DLMD and Commissioner of Taxation - [2017] AATA 739

DLMD and Commissioner of Taxation [2017] AATA 739 (12 May 2017)
Division:TAXATION & COMMERCIAL DIVISION
File Number: 2017/0653
Re:DLMD
APPLICANT

AndCommissioner of Taxation
RESPONDENT

DECISION
Tribunal:The Hon Justice JA Logan RFD, Deputy President
Date:12 May 2017
Place:Sydney

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The Hon Justice JA Logan RFD, Deputy President
CATCHWORDS
ADMINISTRATIVE LAW – confidentiality order sought by Applicants under s 35 of the Administrative Appeals Tribunal Act 1975 (Cth)
ADMINISTRATIVE LAW – private hearing pursuant to s 14ZZE of the Taxation Administration Act 1953 (Cth) – private hearing requirement does not automatically prohibit publication of name of particular witnesses – confidentiality order sought by Applicants under s 35 of the Administrative Appeals Tribunal Act 1975 (Cth) – effect of orders
PRACTICE AND PROCEDURE – confidentiality order – publication of witness names – hearings in private – Tribunal has power to make the witness pseudonym orders sought in this case – orders sought not granted
PRACTICE AND PROCEDURE – mode of reception of evidence – application for reception of evidence by telephone – whether telephone evidence necessary as part of procedure to preserve witness anonymity – other confidentiality provision deemed sufficient – orders not made
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) ss 33, 33A, 35, 40A
Taxation Administration Act 1953 (Cth) ss 14ZZE, 14ZZJ
REASONS FOR DECISION
The Hon Justice JA Logan RFD, Deputy President
12 May 2017

