De Vonk, H.J. v Deputy Commission of Taxation of the Commonwealth of Australia
[1995] FCA 623
•16 Aug 1995
CATCHWORDS
PRIVILEGE - TAXATION - privilege against self-incrimination - notice served on taxpayer requiring attendance at Australian Taxation Office - notice required taxpayer to give evidence concerning certain matters - taxpayer facing trial on criminal charges arising out of same matters - whether privilege against self-incrimination abrogated by statutory scheme - whether contempt of court or other interference with the course of justice.
Income Tax Assessment Act 1936 (Cth) s.264
Taxation Administration Act 1953 (Cth) ss.8C, 8D
Administrative Decisions (Judicial Review) Act 1977 ss.5,6
Mortimer v. Brown (1970) 122 CLR 493
Victoria v. The Australian Building Construction Employees and Builders Labourers' Federation (1982) 152 CLR 25
Hammond v. The Commonwealth (1982) 152 CLR 188
Sorby v. The Commonwealth (1983) 152 CLR 281
Pyneboard Pty Ltd v. Trade Practices Commission (1983) 152 CLR 328
Controlled Consultants Pty Ltd v. Commissioner for Corporate Affairs (1985) 156 CLR 385
Police Service Board v. Morris (1985) 156 CLR 397
Hamilton v. Oades (1989) 166 CLR 486
Industrial Equity Ltd v. Deputy Commission of Taxation (1990) 170 CLR 649
Stergis v. Commissioner of Taxation (1989) 89 ATC 4442
Donovan v. Commissioner of Taxation (1992) 92 ATC 4114
HUGO JOHN DE VONK v. DEPUTY COMMISSION OF TAXATION OF THE
COMMONWEALTH OF AUSTRALIA
No. WAG 138 of 1994
CARR J.
PERTH
16 AUGUST 1995
IN THE FEDERAL COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WAG 138 of 1994
GENERAL DIVISION )
B E T W E E N: HUGO JOHN DE VONK
Applicant
and
DEPUTY COMMISSION OF
TAXATION OF THE
COMMONWEALTH OF AUSTRALIA
Respondent
CORAM: CARR J.
PLACE: PERTH
DATE: 16 AUGUST 1995
MINUTE OF ORDERS
THE COURT ORDERS AND DECLARES THAT:
The applicant is not entitled to refuse to answer questions put to him by the respondent's officers pursuant to the notice dated 1 November 1994 merely on the ground that his answers thereto may tend to incriminate him.
The conduct by the respondent's officers of an interrogation of the applicant pursuant to the abovementioned notice prior to the hearing of the criminal charges referred to in the applicant's affidavit sworn 30 March 1995 may, depending upon the specific questions asked and all other relevant circumstances, constitute a contempt of the court before which such charges are to be heard. If so, the decision to ask such questions is not authorised by s.264 of the Income Tax Assessment Act 1936 (Cth).
The application be otherwise dismissed.
NOTE:Settlement and entry of Order is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WAG 138 of 1994
GENERAL DIVISION )
B E T W E E N: HUGO JOHN DE VONK
Applicant
and
DEPUTY COMMISSION OF
TAXATION OF THE
COMMONWEALTH OF AUSTRALIA
Respondent
CORAM: CARR J.
PLACE: PERTH
DATE: 16 AUGUST 1995
REASONS FOR JUDGMENT
Introduction
This is an application for an order of review of a decision made by the Deputy Commissioner of Taxation ("the Commissioner") under s.264 of the Income Tax Assessment Act 1936 (Cth) ("the Act") to issue a notice ("the s.264 notice") to the applicant Hugo John De Vonk and to require compliance with that notice. The s.264 notice requires Mr De Vonk to attend the Commissioner's office and give evidence concerning "... the income or assessment of Hugo John De Vonk and Sunset Gold Mining Syndicate for the period 1 July 1989 to 30 June 1993". The notice requires Mr De Vonk to give that evidence before either or both of two named officers employed in the Australian Taxation Office whom the Commissioner has authorised for that purpose. Mr De Vonk and others are facing criminal charges related to the matters forming the subject of the s.264 notice. Those proceedings are pending in the District
Court of Western Australia.
On 15 February 1994 the National Crime Authority charged Mr De Vonk and five others with offences which fall within the definition of "serious offence" in the Taxation Administration Act 1953 (Cth). A copy of the indictment listing the three charges was tendered in evidence in these proceedings. It is a sufficient description of them to say that they are very serious charges, namely conspiring to defraud the Commonwealth and two charges of conspiring to commit an offence against the Financial Transactions Reports Act. Technically, the first charge is probably not a "tax-related offence" and none of the three charges amount to a "taxation offence" as those terms are defined in the Taxation Administration Act.
However, the Commissioner admits that the questions which he wishes to ask Mr De Vonk under interrogation pursuant to the terms of the s.264 notice will elicit information germane to the criminal charges against him. The Commissioner denies that the questions are being asked for any purpose related to those proceedings.
The grounds upon which Mr De Vonk seeks review of the Commissioner's decision to issue the s.264 notice can be summarised as follows:
.The audit of the income tax affairs of the Sunset Gold Mining Syndicate partnership for the years ended 30 June 1990 to 30 June 1992 has been completed and thus there is no need for Mr De Vonk to attend and answer questions involving that partnership;
.Mr De Vonk has a common law right not to answer any question where the answer may tend to incriminate him;
.that privilege against self-incrimination has not been excluded by any relevant legislation;
.the questioning under s.264 of the Act of a person charged with criminal offences about matters germane to those charges creates a real risk of interference with the course of justice;
.such extra-curial inquisitorial investigations in those circumstances constitute an improper interference with the due administration of justice and thus a contempt of court; and
.Mr De Vonk has the right to remain silent and not to disclose to the Commissioner his defence to the charges upon which he has been indicted.
