Commissioner of Taxation v Swiss Aluminium Australia Ltd

[1986] FCA 416

Re: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
Ex parte: SWISS ALUMINIUM AUSTRALIA LIMITED
No. G215 of 1986
Practice (Subpoenas)

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.

CATCHWORDS

Practice (Subpoenas) - Application to set aside subpoena for production issued to stranger to mandamus application - subpoena issued before final hearing fixed - whether abuse of process.

HEARING

SYDNEY

#DATE 25:9:1986

Counsel and Solicitors for Applicant: A.R. Emmett Q.C. and B.J. Sullivan instructed by Minter Simpson.

Counsel and Solicitors for Respondent: A. Robertson instructed by the Australian Government Solicitor.

Counsel and Solicitors for Kaiser Alumina Australia Corporation: A.H. Slater instructed by Clayton Utz.

Counsel and Solicitors for Alcan South Pacific Limited: M. Pembroke instructed by Allen Allen and Hemsley.

ORDER

The subpoenas addressed to Kaiser Alumina Australia Corporation and to Alcan South Pacific Limited and the notices of motion filed on their behalf be stood over until further order.

Reserve liberty to apply on three days' notice.

Costs reserved.

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

JUDGE1

Before the Court are applications by Kaiser Alumina Australia Corporation ("Kaiser") and Alcan South Pacific Limited ("Alcan") to set aside subpoenas issued to them at the request of the prosecutor, Swiss Aluminium Australia Limited.

1. In the principal proceedings, the prosecutor claims a writ of mandamus commanding the Commissioner to consider and deal with the income tax objections dated 17 August 1984 lodged by the applicant with respect to assessments issued to the prosecutor by the Commissioner under s.136 of the Income Tax Assessment Act 1936 ("the Act") in respect of the prosecutor's years of income ended 31 December 1978 and 31 December 1979.

2. The applicants, Kaiser and Alcan are producers of bauxite and alumina in this country. In 1984 and 1985, the Commissioner issued a number of assessments under s.136 of the Act to producers of bauxite and alumina on the footing, it would seem, that "transfer pricing" was involved in the industry.

3. On 28 May 1986, Burchett J. made an order nisi in the principal proceedings. A date for the final hearing has not yet been fixed as a number of interlocutory matters are outstanding. In particular, there is still unresolved an interlocutory application made by the applicant that the Commissioner discover certain documents. The Commissioner, whilst resisting general discovery on a number of substantial grounds, has recently agreed, without admissions, to give discovery of a limited class of documents.

4. On 2 September 1986, at the request of the prosecutor, a subpoena was issued to Kaiser, returnable on 18 September, calling for production of the following documents:
   
   

"(a) Any original assessments for income tax issued to the company by or on behalf of the Commissioner of Taxation with respect to the years of income from 1976 to 1979 inclusive (hereinafter called "the original assessments").

(b) Any amended assessments for income tax issued to the company by or on behalf of the Commissioner of Taxation with respect to the years of income from 1976 to 1979 inclusive (hereinafter called "the amended

< assessments").

(c) Any objections lodged by the company with respect to such assessments or amended assessments (hereinafter called "the objections"). assessments").

(d) Any correspondence or other written communication with the Commissioner of Taxation or his delegates relating to:-

(i) the original assessments;

(ii) the amended assessments;

(iii) the objections.

(e) Any memoranda, file notes or other documents recording in whole or in part any negotiations or discussions with the Commissioner of Taxation or his delegates relating to:

(i) the original assessments;

(ii) the amended assessments;

(iii) the objections."

1. A subpoena for production in the same terms, returnable on the same date, was also issued to Alcan at the request of the prosecutor.

2. In support of their application to set aside the subpoenas, Kaiser and Alcan contend that the material now sought could not be relevant to any of the issues in the principal proceedings. They submit that it is proper to infer that the subpoenas were issued to them as competitors of the prosecutor for a collateral purpose. It follows, they say, that the subpoenas should be set aside as an abuse of process (see National Employers' Mutual General Association Ltd. v. Waind (1978) 1 NSWLR 372 per Moffitt P. at p 382).

3. In Hughes v. Western Australian Cricket Association (Inc.), unreported, 30 May 1986, Toohey J. held that, in a proper case, the Court has power to order a stranger to the litigation to produce documents before the final hearing of the principal proceedings. His Honour said (at p.6):
   
   

"In my view, where it appears to the Court to be in the interests of justice and the proper and expeditious conduct of a proceeding that a person produce documents before the date of hearing of the application, such a power exists. It arises by implication from the broad procedural scope of s.23 and also of the Rules, in particular the powers given to the Court by 0.27 to control the issue of subpoenas and the circumstances in which documents are produced. And it arises incidentally and necessarily to the exercise of the powers that s.23 and 0.27 confer."

1. I respectfully agree.

2. Reference was made in argument to the decision of Pincus J. in Greyhound Australia Pty. Ltd. v. Deluxe Coachlines Pty. Ltd., unreported, 25 June 1986. His Honour, referring to Elder v. Carter (1890) 25 QBD 194 and Botany Bay Instrumentation and Control Pty. Ltd. v. Stewart (1984) 3 NSWLR 98, seems to have held that the Court's power to order a stranger to produce documents is available only where a hearing is "pending" - a term not clearly defined in the authorities. In so holding, Pincus J. appears to have disapproved of the decision to the contrary of Northrop J. in Jet Corporation Australia Pty. Ltd. v. Petres Pty. Ltd., unreported, 3 May 1985.

3. In my respectful opinion, the approach taken by Toohey J. and by Northrop J. was correct.

4. This is not to say that it is not possible to set aside the issue of a subpoena to a stranger on the ground that it is an abuse of process. If the proper inference to be drawn from the facts of the case is that a subpoena has been issued to a stranger, not with a view to obtaining documents for use at a trial, but in order to discover, for some other purpose, what documents the stranger holds, an abuse of process may have occurred. In my view, this is the proper explanation of the decisions in Elder v. Carter and the Botany Bay case: they do not establish that the Court lacks power, in a proper case, to order a stranger to produce documents before trial.

5. On the other hand, before exercising its discretion to make such an order, the Court will need to be satisfied that a legitimate forensic interest is being advanced by the adoption of this special procedure. Thus, the relevant inquiry is as to the true purpose underlying the litigant's request for the production of the third party's documents. As Bowen L.J. observed in Elder v. Carter (at p 200), the rule is "intended to enlarge the facilities of obtaining production when production is necessary for the purpose of justice."

6. In the present case, it is too early to form a final view on the question whether the subpoenas are, in truth, an abuse of process. Applying a purposive test, it is not yet possible to affirm or reject the prosecutor's claim that access to the documents now sought may throw light on the issues in its mandamus application. It seems that this question will, in turn, depend, to a significant extent, upon the outcome of the discovery to be made by the Commissioner. If , for instance, it appears that the subpoenas cover the same or even perhaps substantially the same ground, as is covered by documentation made available by the Commissioner on discovery, it is difficult to see how the subpoenas could have a legitimate forensic purpose.

7. In all the circumstances, the proper exercise of the Court's discretion is to await the outcome of the Commissioner's discovery and, pending this, to stand over the subpoenas until further order. The notices of motion to set aside the subpoenas will also be adjourned. Liberty to apply will be reserved.

8. I make the following orders:
   
   

1. The subpoenas addressed to Kaiser Alumina Australia Corporation and to Alcan South Pacific Limited and the notices of motion filed on their behalf be stood over until further order.

2. Reserve liberty to apply on three days' notice.

3. Costs reserved.