Some procedural questions have arisen in this taxation review proceeding. Those questions are what provision ought to be made with respect to the manner of reception of evidence from particular witnesses and what measure of anonymity, if any, ought to be afforded to them?
The proceeding is one in respect of which the applicant has exercised the right conferred by s 14ZZE of the Taxation Administration Act 1953 (Cth) (TAA) for the hearing to be in private. In turn that means that, as far as practical, it will be incumbent upon me, when publishing reasons in respect of the decision to which I come on the review, to frame those reasons so as not to be likely to enable the identification of the applicant: s 14ZZJ of the TAA.
The applicant operates a brothel. It is at odds with the Commissioner of Taxation in relation to objection decisions made by him in respect of goods and services tax (GST) assessments and notices of penalty, including penalties for failure to withhold amounts.
As to the GST assessments, at the heart of the controversy lies a question of characterization based on findings of fact which will fall to be made on the basis of the material before the Tribunal at the final hearing. The question is whether, as the applicant contends, it supplies only rooms at its premises and administrative services to particular sex workers who in turn provide sexual services to their own clients at those premises or whether, as the Commissioner contends, the sexual services are supplied by the applicant, via the sex workers, at its premises? This same question arises in respect of the disputed penalties to the end of determining whether the applicant ought to have withheld amounts from payments which it made to those sex workers. In short, the central question will entail deciding what exactly is it that the applicant supplies?
In the course of his investigation and in the exercise of statutory powers conferred on him, the Commissioner examined a number of sex workers by compulsory process. It is proposed that, at the hearing, I receive evidence from such persons. That will necessarily be subject to the applicant’s right to require such persons to attend for the purposes of cross-examination.
The applicant also proposes to lead evidence from sex workers touching upon the nature of the supply or supplies made at the applicant’s premises. For the purposes of the interlocutory directions hearing, the applicant led evidence relating to confidentiality concerns generally held by sex workers. This, in turn, was consistent with other evidence led by the applicant as to difficulties it was encountering in the gathering of evidence from sex workers and others (receptionists) to lead in its case. This evidence was not challenged by the Commissioner, although that did not mean that he was in agreement with the applicant as to the directions which ought to be made in light of it.
I do not find it necessary to refer in detail to the evidence which the applicant led about the confidentiality concerns. The long and the short of it is that there remains a social stigma in respect of it becoming known that a particular individual is a sex worker or is otherwise engaged in the sex industry. I accept that, even though the term “sex worker” has gained currency in modern times and that such work is not, as it once was, necessarily illegal, the alternative description, “prostitute” with all of the elements of societal disapproval that can entail is also still current. And the same applies in respect of those who “consume” the services on offer, i.e. the clients, some of whom may also, potentially, be witnesses. I need no persuasion that the concerns are genuine and well-founded. An apprehension about personal publicity arising from the giving of evidence revealing that a person works or seeks the services of those who work in the sex industry has already inhibited and might reasonably be expected to continue to inhibit persons being willing to give evidence for the applicant.
I am conscious that it is incumbent on the applicant to prove the assessments concerned to be excessive and otherwise to prove that the taxation decision should either not have been made or have been made differently: s 14ZZK(b) of the TAA.
The applicant does have available to it from the Tribunal on proper materials a form of compulsory process in order to secure the attendance of particular individuals. That process is a summons issued under s 40A of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act). At least as presently advised, I do not regard the reference in s 40A(1)(a) of the AAT Act to “appear before the Tribunal to give evidence” as confined to a requirement to attend at the date, time and place fixed for the final hearing of the review proceeding. The summons must be issued “for the purposes of a proceeding” but that could, in my view, embrace a requirement for a person unwilling to furnish a party with an affidavit to attend before the Tribunal to be examined in chief by that party so as to procure their evidence. There is, to this extent, an analogy to be drawn with a use in relation to a court proceeding to which a subpoena can sometimes be put. The procuring of oral evidence in advance of trial via attendance pursuant to a subpoena is sometimes necessary but it is perhaps more often only necessary to draw the existence of the practice to the attention of a person otherwise reluctant to furnish an affidavit for a court proceeding. Often that reluctance disappears once it is realized that the alternative would be attendance in advance of trial under subpoena in order to be examined.
There are two practical difficulties about this form of process which, in my view, make its availability more theoretical than real in the circumstances of the present case. One is that any evidence taken in advance would have to be taken before the Tribunal. For the purposes of the hearing, the Tribunal is constituted by me. I have, to say the least, extremely limited availability prior to the allocated hearing dates to constitute the Tribunal for the purpose of receiving in advance any evidence in chief in this fashion. I have not explored whether it might otherwise be possible to constitute the Tribunal for the latter purpose because it would not, in itself, address the concerns about confidentiality. The other practical consideration is related to the point just made. Special provision might have to be made as to by what mode or in what venue and subject to what disclosure terms evidence in advance should be taken.
Section 14ZZE of the TAA is expressed to apply, “Despite section 35 of the AAT Act”. I do not read that expression as excluding altogether s 35 of the AAT Act, as opposed to prevailing over s 35 of the AAT Act to the extent of any inconsistency in the event that an applicant makes a request for a private hearing. Thus, s 14ZZE of the TAA leaves intact the discretionary powers vested in the Tribunal by ss 35(2)(b), 35(3) and 35(4) of the AAT Act. It is just that, upon an applicant requesting a private hearing, s 14ZZE requires that the hearing be so held, without any need for the making of a discretionary value judgement by the Tribunal as to whether a private hearing is warranted. It is evident from cases to which reference was made in submissions that other members of the Tribunal have taken a like view of the inter-relationship between s 14ZZE of the TAA and s 35 of the AAT Act. It is not necessary to refer to earlier case exemplars because there was no difference between the parties or between them and me on this subject.
In itself, the statutory requirement that a hearing be conducted in private carries with it much by necessary implication. Save for the parties and their representatives, the member(s) constituting the Tribunal, that member’s personal staff and any other Tribunal staff required for the purposes of the hearing and those charged with the recording of the proceeding, no-one else is entitled to be present in the hearing room. Further, by necessary implication, only those staff in the registry necessary to support the hearing would be entitled to know the name of the applicant or the evidence which was in fact presented at the hearing. Nor would any of the persons mentioned, including me, be entitled to disclose the name of the applicant or the evidence led “in private” to any third party, if that would be likely to disclose the identity of the applicant. To construe s 14ZZE of the TAA otherwise would be subversive of that provision and of the intended operation of s 14ZZJ of that Act.
To this extent, some of the concerns voiced by the applicant might well be met just by all that necessarily follows from the request that it made for a private review hearing. However, neither the terms of s 14ZZE nor those of s 14ZZJ necessarily mean that the identity of a witness must be rendered anonymous in the Tribunal’s reasons for decision. Only if disclosure would reveal the identity of the applicant would these sections make it necessary to give anonymity to the identity of the witness in the published reasons.
Thus, I readily accept that there may well be scope for the making of particular orders under s 35 of the AAT Act, as well as, perhaps, under s 33 of that Act. Subject to the conditions mentioned in s 33(1), the procedure to be followed at all stages of the review is, by s 33(1) of the AAT Act, “within the discretion of the Tribunal”. It is axiomatic that the directions given in the exercise of this broad discretionary power and in the exercise of powers conferred by s 35 of the AAT Act must be procedurally fair. And procedural fairness entails being fair both to the applicant and to the Commissioner.