The applicant did not, either in his application or in the course of the presentation of his case, specify the particular grounds set out in ss.5 and 6 (for review was sought also, in the alternative, of the Commissioner's conduct) of the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act"). However, towards the end of the hearing I asked Mr S. Martella, counsel for Mr De Vonk, to let me know which of those grounds were relied upon by his client. Mr Martella was unable to specify those grounds at the hearing but sought and obtained leave to file a short notice specifying the grounds upon which reliance was placed. It transpired that Mr De Vonk relies upon the provisions of s.5(1)(d), (e) and (j) and s.6(1)(d), (e) and (j). As those respective grounds are so similar in each of s.5 and s.6 and as the conduct leading up to the decision to issue the notice has, in my view, merged into the making of the decision, I shall refer to the former set of sub-sections only. In other words, Mr De Vonk asserts that the decision to issue the s.264 notice was not authorised by the Act, that the decision was an improper exercise of the power conferred by the Act and that the decision was otherwise contrary to law. No particulars were given of the alleged improper exercise of power.
Factual Background
Mr De Vonk's unchallenged evidence was that in 1988 he conducted various gold prospecting activities in Western Australia. On 12 September 1989 a partnership was formed under the style "Sunset Gold Mining Syndicate". Mr De Vonk says that for the financial years ended 30 June 1990 and 1991 he received distributions of exempt income from Sunset Gold Mining Syndicate. On 15 February 1994 he and all of his partners together with another person were charged with the offences to which I have referred. Those charges were the subject of an indictment which was filed on 2 November 1994. On or about 5 November 1994 he received the s.264 notice. Exhibited to Mr De Vonk's affidavit sworn 30 June 1995 is a copy of a letter dated 12 June 1995 from the Australian Taxation Office to Mr De Vonk's solicitors which, omitting formal parts and an irrelevant paragraph reads as follows:
"INCOME TAX: SUNSET GOLD MINING SYNDICATE
The audit of the income tax affairs of the above named partnership for the years ended 30 June 1990 to 30 June 1992 has been completed.
Details of the adjustments and the calculation of penalties are attached. The notices of assessment to reflect the adjustments will be issued shortly. It is emphasised that these assessments relate only to the activities of the above named partnership and are based on current information. Should any further information become available which affects either this or any other matter, further amendments may be issued."
Two affidavits were filed on behalf of the Commissioner each sworn by Mr Clive Ross. Mr Ross is one of the two officers named in the s.264 notice. In his first affidavit Mr Ross says that he is an audit manager in the Australian Taxation Office. On 24 March 1994 he authorised audit enquiries into the taxation affairs of Sunset Gold Mining Syndicate and Mr De Vonk. He allocated the enquiry to Mr Adrian Clutterbuck, an auditor in his section. Mr Ross then describes the efforts which Mr Clutterbuck made to interview Mr De Vonk. Those efforts were unsuccessful and Mr Ross says he then gave Mr Clutterbuck oral approval to issue the s.264 notice. MrRoss further says in his affidavit that in reaching his decision to issue the s.264 notice he took into account the attempts which had been made to contact Mr De Vonk, the likelihood of successfully contacting him in the future using the same methods and what he described as the Australian Taxation Office's standard practice of issuing a notice under s.264 of the Act requiring attendance when a taxpayer subject to audit enquiries cannot be otherwise contacted.
Mr Ross goes on to say that he was aware that Mr De Vonk had been charged with a criminal offence in relation to taxation matters and he took this into account in reaching his decision to issue the s.264 notice. His affidavit continues:
"In this regard I had previously read the decision of the Federal Court in Donovan v. Federal Commissioner of Taxation ... and had formed the view that a notice under section 264 of the Act could issue in the applicant's case as the audit enquiries were being conducted for the purpose of determining the assessable income of the Applicant and the Sunset Gold Mining Syndicate for the purposes of the Act and for no other purpose."
Mr Ross points out in his affidavit that the s.264 notice does not require Mr De Vonk to produce documentation or to give evidence on oath and nor, so Mr Ross deposed, was it intended to ask Mr De Vonk at the examination to give his evidence on oath. However, Mr Ross then admits that the questions which Mr De Vonk will be asked at any examination conducted under the terms of the s.264 notice will elicit information which is germane to the matters in issue in the criminal proceedings in the District Court of Western Australia referred to above. Finally, in his first affidavit Mr Ross says:
"... I approved the issue of the section 264 notice for the purposes of the Act and not for the purpose of gathering evidence for use in the criminal proceedings pending against the Applicant."
Mr Ross's second affidavit was sworn on 4 July 1995 in response to Mr De Vonk's affidavit which exhibited the letter dated 12 June 1995, the main parts of which are set out above. In essence, Mr Ross says in his second affidavit that when that letter was sent, the audit of Sunset Gold Mining Syndicate was almost complete and the only work remaining was to take and consider Mr De Vonk's oral evidence in relation to his income-earning activities as a member of the Sunset Gold Mining Syndicate. Mr Ross says that Mr De Vonk's refusal to attend in compliance with the s.264 notice had delayed the audit. If completion of the audit of the Sunset Gold Mining Syndicate were held over until Mr De Vonk was prepared to attend and give evidence, there was no indication when the audit would be completed. He decided that the audit of the taxation affairs of Sunset Gold Mining Syndicate should be brought to a conclusion on the basis of the information to hand and without waiting until Mr De Vonk had been interviewed. Mr Ross swears that in his view there was sufficient information available to form a conclusion about the assessability of the income disclosed and summarised in the income tax returns of the Sunset Gold Mining Syndicate. What Mr Ross described as "this course of action" had, in his view, become necessary in order to ensure that the audit of Sunset Gold Mining Syndicate was completed in a timely manner, the revenue of the Commonwealth of Australia
was protected and other members of the Syndicate were not disadvantaged by the delay. Mr Ross swears further that the audit of Mr De Vonk's income and assessments for the years ended 30 June 1990, 1991, 1992 and 1993 including his income-producing activities as a member of the Sunset Gold Mining Syndicate was not complete. Mr Ross's second affidavit continues:
"... there are a number of questions which I and Mr Clutterbuck wish to put to the Applicant in relation to his income-producing activities generally and as a member of the Sunset Gold Mining Syndicate. Should the evidence eventually given by the applicant pursuant to the Notice to Attend, along with any information gathered from other necessary enquiries warrant the issue of further amended assessments, then the applicant's assessments for the years ended 30 June 1990, 1991, 1992 and 1993 will be amended to either increase or decrease his assessable income as appropriate."
