at 273; and on appeal in the Full Federal Court, Haines v Copyright Agency Ltd. (1982)42 ALR 549 per Fox J at 560; Meagher, Gummow and Lehane Equity-Doctrines and Remedies, 1st ed. at 496-7), it does not follow that alikelihood of prejudice at this stage has been established by the Commissioner. For one thing, the proceeding before the Tribunal is not a trial, so that the ordinary incidents of judicial proceedings cannot be assumed as Bott's Case, both in the majority approach and on the dissenting opinion of Evatt J, demonstrated (noting, for instance, the observations by Starke J, at 249, that there was no obligation on that Tribunal to take evidence on oath). The relevant question here, whether procedural fairness has been, or is about to be, denied necessarily depends upon the particular circumstances of the case at hand. In Omran v Australian Postal Commission (1991) 14 AAR 51, for instance, Morling J said (at 54):
   

"Whether or not a denial of the right to cross-examine is a denial of natural justice will depend on the facts of the particular case: see Minister for Immigration and Ethnic Affairs v Pochi at 63 per Deane J. In Barbaro v Minister for Immigration and Ethnic Affairs ... at 131, the Court said: 'The admission of an adverse hearsay report, without an opportunity being provided to cross-examine the author, does not by itself amount to a denial of natural justice (T.A. Miller v Minister of Housing and Local Government ... Kavanagh v Chief Constable of Devon and Cornwall ... see also R v War Pensions Entitlement Appeal Tribunal; Ex parte Bott ...). Consideration of whether there has been a denial of natural justice must have regard to statutory provisions, such as s 33 of the Administrative Appeals Tribunal Act (as well as ss 30, 31 and 32). In the present case, it seems to us that the appellant was treated fairly. He had an opportunity by his own evidence, and by any other he could produce, to refute statements in the Report, and he had a legal representative through whom all appropriate submissions could be made.'

However, on the facts of the present case, I would have thought that if the Tribunal had been pressed by counsel for the applicant to adjourn the proceedings until Dr Alexander could attend for cross-examination, it would have been incumbent upon it to have done so, or to have taken some other course which would have been fair to the applicant. One such course may have been to reject the tender of Dr Alexander's reports, or since they had already been admitted into evidence, to pay no regard to them. It is important that proceedings before the Tribunal be not attended by the formality which attends proceedings in court. It must often be the case in proceedings before the Tribunal that a medical expert is not readily available for cross-examination. In such cases it may well be a sufficient compliance with the rules of natural justice for the Tribunal to make an arrangement whereby questions may be put to the expert by telephone without requiring his personal attendance. Such an arrangement would obviously be unsatisfactory in a case where the credit of a witness is concerned but this would rarely, if ever, be the case with a medical expert."

1. There is, of course, a difference between a cross-examination conducted by telephone and what is proposed here. There have already been several cases, in this country and in the United Kingdom, where even in judicial proceedings, the Court has permitted evidence to be given by VCF (see, e.g., Garcin v Amerindo Investment Advisors Ltd. (1991) 1 WLR 1140; Laporte Group Australia Ltd. v Vatselias, Supreme Court of New South Wales, Young J, 25 November 1991, unreported; ICI Australia Ltd. v Commissioner of Taxation, Ryan J, 29 May 1992, unreported; Comment "Evidence - Examination of witness by video link" (1992) 66 ALJ 230).

2. In Australian Postal Commission v Hayes (1989) 87 ALR 283, Wilcox J concluded that a direction given by the Tribunal as to the course of the cross-examination of a witness was a denial of procedural fairness because it "had the effect of infringing the right of (a party) to present its case" (at 292). In my opinion, the Commissioner has failed to demonstrate that this is a fair description of the present situation. For one thing, it is not suggested that there will be any time limit on the cross-examination (cf. R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 33-4). For another, the Commissioner adduced no evidence of any specific prejudice that might flow from cross-examining in the way suggested. It may be accepted, as the High Court has recently pointed out (Wakeley v The Queen (1990) 64 ALJR 321 at 325) that:
   

"The limits of cross-examination are not susceptible of precise definition, for a connection between a fact elicited by cross-examination and a fact in issue may appear, if at all, only after other pieces of evidence are forthcoming. Nor is there any general test of relevance which a trial judge is able to apply in deciding, at the start of a cross-examination, whether a particular question should be allowed. Some of the most effective cross-examinations have begun by securing a witness's assent to a proposition of seeming irrelevance. Although it is important in the interests of the administration of justice that cross-examination be contained within reasonable limits, a judge should allow counsel some leeway in cross-examination in order that counsel may perform the duty, where counsel's instructions warrant it, of testing the evidence given by an opposing witness."

1. It may further be accepted that if documents were to be shown to Mr. Shen in the course of his cross-examintion, advance arrangements would need to be made. But it does not follow from these matters that it is likely that the Commissioner will be effectively deprived of the benefit of cross-examination.

2. Finally, the Commissioner points to the absence of any oath. Again, I am prepared to assume, in the Commissioner's favour, that it is not possible to arrange for an oath to be administered in Hong Kong. In her essay, "Principles of Evidence and Administrative Tribunals" (in Well and Truly Tried (1982)), Professor Enid Campbell wrote (at 45):
   

"The mere fact that a tribunal has the power to require the giving of evidence on oath or

affirmation does not mean that it is precluded from receiving and acting on unsworn testimony, ... though it may well take the view that unsworn evidence deserves less weight than sworn testimony."

1. Again, even if this be so, it does not follow that, at this stage, the Court should intervene, especially on a matter of the weight to be given by the Tribunal to evidence yet to be adduced.

2. For these discretionary reasons, I decline the relief sought.

COSTS
37. Since the Commissioner was successful on the objection to competency but failed on the merits in the principal proceedings, it is appropriate that the Commissioner pay three-quarters of Mr. Shen's costs. As Mr. Grbich was, appropriately, a submitting party, there will be no order for costs for or against him. ORDERS

1. I make the following orders:
   

1. Objection to competency overruled.

2. Application dismissed.

3. The applicant pay three-quarters of the costs of the second respondent.

4. No order for the costs of the first respondent.