Consolidated Press Holdings Ltd v Commissioner of Taxation
[1999] FCA 1314
•10 SEPTEMBER 1999
FEDERAL COURT OF AUSTRALIA
Consolidated Press Holdings Ltd v Commissioner of Taxation [1999] FCA 1314
CONSOLIDATED PRESS HOLDINGS LTD & ANOR v COMMISSIONER OF TAXATION & ANOR
N 1041 of 1999
KATZ J
SYDNEY
10 SEPTEMBER 1999
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1041 of 1999
BETWEEN:
CONSOLIDATED PRESS HOLDINGS LTD
First ApplicantCONSOLIDATED PRESS (FINANCE) LTD
Second ApplicantAND:
COMMISSIONER OF TAXATION
First RespondentANTHONY JOHN BRIDGE
Second RespondentJUDGE:
KATZ J
DATE OF ORDER:
10 SEPTEMBER 1999
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
The application for interlocutory relief be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1041 of 1999
BETWEEN:
CONSOLIDATED PRESS HOLDINGS LTD
First ApplicantCONSOLIDATED PRESS (FINANCE) LTD
Second ApplicantAND:
COMMISSIONER OF TAXATION
First RespondentANTHONY JOHN BRIDGE
Second Respondent
JUDGE:
KATZ J
DATE:
10 SEPTEMBER 1999
PLACE:
SYDNEY
EX TEMPORE REASONS FOR JUDGMENT
I have before me an application for interlocutory relief, made in the course of a proceeding which invokes this Court’s jurisdiction under both the Administrative Decisions (Judicial Review) Act 1977 (Cth) and the Judiciary Act 1903 (Cth). In effect, the relief which is sought would restrain the second respondent to the proceeding, Mr Anthony John Bridge, on an interlocutory basis from re-appointing Mr David Farmer as an external consultant to the Australian Taxation Office (“the ATO”) for the purpose of an audit which is being conducted into the taxation affairs of the first and second applicants.
I set out immediately the particular factual circumstances out of which the application for interlocutory relief arises.
On 17 August 1999, Mr Bridge appointed Mr Farmer as an external consultant for the purpose to which I have referred above. It was then in contemplation that Mr Farmer would be provided with certain documents which were owned, I presume, by the first and second applicants and, to some extent, that did occur immediately. As I understand the position, those documents related to foreign exchange issues which were relevant in connection with the taxation audit.
It appears that two days later, the applicants, through the medium of Ernst & Young, their accountants, were made aware that Mr Bridge had appointed Mr Farmer and had provided him with certain documents. Ernst & Young immediately wrote to the ATO complaining on behalf of the applicants about Mr Farmer’s appointment having occurred and about some documents having already been supplied to him, in circumstances in which there had been no advance notice to or consultation with the applicants about the matter.
That complaint was followed by other communications to the ATO on behalf of the applicants and ultimately provoked a response on behalf of the ATO on 27 August 1999.
In the ATO’s letter of 27 August 1999, written by Mr Bridge, he confirmed his appointment of Mr Farmer on 17 August 1999, gave a brief curriculum vitae so far as Mr Farmer was concerned and referred to documents which had already been provided to Mr Farmer for the purpose of his assisting the ATO and to further documents which had been intended to be provided to Mr Farmer for the same purpose. Mr Bridge also asserted that proper procedures had been followed to satisfy the secrecy provisions in force under the income tax assessment legislation. Mr Bridge responded to the applicants’ complaint about the appointment of Mr Farmer by saying,
“While we do not accept that in all the circumstances of this matter there is a similar legitimate expectation to that found by Lockhart J in Consolidated Press Holdings & Ors v Commissioner of Taxation & Anor (1995) …, in light of your comments and as a matter of courtesy, we are willing nevertheless to consult with you about the appointment of the consultant….
To give the consultation meaning I have decided to retrieve all documentation previously given to the consultant and to reconsider the decision to appoint him. I propose to reconsider the matter and make my decision on 10 September 1999. Any information that you wish to put before me or any comment you wish me to take into account in making my decision should be forwarded to me prior to this date.”That communication from Mr Bridge to the applicants itself provoked further complaint on the part of the applicants. It is significant for present purposes that, on 1 September 1999, Mr John Howard Cherry, a director of the applicants, wrote a letter complaining particularly about Mr Bridge’s himself reconsidering the original decision to appoint Mr Farmer. Mr Cherry said:
“… I have no objection to the reconsideration process, other than it being conducted by you. Quite frankly, I do not have any confidence in your impartiality and consider that any reasonable person would apprehend some potential for bias in so far as you have already made a decision and supplied information to a third party….”