Mr Ross deposes to having made certain enquiries of the criminal listings co-ordinator for the Supreme and District Courts of Western Australia which suggest that the trial of the applicant and his co-accused will be listed for hearing in January 1996. Mr Ross concludes his second affidavit by saying:
"The Applicant is still required to attend and give evidence for the purpose of determining the assessable income of the Applicant and the Sunset Gold Mining Syndicate for the purpose of the Income Tax Assessment Act 1936 and not for the purpose of gathering evidence for use in the criminal proceedings pending against the Applicant."
Like Mr De Vonk, Mr Ross was not cross-examined upon his affidavits.
I should at this stage note Mr De Vonk's position in relation to the s.264 notice. Mr De Vonk says that he is prepared to attend forthwith before the Commissioner's delegate to answer any questions relevant to his income other than from the Sunset Gold Mining Syndicate. Furthermore, he says that he has offered
through his solicitors (and Mr Martella repeated the offer at the hearing of this matter) to answer any questions whatsoever which the Commissioner may wish to ask after the criminal charges against him have been finalised. The Commissioner is not prepared to accept either of these proposals.
The Contentions
A. Completion of the Audit
Mr Martella's first submission was based on the Commissioner's letter dated 12 June 1995. He drew my attention to the fact that the letter discloses that the audit of the income tax affairs of the Sunset Gold Mining Syndicate partnership for the years ended 30 June 1990 to 30 June 1992 has been completed and says that in those circumstances there is no need for his client to attend and answer questions involving that partnership. Mr Martella submitted that to that extent there was no longer any purpose for the s.264 notice. If his client's attendance is required only to answer questions concerning his own personal income tax return and not involving the partnership Mr De Vonk is quite prepared to attend. In those circumstances, so Mr Martella submitted, including the fact that Mr De Vonk was prepared to attend after the hearing of the criminal proceedings to answer questions regarding the Sunset Gold Mining Syndicate, the purpose of the Act (to levy tax on assessable income and protect the revenue) has been achieved.
Mr W. Martin QC, (with Ms L. Price) counsel for the Commissioner, submitted that the Act contemplates a process of one or more amended assessments as and when information comes to light. There was a distinction to be drawn between
the affairs of the Sunset Gold Mining Syndicate and the affairs of Mr De Vonk. The evidence was that the audit of Mr De Vonk's income and assessments for the years ended 30 June 1990 to 1993 is not complete. It would, so Mr Martin submitted, be very difficult to segregate Mr De Vonk's assessability from the assessability of the syndicate because part of Mr De Vonk's assessable income had been derived from that syndicate.
In my view, even though the Commissioner is in a position to issue notices of assessment in respect of the partnership income, that does not preclude him from making further enquiries, including the issue of a notice under s.264 of the Act to obtain further information. In Industrial Equity Ltd v. Deputy Commission of Taxation (1990) 170 CLR 649 at p.659 there appears the following passage in the joint judgment of the High Court:
"The existence of an assessment even of an amended assessment, cannot itself deny to the Commissioner the powers contained in ss.263 and 264. It may, particularly where an amended assessment already exists, place an exercise of power under either of the sections in more stark relief than would ordinarily be the case. But the principle involved remains the same. It is that the actions of the Commissioner must be taken for the purposes of the Act."
And at p.660 their Honours, having referred to a "tax audit" as being an expression which does not appear in the Act, then observe, in respect of a tax audit:
"Such an examination where a taxpayer's affairs are involved, will be for the purposes of the Act where it is directed to ascertaining the taxable income of a taxpayer. The examination is relevant to the process of assessment and to the further consideration of an assessment, once raised."
Having regard to the above passages, it seems to me that I must pay particular attention to the fact that the audit of the Sunset Gold Mining Syndicate has been completed (and that notices of assessment have been or are about to be issued) when I assess such evidence as exists of any improper purpose on the Commissioner's part in deciding to issue the s.264 notice. However, it is clear that those circumstances (conclusion of the audit and issue of the notices of assessment) do not bring to an end the Commissioner's power to issue a notice under s.264.
Mr Ross has sworn that Mr De Vonk's attendance to give evidence is required for the purpose of determining his assessable income and the income of the Sunset Gold Mining Syndicate. He further swears that it is not for the purpose of gathering evidence for use in the criminal proceedings against Mr De Vonk. Mr Ross was not cross-examined. In those circumstances I am not prepared to find that the s.264 notice was issued with an improper purpose. Nor am I prepared to find that insistence on compliance with the s.264 notice in circumstances where the audit of the income tax affairs of the Sunset Gold Mining Syndicate has been completed is sufficient evidence of improper purpose. There is also considerable merit, in my view, in the submission made by Mr Martin that the Commissioner's enquiries extend beyond 30 June 1992 which was, apparently, the year in respect of which a final return was filed by Sunset Gold Mining Syndicate.
B. The Privilege Against Self-Incrimination
Mr Martella next submitted that the common law privilege against self-incrimination has not been abrogated by s.264 of the Act when read with ss.8C and 8D of the Taxation Administration Act 1953 (Cth).
The relevant provisions of those sections are as follows:
INCOME TAX ASSESSMENT ACT
"264. (1)The Commissioner may by notice in writing require any person, whether a taxpayer or not, including any officer employed in or in connection with any department of a Government or by any public authority -
(a)to furnish him with such information as he may require; and
(b)to attend and give evidence before him or before any officer authorized by him in that behalf concerning his or any other person's income or assessment, and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto.
(2)The Commissioner may require the information or evidence to be given on oath and either verbally or in writing, and for that purpose he or the officers so authorised by him may administer an oath.
(3)...
TAXATION ADMINISTRATION ACT
8C.(1) A person who refuses or fails, when and as required under or pursuant to a taxation law to do so:
(a)...
(aa)to give information to the Commissioner in the manner in which it is required under a taxation law to be given;
...
to the extent that the person is capable of doing so is guilty of an offence.