I append to these reasons the draft of the directions sought by the applicant. Of these, the Commissioner supports the making of draft direction 1 but does oppose the making of draft directions 2, 3 and 4. I shall deal separately with draft direction 5.
I agree that it is apt in the circumstances of this case to make a direction in terms of draft direction 1. Subsection 35(2) of the AAT Act confers the requisite power to give that direction. As to draft direction 5, the practice which I propose to follow is that dictated by s 14ZZE and s 14ZZJ of the TAA, as well as direction 1. That being so, draft direction 5 as cast strikes me as superfluous. The name of the applicant will be kept private in the form of reasons and terms of decision released for general publication. Only the formal terms of decision kept on the Tribunal file and released solely to the parties will include the name of the applicant. The terms of that decision will make provision with respect to a restriction as to its publication.
Draft direction 2 very probably makes explicit what is implicit in any event in s 14ZZE of the TAA. I accept that s 35(3) and s 35(4) empower the Tribunal to give such a direction. I am persuaded that it is desirable to give such a direction, because it may assist the applicant in its endeavours to persuade particular sex workers and others whom it considers may be able to give relevant evidence to co-operate in furnishing a statement and in attending to give evidence. Further, given the disclosure to the Commissioner and his representatives permitted by draft direction 2, I do not see that making it would be procedurally unfair to the Commissioner.
Draft direction 3 must be read in conjunction with draft direction 4. So read, a particular regime is proposed for the reception of evidence from those who are or were sex workers, those who worked as receptionists or cashiers or those who were clients.
Subsection 33A(1) of the AAT Act provides, “The Tribunal for the purposes of a hearing, or the person conducting a directions hearing or alternative dispute resolution process, may allow or require a person to participate by telephone or by means of other electronic communications equipment.” Even if, contrary to my inclination, the references to “for the purposes of a hearing” and “participate” were not to be read as extending to a witness (and it is not necessary finally to decide that, for the reason which follows), s 33 of that Act provides ample power to permit the giving of evidence by telephone. In conjunction with s 35, s 33 of the AAT Act gives the Tribunal power to make draft directions 3 and 4. The existence of the power is one thing, whether in the circumstances it ought to be exercised as sought is another.
It is by no means uncommon for the Tribunal to receive evidence by telephone. And that is not just in respect of expert witnesses, especially medical practitioners, where reasons of convenience, courtesy and opportunity cost can often make that mode of giving evidence preferable. Such a mode of giving evidence can sometimes also be the most feasible in relation to the evidence of witnesses who live abroad or in places remote from the place of hearing. These categories are by no means exhaustive and in law and in practice this mode of reception can extend to the evidence of any witness.
It is always a necessary consequence of the reception of evidence by telephone that the visual element is lost both as a means of inter-personal communication and, which is not unrelated, general observation. That impacts not just upon the person who must make an assessment of credibility but also upon those who question the witness and the witness him or herself. Of course, as was submitted on behalf of the applicant, an assessment of credit based on observation alone is fraught with the contingency of elevating manner over substance. Nonetheless, it is a touchstone, one which falls for weighing up in conjunction with others such as consistency with reliable, contemporaneous documentation.
It was common ground that in the present case there may well be questions of credibility to resolve as between those whom the applicant may call and those whom the Commissioner may call. That, in itself, makes me reluctant to give a direction in terms of the telephone evidence content of draft direction 4. Another source of reluctance is that it is difficult though not impossible to examine or cross-examine by reference to documents a witness giving evidence by telephone. It is readily possible to see how it may be necessary to take witnesses giving evidence to certain of the applicant’s documents, if only by way of example.
This reluctance might though have to yield to other considerations if the circumstances reasonably so required.
As cast, draft direction 4 would give complete anonymity to a particular class of witness. That is hardly satisfactory. To conceal their true identity from the Commissioner is to deprive him of a means of investigating the truth or reliability of their evidence. It is no answer to this to have a member of the Australian Government Solicitor’s Office present at a venue from which the evidence is to be given by telephone. All that would do is to offer assurance as to the integrity of the reception of that person’s evidence. As promoted, draft direction 4 is pregnant with procedural unfairness to the Commissioner.
Recognizing this feature in the course of submissions, senior counsel for the applicant accepted that a means of addressing that would be a confidential “dramatis personae” to which particular non-publication restrictions applied by direction. There was also receptiveness to the alternative of a video link to the hearing room from a remote location. This would yield a form of visual communication, albeit one which lacks the immediacy of a presence in person.
A suggested detriment by the applicant even in this mode of giving evidence would be that the person’s face would thereby become known and might be later recalled. Apparently some sex workers support themselves by this work during tertiary study. The prospect that they might, for example, be recognized upon later entry to the legal profession was promoted by the applicant. I do not see this as a reasonable prospect. The contact by anyone permissibly present at a hearing with a particular witness is likely to be fleeting, given that the case has consensually been fixed for hearing over five days. As for my circumstance, true it is that either in the exercise of my primary commission as a Federal Court judge or in the exercise of my other Australian commissions as a Deputy President of this Tribunal or as the Deputy President of the Defence Force Discipline Appeal Tribunal I am entitled to sit anywhere in Australia but I am ordinarily resident in Brisbane, not Sydney. Realistically, the prospect of later identification is so remote as not to offer a reasonable basis for a blanket ruling out of any visual element in the reception of a witness’s evidence. I leave open the possibility of such an application being renewed for cause in relation to a particular individual.
The Tribunal’s hearing room is fully equipped for the reception and recording of evidence given in person. However, it seems inherently likely that it would be possible to secure a remote venue from which a video link to the hearing room could be provided. Further, experience would suggest (especially with both the applicant and the Commissioner being well represented by the legal profession) that it would be possible both to pre-position copies of documents needed for examination or cross-examination and to guarantee the integrity of the reception of evidence by video link from the remote location. Ought this to be directed, given the concerns mentioned? These concerns, notably, do not entail a credible threat to the life or limb of the witness or those present at the Tribunal’s premises if the witness attends there in person. That type of threat can, in itself, sometimes dictate the reception of evidence by video link from a remote location, as well as the use of a pseudonym for a witness.
On reflection, I do not consider that the reception of evidence by video link, much less telephone link, under a pseudonym confidential to the parties from a remote location is warranted. The hearing will be conducted in private with the applicant identified under a pseudonym. Directions 1 and 2 (as proposed) will be in place. In addition, I propose to direct that, after the publication of these reasons, that pseudonym be changed to another communicated by the Registrar to the parties. The present pseudonym will, on the publication of these reasons, be associated with a case entailing the taxation affairs of a brothel in which sex workers and others in the industry may give evidence. To retain it would mean that the date of its final hearing would be published under the current pseudonym for the applicant in the Daily Law List. Changing the pseudonym will negate any prospect that anyone other than the parties, their advisers, the Tribunal staff and recording contractor, my personal staff and me will know when the case is listed for final hearing. Confidentiality restrictions will apply to everyone in this class. The hearing room which will be used for the final hearing is not located in any court complex. Any witness for either party would be just another entrant to an office building. It will doubtless be possible to make available a private waiting room for witnesses pending the reception of their evidence.