It may be convenient, while I am dealing with Mr Cherry’s letter of 1 September 1999, to refer to two other features of it.
First, after setting out the date and the words “Private & Confidential”, it continued with the following words:
“The information provided to you herein is provided on the express condition that without my prior approval it is not to be divulged either in whole or in part to any person other than a person who is a full time employee of the Australian Taxation Office.”
I understand that those words, which Mr Griffiths, who appeared on behalf of the applicants on this application for interlocutory relief, called in his submissions “the formula”, have appeared on most, if not all, communications emanating from the applicants to the ATO and, I rather gather, although I am not sure that Mr Griffiths said so expressly, had appeared on the various documents which had been supplied to Mr Farmer. In any event, I am prepared to assume that a blanket formula of that sort has been applied to all documents supplied by the applicants to the ATO in connection with the taxation audit.
Secondly, there is reference in the letter to the fact that discussions had earlier taken place between Mr Cherry, on the one hand, and a Mr Perry, who I understand is an officer of the ATO, on the other. Those discussions were said by Mr Cherry to have “relat[ed] to security” and Mr Cherry said that Mr Perry had repeatedly assured him that all documents relating to Consolidated Press and the private group of companies were in locked filing cabinets with very limited ATO officer access to them. Mr Cherry further said that those measures had been put in place to avoid leakage of information from the ATO which had previously occurred and had been very damaging to Consolidated Press.
The next correspondence to which it seems to me to be necessary to refer for present purposes is a letter of 8 September 1999, in which Mr Cherry, writing to Mr Bridge, referred to earlier communications from Mr Bridge and in particular, to his letter of 27 August 1999, to which I have already referred, and to a letter which Mr Bridge had written to Mr Cherry on 7 September 1999. In his letter of 8 September 1999, Mr Cherry said:
"I need time to consider the views expressed in your letter of 7 September 1999 and may, indeed, need to refer the matter to Counsel for advice. In the circumstances I ask for your assurance that you will not make a decision on 10 September 1999, as is indicated in your letter to Mr Williams [of Ernst & Young] dated 27 August 1999.”
So far as I can tell from the correspondence, which I have had the opportunity of perusing only briefly, that is the first occasion upon which there was an express request by the applicants for some extension of time within which to make submissions on the matter of the re-appointment of Mr Farmer.
That letter provoked a response by Mr Bridge dated 9 September 1999, in which Mr Bridge said, among other things,
“The matters that I propose to consider on 10 September 1999 relate to the appointment of Mr Farmer as a consultant to the ATO and the provision to him of documents containing information about the taxpayers, and to that end I have given you the opportunity to consider the proposal and to make submissions. It is not necessary for that purpose to debate the decision of Lockhart J, and for example whether the taxpayers might have the right to that opportunity. It is sufficient for present purposes that they have had that opportunity.
I believe that the time originally allowed provided you with a reasonable opportunity to consider the proposal and to make submissions. I do not see sufficient reason to extend that time.
Accordingly, as originally advised, I propose to make my decision on 10 September 1999. Any information that you wish to put before me or any comment you wish me to take into account should be forwarded to me on or prior to that date.”I turn now to the legal submissions of the respective parties.
Mr Griffiths argued that there were three matters in particular which established an arguable case of a legitimate expectation on the part of the applicants of an opportunity to be heard before any re-appointment of Mr Farmer was made, which legitimate expectation was not being satisfied by, relevantly, Mr Bridge.
Mr Griffiths first relied upon “the formula”, which I have already quoted, and its iteration by the applicants in all communications with the ATO.
Mr Griffiths secondly relied upon the particular reference in Mr Cherry’s letter of 1 September 1999, from which I have already quoted, to the prior discussions between Mr Cherry and Mr Perry “relating to security”.
Mr Griffiths thirdly relied upon what had been said by Mr Bridge in his letter to Ernst & Young of 27 August 1999. I may repeat here that that had been an expression of willingness on the part of the ATO to consult with the applicants about the re-appointment of Mr Farmer.