8D.(1) A person who, when attending before the Commissioner or another person pursuant to a taxation law, refuses or fails, when and as required pursuant to a taxation law to do so:
(a)to answer a question asked of the person; or
(b)to produce a book, paper, record or other document,
to the extent that the person is capable of doing so is guilty of an offence.
(2)A person who, when attending before the Commissioner or another person pursuant to a taxation law, refuses or fails, when and as required pursuant to a taxation law to do so, either to take an oath or make an affirmation is guilty of an offence." [Emphasis added]
The term "taxation law", which appears in ss.8C and 8D of the Taxation Administration Act is defined by s.2 of that Act in a manner which includes the Act. Thus those sections apply to an interrogation under s.264 of the Act.
Section 8E of the Taxation Administration Act provides that an offence against either s.8C or s.8D is punishable on conviction by a fine not exceeding $2,000 for a first offence and $4,000 for any subsequent offence.
Mr Martella accepted that the common law rule against self-incrimination may be excluded in a particular case by express legislative stipulation to that effect: Sorby v. The Commonwealth (1983) 152 CLR 281 at pp.289-290, 296, 305, Hamilton v. Oades (1989) 166 CLR 486, or by necessary implication: Mortimer v. Brown (1970) 122 CLR 493 at p.496 and Sorby at p.289. It was the applicant's submission that the privilege had not been expressly or impliedly excluded by the provisions of s.264 of the Act when read with ss.8C and 8D of the Taxation Administration Act.
Until 1984 s.224 of the Act, which provided the sanction for failure to comply with s.264 of the Act, qualified or limited such liability in terms of "unless just cause or excuse for the refusal or neglect is shown by him". In 1984, when the sanction for such non-compliance was enacted in ss.8C and 8D of the Taxation Administration Act those words were not carried forward but instead there appear in each of those sections the words "to the extent that the person is capable of doing so."
Mr Martella acknowledged that his submission involved a challenge to two decisions of this Court which were squarely against him on this point. The decisions were those of Hill J. and Wilcox J. respectively in Stergis v. Commissioner of Taxation (1989) 89 ATC 4442 and Donovan v. Commissioner of Taxation (1992) 92 ATC 4114. In each of those cases it was held that the omission of the defence of "just cause and
excuse" and the insertion of the words "to the extent that the person was capable of doing so" represented a deliberate abrogation by the Parliament of the common law privilege against self-incrimination.
In Stergis the question arose whether there had been a breach of the rules of natural justice when a taxation officer conducting an interview under s.264 had told the interviewee that he was required to answer the questions put to him under pain of penalty. The issue was treated as being whether the provisions of s.264 of the Act when read in conjunction with s.8C of the Taxation Administration Act are such that the common law privilege against self-incrimination is abrogated (see p.4,452). Hill J. reviewed many of the relevant authorities both in Australia and in the United Kingdom. In particular his Honour referred to the decision of the High Court of Australia in Pyneboard Pty Ltd v. Trade Practices Commission (1983) 152 CLR 328 and the passage in the reasons for judgment of Mason ACJ, Wilson and Dawson JJ at p.343 which reads:
"It is significant that sub-sec.(5) [a reference to s.155(5) of the Trade Practices Act 1974 (Cth)] makes it an offence for a person to refuse or fail to comply with a notice under sub-sec.(1) `to the extent that the person is capable of complying with it'. For these words in themselves are quite inconsistent with the existence of a privilege entitling the recipient of a notice to refuse to comply whether on the ground that compliance might involve self-incrimination or otherwise." [Emphasis added]
Hill J. concluded:
"Having regard to the purpose for which the powers under sec.264 are conferred, the context in which that section applies in the Act and the language now enshrined in sec.8C and 8D of the Taxation Administration Act I am of the view that where an officer of the Australian Taxation Office acting properly and in accordance with sec.264 of the Act requires a person to furnish information or to answer any question, that person will not be entitled to refuse to
furnish that information or answer that question on the grounds that to do so might tend to incriminate him."
Hill J's decision in Stergis was followed by Wilcox J. in Donovan. The facts in Donovan were very similar to the facts of the present matter. Ms Donovan had been charged with five breaches of the Cash Transaction Reports Act 1988 (Cth). Within a month of the laying of those charges Ms Donovan attended for an interview in accordance with a s.264 notice and objected to 22 questions on the ground that the answers might incriminate her. She subsequently withdrew her objections to three questions and provided answers to them. Wilcox J. referred to a series of High Court cases in which privilege against self-incrimination had been relied upon in attempts to justify non-compliance with an obligation to answer official enquiries. Those were Mortimer v. Brown (1970) 122 CLR 493, Sorby v. The Commonwealth (1983) 152 CLR 281, Pyneboard, Controlled Consultants Pty Ltd v. Commissioner for Corporate Affairs (1985) 156 CLR 385, Police Service Board v. Morris (1985) 156 CLR 397 and Hamilton v. Oades (1989) 166 CLR 486. At p.4120 in Donovan Wilcox J. acknowledged the force in counsel's comment that Parliament might have chosen clearer words to convey its intention to abrogate the privilege of self-incrimination in ss.8C and 8D of the Taxation Administration Act. However, his Honour did not doubt the correctness of Hill J's conclusion in Stergis which he respectfully adopted. Referring to Pyneboard Wilcox J. (at p.4120) observed:
"The High Court gave judgment in Pyneboard in March 1983. As already indicated, ss.8C and 8D were inserted in the Taxation Administration Act in the following year. It seems extremely likely that the drafter of the amendment treated their Honours' comment as authority for the proposition that the formula "to the extent that the person is capable of complying with it" evidenced an intention to exclude the privilege against self-incrimination."