I have also considered whether I ought nonetheless direct that a witness in the class mentioned may use a pseudonym in one affidavit containing the main portion of their evidence with their true identity and the pseudonym being stated in a separate affidavit. Given the strict confidentiality directions and privacy of hearing that will be in place, this type of provision strikes me as quite unnecessary. Each witness in the class concerned can be assured that their true identity will not be mentioned in the Tribunal’s final reasons.
For these reasons, the directions will be as follows:
1. Pursuant to s 35(3) of the Administrative Appeals Tribunal Act 1975 (Cth):
a.    the names and addresses of the witnesses of the Applicant and the Respondent are not to be published by the Tribunal when giving its reasons for decision;
b.    where necessary, the names of the witnesses are to be replaced by pseudonyms; and
c.    the Tribunal is to ensure, as far as practicable, that its reasons for decision are framed so as not to reveal the identity of the witnesses.
2.Pursuant to ss 35(3) and 35(4) of the Administrative Appeals Tribunal Act 1975 (Cth), the publication or disclosure of any evidence given before the Tribunal, and any information provided to, or contained in documents lodged with, the Tribunal, is restricted to members and staff of the Tribunal, the parties and their representatives and the staff of the Tribunal’s transcription service.
3.Upon the publication of these reasons, the Registrar is to replace the current pseudonym for the Applicant with a different pseudonym and notify the same to the parties. The proceedings are thereafter to continue under that replacement pseudonym. Further, any published listing is only to use the replacement pseudonym and the Commissioner of Taxation as parties and is not to include the Tribunal file number.
4.Liberty to apply on notice one to the other is reserved to each of the parties in respect of the giving for cause in the circumstances of individual witnesses particular directions under either ss 33, 33A or 35 of the Administrative Appeals Tribunal Act 1975 (Cth).

I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the decision herein of The Hon Justice JA Logan RFD, Deputy President

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Associate
Dated: 12 May 2017

Date of interlocutory hearing: 8 May 2017

Counsel for the Applicant: Neil Williams SC

Solicitors for the Applicant: Balazs Lazanas & Welch LLP

Counsel for the Respondent: Crhis Sievers

Solicitors for the Respondent: Australian Government Solicitor

Date of interlocutory hearing:	8 May 2017
Counsel for the Applicant:	Neil Williams SC
Solicitors for the Applicant:	Balazs Lazanas & Welch LLP
Counsel for the Respondent:	Crhis Sievers
Solicitors for the Respondent:	Australian Government Solicitor