Of course, that expression of willingness had been a qualified one, that is to say, it had been an expression of willingness to receive anything that might be said on the question of Mr Farmer’s re-appointment, but only until 10 September 1999.
Mr Griffiths’ position on that qualification was that one should treat what had been said in the letter of 27 August 1999 as being an expression of a willingness to consult, but one which was not binding as to the period of time within which that consultation could occur. As I understood his position, it was that the applicants had, as a result of the letter, a legitimate expectation of being consulted and the question of the sufficiency of the period of time given for the purpose was an objective matter for the Court. If there were an arguable case that the period of time given had not been a sufficient time for the purpose, then that would found a claim for interlocutory relief on the applicants’ part, on the basis that there had been an attempted resiling from the undertaking by the ATO which had given rise to a legitimate expectation in them of consultation.
I have already quoted more than once in my recitation of the facts references by the ATO in communications with the applicants to the decision of Lockhart J in Consolidated Press Holding [sic] Ltd v Commission of Taxation (1995) 57 FCR 348. I should mention now that Mr Griffiths placed considerable reliance upon that case in his submissions before me, taking me through that portion of the reasons for judgment (at 355-58) which dealt specifically with the notion of “legitimate expectation” and referring me specifically to five matters which had been set out by Lockhart J (at 357).
Mr Griffiths also submitted that there was an arguable case of a reasonable apprehension of bias on Mr Bridge’s part, a matter which related to the complaint which had been made by Mr Cherry in his letter of 1 September 1999 of his lack of belief in the impartiality of Mr Bridge, so far as the making of a reconsidered decision was concerned. Mr Griffiths pointed to two matters which were said to give rise to at least an arguable case that there was such a reasonable apprehension: first, the fact that Mr Bridge was proposing to reconsider an earlier decision of his own; and, secondly, the fact that Mr Bridge was unwilling to accept that the reasoning of Lockhart J in the 1995 case between the parties had applicability to the present dispute between them.
Finally, Mr Griffiths made submissions on the balance of convenience, submitting that if I were satisfied that the applicants had an arguable case on the merits, then the balance of convenience would favour them. Subject possibly to one matter on which Mr Gageler, who appeared on behalf of the respondents, relied and to which I will return below, namely, delay by the applicants in commencing the present proceeding, prima facie it seems right that, if the applicants have an arguable case, the balance of convenience is in their favour.
Turning now to the submissions of Mr Gageler, he addressed himself in detail to only two matters.
First, as I understand his attitude, he did not demur from Mr Griffiths’ submission that a legitimate expectation had been engendered by the matters in the ATO letter of 27 August 1999 to which I have referred above. However, he sought to repel the effect of that legitimate expectation by submitting that it had been fulfilled. The letter had to be read, he said, as including the time limit on the period for consultation, as well the opportunity to consult. In those circumstances, the applicants could not complain that they had not been given a greater period of time within which to consult than the time laid down by Mr Bridge in his letter of 27 August 1999. As Mr Gageler put it, the question was whether or not the promise in the letter could in some way be “bootstrapped” into an argument of some consultative right of greater magnitude than that which had been promised.
Secondly, as I have already foreshadowed, Mr Gageler did say that the present case was not an appropriate one for the grant of interlocutory relief because of the delay involved in applying for it. His position, as I understood it, was that, given that the time limit of today had been laid down on 27 August 1999 and given that the applicants had made their position clear so far at least as an allegation of partiality against Mr Bridge was concerned as early as 1 September 1999, there was too great a delay in respect of both of the grounds upon which Mr Griffiths was relying.
I am of the view that the submissions made on behalf of the applicants have not disclosed the existence of a serious question to be tried.
I deal first with Mr Griffiths’ reliance upon the 1995 decision of Lockhart J. I raised with Mr Griffiths during the course of his submissions one particular thing which Lockhart J had had to say in the course of his discussion in that case of the notion of “legitimate expectation” (at 358). I may quote that thing now:
“What I have said is not to be taken as an expression of a general view that whenever the Commissioner proposes to engage outside experts (whether chartered accountants or others) he must necessarily first consult with the relevant taxpayer. There may be occasions when appointments of this kind do not require prior consultation with or notice to taxpayers. My judgment is based squarely on the facts of this case.”
In the light of that statement, I must confess that I derive little assistance from his Honour’s judgment in that case, based, as he said it was, squarely on the facts of that case.