Mr Martella submitted that Stergis and Donovan were incorrectly decided. He submitted that the words "to the extent that the person is capable of doing so" leave room for the assertion that a person is not capable of doing so because the answer to the questions may lead to self-incrimination. The words "extent" and "capable" were, so it was submitted, words of degree. I reject that submission for two reasons. First, the word "capable" in this context must mean "having the ability, power or fitness for some ... activity" (the New Shorter Oxford English Dictionary) or "having the ability, strength" (the Macquarie Dictionary). The fact that his answers may tend to incriminate him does not, in my view, render Mr De Vonk incapable of answering the questions. Secondly the submission is squarely to the contrary of the passage from the judgment of Mason ACJ, Wilson and Dawson JJ. in Pyneboard at p.343 which I have set out above.
Next Mr Martella criticised the resort by Hill J. in Stergis to extrinsic material, being the explanatory memorandum. Hill J. simply referred to the explanatory memorandum in passing and my assessment of his Honour's conclusion is that it was not substantially based upon the content of that memorandum. In any event such resort is permissible to confirm that a literal meaning was intended: s.15AB(1)(a) of the Acts Interpretation Act 1901 (Cth). See also Pearce: "Statutory Interpretation in Australia" (3 ed) para 3.18 and the cases there cited.
Mr Martella submitted that the observations in Pyneboard were obiter dicta because the issue in that case was whether the privilege against being required to expose oneself to civil liability for penalties had been abrogated. Exposure to self-incrimination was not in issue. Furthermore, so it was argued, s.155 of the Trade Practices Act, which was the provision being considered in that case, provided partial protection from admissibility of evidence against the relevant person in criminal proceedings and that factor played a part in the Court's decision. I doubt whether that latter submission is correct. Their Honours first construed s.155(5) and then (at p.344) acknowledged that on such construction the first part of sub-section (7) was redundant. Hill J. drew attention to that matter in Stergis at p.4,456.
In any event it is not necessary for me to decide whether the passage at p.343 in Pyneboard forms part of the ratio of that case because, with the greatest respect, in my view it is quite clearly correct and I should follow it.
Mr Martella submitted that Mortimer v. Brown (1970) 122 CLR 493 was also distinguishable on the basis that s.250(3) of the Companies Act, which was under consideration in that case, enabled the presiding judge to allow or disallow a question sought to be put to the person being examined pursuant to the provisions of that section. However, although Barwick CJ and Walsh J referred to that aspect and Windeyer and Owen JJ agreed with the conclusion and reasons of Walsh J, that was not the basis, as I read the case, upon which it was decided. The case was decided, in my view, on the basis that the exercise of the common law right to decline to answer any question the answer to which might tend to incriminate a person would frustrate the purpose of the provisions contained in s.250 and would, as well, be inconsistent with the language of those provisions (per Walsh J at p.501). At p.502 his Honour referred to the possibility of self-incrimination as being no more than one factor to be considered with others in deciding whether, as a matter of discretion, a question should be disallowed. In my opinion Mortimer v. Brown does not assist the applicant in this matter and in fact was relied upon by Mason ACJ, Wilson and Dawson JJ in reaching their conclusion in Pyneboard.
Next Mr Martella referred to Sorby v. The Commonwealth (and in particular a passage at p.295 in the reasons for judgment of Gibbs CJ in that case) for the proposition that even a statutory provision to the effect that answers to questions may not be used in evidence, does not reveal clearly an intention that the privilege against self-incrimination should be unavailable. In my view, the legislative provisions in Sorby were so different to the provisions under consideration in this matter as to provide no assistance to the applicant. Here the words used are "to the extent that the person is capable of doing so" and, as I have indicated above, they are in my opinion sufficiently clear to abrogate the common law privilege.
I respectfully agree with the conclusion drawn by Hill J. in Stergis and Wilcox J. in Donovan that s.264 of the Act is not subject to the common law privilege against self-incrimination and also with the reasoning which led their Honours to that conclusion.
The privilege against self-incrimination may not, in my opinion, be invoked in response to a notice under s.264 or in the course of an examination conducted as a result of service of such a notice.
C. Contempt of Court
It was submitted on behalf of the applicant that if the Commissioner were allowed to proceed with his enquiry under s.264 of the Act then this would constitute a contempt of court by way of either an interference with the administration of justice or an unfairness to the accused in the pending criminal proceedings against the applicant and others, given that the proposed questioning is admittedly germane to those pending criminal charges. Reliance was placed on Sorby at pp.207-308 and Hamilton v. Oades at pp.515-516 and Hammond v. The Commonwealth (1982) 152 CLR 188 at pp.198-199, 201, 206 and 207-208.
In Donovan, but not in Stergis, the applicant argued that to persist with an examination under s.264 in the circumstances of pending charges constituted contempt of court. Wilcox J. referred to Victoria v. The Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25 at pp.53-56, 69, 94-99, 130-132 and 161-164 as authority for the proposition that even where there is no purpose of interfering with the course of justice
"... the establishment or continuation of an administrative inquiry will constitute a contempt of court if there is an actual interference with the administration of justice or a `real risk, as opposed to a remote possibility' of such an interference."
His Honour then cited Hammond as establishing that the questioning of a person charged with a criminal offence about matters germane to that charge creates a real risk of interference with the course of justice, even if that questioning is effected in private. Pausing there, it is most pertinent to note that those are the admitted factual circumstances of this matter. In fact, the present circumstances are
more serious than in Hammond. In Hammond the relevant legislation precluded the answers from being admissible in any civil or criminal proceeding. That is not the situation here.
Next Wilcox J. observed that:
"... the principle that the establishment or continuance of an inquiry may constitute a contempt of court is subject to legislative abrogation, either by express words - see Lockwood v. The Commonwealth (1954) 90 CLR 177, referred to in BLF - or by necessary implication: Hamilton v. Oades at 494, 509 and 515-516."
His Honour then put to one side the questions:
.whether that principle was expressed too widely in Hammond (referring to the comment of Dawson J. in Hamilton v. Oades at p.509); and
.whether the statement of Gibbs CJ in Hammond is to be read as dependent on the intention lying behind the question (as to which see Toohey J. at pp.515-516 in Hamilton v. Oades);
saying that those were matters for the High Court. Wilcox J's conclusion on the question of contempt of court was expressed (at p.4120) as follows:
"It is now clear that the contempt of court doctrine is also subject to legislative intent. The reasons which impel the conclusion that Parliament intended s.264 to operate notwithstanding the possibility of self-incrimination apply equally to contempt of court. If it is predictable that taxation investigations will often delve into areas of criminal conduct, it is equally predictable that, on some occasions, charges will already be pending against persons sought to be questioned. The rationale of Hamilton v. Oades applies to this case.
It is consistent with Hamilton v. Oades that this Court should have the power to give any directions necessary to ensure that there will be no abuse of the authority conferred upon the Commissioner and his officers by s.264. No such directions are presently sought, nor is there any present reason for concern."
His Honour then referred to an undertaking which had been given by the Deputy Commissioner, the terms of which are set out at pp.4115-4116 of the report. The undertaking was, in summary, that the Commissioner would not directly or indirectly disclose any evidence or other matter obtained pursuant to the s.264 examination to an authorised law enforcement agency or voluntarily divulge or communicate such information or material to the court hearing the charges against Ms Donovan. Notwithstanding certain reservations expressed by Ms Donovan's counsel about the protection provided by such undertaking, it is apparent that Wilcox J. had regard to the undertaking when dismissing the application. His Honour specifically referred to the circumstance that he treated the undertaking as having continuing application notwithstanding the course and result of the case.
Mr Martin submitted that there had to be something more than a theoretical possibility of an interference with the administration of justice before there is any contempt of court. There had to be a real risk as opposed to a remote possibility - relying on Victoria and Australian Building Construction Employees & Builders Labourers' Federation (1982) 152 CLR 25 per Gibbs C.J. at p.56, Stephen J. at p.73 and Mason J. at p.99.
Mr Martin relied upon Hamilton v. Oades as authority for the following propositions:
.first, that where there is an abrogation of the privilege against self-incrimination without any express reference to pending charges then this precludes a construction which would allow for the statutory provision to vary according
to whether or not criminal charges were pending against an examinee;
.secondly, the mere fact that questions will touch upon matters the subject of pending charges is not a sufficient basis for judicial intervention;
.thirdly, a court has no inherent power to override a legislative intention apparent from a provision such as s.264 of the Act.
In my opinion the authorities are to the following effect:
The principle that the establishment or continuance of an inquiry may constitute a contempt of court ("the contempt of court doctrine") is, as Wilcox J. noted in Donovan, subject to legislative abrogation by express words or by necessary implication from the statute or statutes concerned: Lockwood v. The Commonwealth (1954) 90 CLR 177 at p.185; Hamilton v. Oades (1989) 166 CLR 486 at pp.494, 509 and 515-516.
The fact that an inquiry or any other step (such as, in this matter, an interrogation under s.264 of the Act and the communication of information obtained at such an interrogation to the National Crime Authority and the Commissioner of Police for Western Australia) is authorised by statute does not of itself abrogate the contempt of court doctrine: the Builders Labourers' Federation case at pp.54, 72 and 94. Those passages alone show that there is a distinction to be drawn between a statute (such as the legislation considered in Lockwood) which authorises or requires the specific inquiry to be undertaken and one which merely provides a general framework for the conduct of an inquiry. See also Pioneer Concrete (Vic.) Pty Ltd v. Trade Practices Commission
(1982) 152 CLR 460 at p.473 and Johns & Waygood Ltd v. Utah Australia Ltd [1963] VR 70 at pp.72-73. I would regard the statutory scheme comprising s.264 and the various provisions of the Taxation Administration Act as falling into the latter category.
Where, as in the present matter, the contempt of court doctrine is not expressly abrogated, the question whether it has been abrogated by necessary implication must be decided by having regard to the context of the provisions and their legislative purpose.
Even in the absence of a purpose to interfere with the course of justice or actual interference with the course of justice there will be contempt of court if there is a real risk as opposed to a remote possibility of such an interference: the Builders Labourers' Federation case per Gibbs C.J. at p.56, or a substantial risk of serious injustice per Mason J. at p.99.
The fact that a person is to be examined in detail as to the circumstances of an alleged offence is very likely to prejudice him in his defence. If the questions are designed to establish that he is guilty of the offence it is likely that there is a real risk that the administration of justice will be interfered with: Hammond v. The Commonwealth (1982) 152 CLR 188. In particular I refer to the observations of Gibbs C.J. at p.198:
"Once it is accepted that the plaintiff will be bound, on pain of punishment, to answer questions designed to establish that he is guilty of the offence with which he is charged, it seems to me
inescapably to follow, in the circumstances of this case, that there is a real risk that the administration of justice will be interfered with. It is clear that the questions will be put and pressed. It is true that the examination will take place in private, and that the answers may not be used at the criminal trial. Nevertheless, the fact that the plaintiff has been examined, in detail, as to the circumstances of the alleged offence, is very likely to prejudice him in his defence."
Brennan J. at pp.202-203:
"It is sufficient for present purposes to appreciate that it is a principle deep-rooted in our law and history that the Crown may not subject an accused person to compulsory process to obtain his answers upon the issue of his guilt of an offence with which he has been charged."
and Deane J. at p.206:
"... it is fundamental to the administration of criminal justice that a person who is the subject of pending criminal proceedings in a court of law should not be subjected to having his part in the matters involved in those criminal proceedings made the subject of a parallel inquisitorial inquiry by an administrative tribunal with powers to compel the giving of evidence and the production of documents which largely correspond (and, to some extent, exceed) the powers of the criminal court. Such an extra-curial inquisitorial investigation of the involvement of a person who has been committed for trial in the matters which form the basis of the criminal proceedings against him constitutes, in my view, an improper interference with the due administration of justice in the proceedings against him in the criminal court and contempt of court."
An intention to interfere with the course of justice or to prejudice the prosecution or defence in a pending trial is not necessary to constitute the contempt: R. v. Pacini [1946] VLR 544 at pp.546-547.
With great respect, I differ with Wilcox J's conclusion in Donovan (at p.4,120) that the reasons which impel the conclusion that Parliament intended s.264 to operate notwithstanding the possibility of self-incrimination apply equally to the contempt of court doctrine.