So far as concerned Mr Griffiths’ specific reference to the five matters which had been set out by Lockhart J, those matters, as I understand them, were not said to be matters which had in any way enlivened a legitimate expectation. Rather, they were the respects in which the opportunity to be heard created by that legitimate expectation had been required to be satisfied in the particular circumstances of that case.
So far as concerned Mr Griffiths’ reliance upon “the formula”, I am, as I said during argument, quite unimpressed with the suggestion that a member of the public may engender a legitimate expectation in himself merely by asserting to members of the administration the existence of such an expectation. I find the suggestion completely impossible to accept in circumstances in which, rather than there being mere silence on the part of the administration in the face of such an assertion, which silence might conceivably be said to give rise to a legitimate expectation, there is an express denial of acceptance of the matter stated, as there has been in this case in respect of “the formula”. I therefore put “the formula” to one side.
So far as concerned Mr Griffiths’ reliance upon the discussions between Mr Cherry and Mr Perry relating to security, I am quite unable to infer from those prior discussions any particular legitimate expectation relating to the question of the re-appointment of Mr Farmer. Those discussions seem plainly to have related simply to the question of physical security of the applicants’ documents kept within the ATO.
So far as concerned Mr Griffiths’ reliance upon the ATO’s letter of 27 August 1999, I take the view that the attempted bifurcation on the part of the applicants of the statements made by Mr Bridge in that letter is incapable of acceptance. The undertaking about which we are here speaking must, in my view, be considered as a whole.
I must say in any event that if it were a question of whether or not a sufficient period of time had been given by the ATO to the applicants to “get[ ]” their “tackle in order” (see R v Thames Magistrates’ Court; Ex parte Polemis [1974] 1 WLR 1371 at 1375), it does seem to me that the period about which we are speaking here was a sufficient time for that purpose. However, I do not consider that to be the issue.
The issue seems to me to be that one has here an undertaking which must be considered as a whole. It contained its own automatic termination point. A period of about two weeks was given to the applicants. That period must be treated as an essential element of the undertaking which gave rise to the legitimate expectation and I can see no arguable case that there is any reason why that limitation need not have been complied with. (I must add here that, reading the correspondence from the applicants, it does seem to me that the matters which were raised by them, as matters to which they needed to have the ATO’s answers before they could make submissions about Mr Farmer’s re-appointment, were nothing but matters calculated to create further delay in the process. However, it is not necessary for me to form any view on that issue at all. As I have said, I focus specifically on the fact that the ATO’s undertaking must be considered as a whole.)
So far as the suggestion of reasonable apprehension of bias on Mr Bridge’s part is concerned, it will be recalled that there were two matters involved in that complaint: first, Mr Bridge’s refusal to accept Lockhart J’s 1995 decision as controlling in present circumstances; and, secondly, the fact that Mr Bridge was reconsidering his own earlier decision.
As to the first of those matters, that refusal seems to me to have been plainly correct in law in the light of the passage from Lockhart J’s reasons for judgment which I have already read.
As to the second of those matters, the suggestion that, simply because this was a reconsideration by the original decision-maker, it must necessarily follow that there would be a reasonable apprehension of bias, acceptance of that suggestion would lead to a situation in which, for instance, appellate courts could not remit to the judge of trial matters in respect of which there had been a successful appeal. Yet that is something which happens frequently. The same thing happens in the judicial review context. It is by no means uncommon that if an error of law is established on a decision-maker’s part, the matter is remitted to the same administrative decision-maker. I am quite unable to infer, merely from the fact that this is a reconsideration of a decision by the original decision-maker, that there must necessarily be a reasonable apprehension of bias by that decision-maker on the part of the reasonable bystander.
In those circumstances it seems to me unnecessary to deal with Mr Gageler’s complaint about delay in the commencement of the proceeding. I simply found my refusal to grant interlocutory relief on my conclusion that there is not a serious question to be tried on the matters raised by Mr Griffiths. I therefore refuse the application for interlocutory relief and order that the applicants pay the respondents’ costs of today’s proceedings.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz. Associate:
Dated: 20 September 1999
Counsel for the Applicant: Mr J E Griffiths Solicitor for the Applicant: Ernst & Young Law Counsel for the Respondent: Mr S Gageler Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 10 September 1999 Date of Judgment:
Date of Publication:
10 September 1999
20 September 1999
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