It is one thing to find by necessary implication from a statute that it permits an inquiry which will require the disclosure of facts or circumstances relevant to the assessment of liability for tax even though such disclosure may tend to incriminate a person. It is another thing to say that if the statute permits that, then questions may be asked at that inquiry which go beyond such a tendency to incriminate and by interfering with the course of justice amount to contempt of court. One can accept the predictability that taxation investigations will often delve into areas of criminal conduct and that, on some occasions, charges will be pending against persons sought to be questioned. However, in my opinion the rationale of Hamilton v. Oades does not, in those circumstances, authorise what would otherwise be contempt of court.
Hamilton v. Oades was a case concerned with s.541 of the Companies Code which made provision for the examination of officers of a company on oath and in Court. Section 541(12) expressly provided that at such an examination a person was not excused from answering a question on the ground that the answer might tend to incriminate him. However, if the person claimed, before answering the question, that the answer might tend to incriminate him the answer was not admissible in evidence against him in criminal proceedings other than proceedings under s.541 or other proceedings in respect of the falsity of the answer. Section 541(5) empowered the Court to give directions. As Mason C.J. noted (at p.496) those two matters were designed to reduce any element of unfairness to the witness that might arise as a result of the abrogation of the privilege. In my opinion the most important factor in Hamilton v. Oades was the express statutory abrogation of the privilege against self-incrimination. The High Court viewed the order of the New South Wales Court of Appeal as, in effect, restoring that privilege in relation to the charges facing Mr Oades - see p.492.
One of the two public purposes which were identified in Hamilton v. Oades as being served by a s.541 examination was to enable evidence and information to be obtained to support the bringing of criminal charges in connection with the company's affairs - see p.496. See also at p.497:
"The very purpose of the section is to create a system of discovery, which may cause defences to be disclosed, for the purpose of bringing charges".
Section 264 of the Income Tax Assessment Act has no such purpose; its purpose is to obtain information relevant to a person's income or assessment.
The fact that charges are pending against the person to be interrogated does not in itself govern whether a question is a permissible one at a s.264 interrogation even if the answer might tend to incriminate that person. That does not, in my view, mean that all of the rules of contempt of court are abrogated. Questions may be seen to constitute a real risk to the fairness and integrity of the criminal trial even if the answers will not incriminate or have a tendency to incriminate. That was recognised by Deane and Gaudron JJ in Hamilton v. Oades at pp.502-503. Their honours referred, for example, to answers which may involve the disclosure of a defence or lead to the discovery of other evidence. Toohey J. at p.515 instanced a question designed to elicit a direct admission of guilt as being in a different category to a question the answer to which might tend to incriminate, and consequently being oppressive or unjust. At page 517 his Honour referred to questions the answers to which would tend to disclose a defence to pending criminal charges as being unfair to the person being examined and thus exemplifying questions which might be disallowed under the discretion conferred by s.541. This was a basis other than the ground of self-incrimination which was expressly abrogated by s.541(12) which spoke "in the clearest terms" on that subject.
An example of a legislative provision which would appear expressly to abrogate the contempt of court doctrine can be seen in s.38(1) of the Royal Commission (Police Service) Act 1994 (N.S.W). That section permits the Commissioner to carry out his inquiry, to report on that inquiry and to do "all such acts and things as are necessary or expedient for those purposes" despite any proceedings which may be in or before a legal tribunal at the time. I have taken that description of s.38 largely from the decision of Hunt C.J. in Bayeh v. Attorney-General (NSW) (unreported 10 July 1995).
To remove a person's right to be tried fairly, not by express provision, but by necessary implication requires more than the statutory provisions upon which the Commissioner relies in this matter. The purpose of protecting the revenue is not so demonstrably irreconcilable with the common law protection of a fair trial.
It does not necessarily follow from the above reasoning that all of the questions which the Commissioner wishes to ask Mr De Vonk will be impermissible merely because they may elicit information germane to the criminal charges against him. Each question or series of questions will need to be assessed to ascertain whether it is likely to require the giving of an answer or answers which constitute a real risk to the fairness and integrity of the hearing of the criminal charges against Mr De Vonk. If so, the asking of the question or series of questions will be impermissible as constituting an interference with the administration of justice and hence amounting to contempt of court.
At the hearing of this matter I asked whether the Commissioner's officers had prepared a draft list of questions and, if so, whether that draft list had been shown to Mr De Vonk's legal advisers. I was told that such a draft had been prepared but that it was not an exhaustive set of questions and the Commissioner did not wish to disclose the list to Mr De Vonk. The reasons given by the Commissioner for not wishing to disclose the list were:
.the list is not complete and is only a draft;
.there is a "wide series of other questions" which the Commissioner wishes to ask beyond the topics dealt with in the draft;
.there is "some concern that the prior release of a draft set of questions may impinge on the candour of the person being interviewed"; and
.the Commissioner did not wish to be constrained by the questions that he could ask, because some questions may be thrown up by the answers given to earlier questions.
Mr Martin referred to the confidentiality undertaking proffered by the Commissioner in Donovan and said that the Commissioner did not proffer such an undertaking in this matter. This was because, so it was put, there is now a clear legislative scheme governing revelation of information and if a taxation officer complies with the relevant provisions then such revelation is authorised by statute.
Furthermore, the Commissioner challenged the correctness of Wilcox J's view in Donovan that it was consistent with Hamilton v. Oades that this Court has power to give any directions necessary to ensure that there will be no abuse of the authority conferred upon the Commissioner and his officers by s.264.
As to the first submission, the fact that the Commissioner may pass to the National Crime Authority or the Commissioner for Police of Western Australia information obtained by interrogating Mr De Vonk is something which will have to be weighed up when assessing whether the questions he asks amount to sufficient interference with the course of justice as to constitute contempt of court.
The possibility of such disclosure may well be the factor which tips the scales and renders the questions impermissible. It is a factor which must be balanced against the fact that the interrogation will be in private.
I was taken through what Mr Martin aptly described as a "labyrinth" of statutory provisions concerning the extent to which the Commissioner's officers may divulge information obtained in the course of a s.264 interrogation. I do not need to re-trace those steps. It is sufficient to note that the Commissioner concedes that there are provisions which would authorise the release of the information to the National Crime Authority and to the Commissioner of Police for the State of Western Australia [sections 3D(1) and 3E(1) respectively of the Tax Administration Act]. In respect of at least one of the three charges, s.3E(4) of that Act [when read with the definition of "tax-related offence" in s.3E(11)] would permit the voluntary communication of the information to the Court hearing the charges brought against Mr De Vonk.
Wilcox J's reference in Donovan to the power to give any necessary directions and to the Commissioner's undertaking to the Court in that case suggest that his Honour, having excluded the possibility of contempt of court impinging on the operation of s.264, was still most concerned about the possibility of oppression, unfairness and hence injustice.
As to whether this Court has power to give directions in relation to the s.264 interrogation, my view is that the power to give directions would depend on the establishment of a ground for review under the ADJR Act which would include possible abuse of authority of the type referred to by Wilcox J in Donovan. It should be remembered that in Donovan the Court had a list of the questions sought to be administered. I do not read Wilcox J's remarks as going any further than that or as suggesting the existence of some inherent Federal Court power to give directions generally relating to the conduct of the s.264 interrogation in the absence of other proceedings pending in this Court. In Hamilton v. Oades the examination was conducted in the Supreme Court of New South Wales. That Court's power to give directions had at least two sources. The first was in s.541(5) of the Companies Code and the second was the inherent power of the Court as confirmed by s.23 of the Supreme Court Act 1970 (N.S.W.) which provided that the "Court shall have all jurisdiction which may be necessary for the administration of justice in New south Wales". It may well be consistent with Hamilton v. Oades for the Court, on an appropriate occasion, to give directions in relation to a s.264 interrogation but, in my view, that case does not point to any source of power for this Court to give such directions at present in this matter. That power must be found elsewhere, as I have endeavoured to point out above.
In the absence of clear evidence at this stage that the questions which the Commissioner proposes to put to Mr De Vonk would amount to contempt of court and thus, in my view be contrary to law, the present application is premature.
However, it would seem from the paragraph in Mr Ross's first affidavit in which he refers to the decision in Donovan that the Commissioner may be under the impression that he may interrogate Mr De Vonk regardless of the possible impact of such interrogation on the fairness and integrity of the impending criminal trial. In my view, for the above reasons, that impression is not correct and objection may be taken if and when impermissible questions are asked.
The International Convention on Civil and Political Rights
The applicant relied on Article 14(3)(g) of the abovementioned Convention, which provides:
"3.In the determination of any criminal charge against him everyone should be entitled to the following minimum guarantees, in full
equality:(g)not to be compelled to testify against himself or to confess guilt".
Mr Martella referred me to the following passage in the reasons for judgment of Mason CJ and Toohey J in Environment Protection Authority v. Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at p.499:
"The right not to be compelled to testify against oneself or to confess guilt is embodied in Part 14(3)(g) of the International Covenant on Civil and Political Rights. The language of that Covenant makes it clear that the purpose of its provisions is to protect individual human beings. As this Court has recognised, international law, while having no force as such in Australian municipal law, nevertheless provides an important influence on the development of Australian common law, particularly in relation to human rights [citing Mabo v. Queensland [No. 2] (1992) 175 CLR 1 at p.42]."
I was also referred to certain passages of Brennan J's reasons for judgment in Mabo at pp.41-43 and Murphy J in Controlled Consultants Ltd.
Mr Martella did not specify how the abovementioned article would apply to the circumstances of the present matter.
On behalf of the Commissioner it was submitted that the above provision should be read in the context of the whole of Article 14 which provides a set of guarantees in a criminal trial, as its opening words "In the determination of any criminal charge ..." suggest.
Mr Martin submitted that even if the Convention were construed in the manner in which the applicant contended, this produced nothing more than the
common law implied right. Just as the common law implied right yielded to a contrary legislative intent, so would any legitimate expectation arising from Australia being party to the Convention yield. The present matter was to be distinguished from the case of Minister for Immigration v. Teoh (1995) 128 ALR 353, because here any implied right or expectation was overridden by statutory provision. Alternatively, the respondent contended that Article 14(3)(g) was not infringed by the application of s.264 for the purpose of enforcing revenue obligations. Reference was made to "the Human Rights Commission - its Role in the Development of the International Covenant on Civil and Political Rights", Dominique McGoldrick, Clarendon Press, Oxford 1994, p.429 as indicating that the cases essentially involved physical coercion in the context of pending criminal charges.
In my view Article 14(3)(g) of the Convention has no application to the present matter. First, by its terms it is applicable to the determination of a criminal charge. Compliance with the s.264 notice would not, in my opinion, amount to Mr De Vonk being compelled to testify against himself or to confess guilt in the determination of any criminal charge. The conduct of the s.264 interrogation is sufficiently separate from the forthcoming District Court proceedings not to form part of the determination of the criminal charges. Secondly, the Convention, although ratified on 13 November 1980 and binding on Australia internationally, has not been incorporated into Australian law. If its terms conflict with the express provisions of s.264 (which I doubt, for the above reasons) then any legitimate expectation which might otherwise arise from the article must yield to the contrary legislative intent of that section as properly construed. As the common law privilege against self-incrimination has been abrogated by the statutory scheme there cannot arise any
legitimate expectation that Mr De Vonk should not be compelled to incriminate himself.
Conclusion
For the above reasons I consider that the appropriate course is to exercise the power conferred by s.21(1) of the Federal Court of Australia Act to the extent of making declarations in respect of the self-incrimination and contempt of court matters, but otherwise to dismiss the application. I will hear counsel on the matter of costs.
I certify that this and the preceding thirty-six (36) pages are a true copy of the Reasons for Judgment of Justice Carr.
Associate:
Date: 16 August, 1995
Counsel for the Applicant: Mr S Martella
Solicitors for the Applicant: Martella & Co
Counsel for the Respondent: Mr W S Martin Q.C.
and Ms L Price
Solicitors for the Respondent: Australian Government
Solicitor
Date of Hearing: 6 July, 1995
Date of Judgment: 16 August, 1995
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