Federal Commissioner of Taxation v Citibank Ltd

No judgment structure available for this case.

Re: COMMISSIONER OF TAXATION; DEPUTY COMMISSIONER OF TAXATION
(MELBOURNE); DOUGLAS FRANKLIN BOOTH; NORMAN ROSENBAUM and DEPUTY
COMMISSIONER OF TAXATION (SYDNEY)
And: CITIBANK LIMITED
No. G1244 of 1988
FED No. 161
Income Tax - Legal Professional Privilege
20 FCR 403

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.(1), Fisher(1) and French(2) JJ.

CATCHWORDS

Income Tax - access to premises and documents under s.263 of Assessment Act - validity of written authorizations - whether one authorization can cover right under several statutes - whether authority must be shown to person in authority before search begins - whether s.264 should be used before s.263 - whether authorization must specify premises and documents to which access sought - whether request for delay to enable legal advice to be sought should have been granted - whether manner in which right was exercised was unreasonable.

Legal Professional Privilege - whether common law principle of privilege overridden by s.263 - whether bank holding documents was denied capacity to make an adequate claim of privilege - whether way in which right of access was exercised was beyond power.

Administrative Decisions (Judicial Review) Act 1977

Income Tax Assessment Act 1936: ss.263 and 264

Judiciary Act 1903: s.39B

Taxation Administration Act 1953: s.8.

HEARING

SYDNEY

#DATE 19:4:1989

Counsel for the Appellants: Mr D.G. Hill Q.C.

Mr A.H. Slater Mr A. Robertson

Solicitors for the Appellant: Australian Government Solicitors

Counsel for the Respondents: Mr D.H. Bloom Q.C.

Mr D.G. Flick Mr B.J. Sullivan

Solicitors for the Respondents: Mallesons Stephen Jacques

ORDER

The declarations 1 to 6 made on 16 September 1988 be set aside.

The appeal is otherwise dismissed.

The appellants pay the costs of the respondent of this appeal.

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

JUDGE1

This is an appeal from certain declarations and orders made by Lockhart J. in favour of the respondent Citibank Limited ("Citibank") on 16 September 1988. In consequence of a "visit" or "raid" by the appellants on its premises in Sydney, Citibank commenced proceedings seeking review under the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") of various decisions of the appellants leading to the visit. The jurisdiction of this Court was invoked under that Act, under s.39B of the Judiciary Act 1903 and under the accrued jurisdiction of the Court.

The visit, as Lockhart J. noted, provoked a strong reaction from Citibank and attracted great public interest. The Commissioner of Taxation ("the Commissioner") relied upon s.263 of the Income Tax Assessment Act 1936 ("the Act") as authority for the entry and access (hereinafter called "a search"), which appears to have been the largest operation of search of private premises under that section. Citibank occupies a number of floors in a building in Margaret Street, Sydney where it carries on an extensive business as a Bank.
The search took place on 15 June 1988 at approximately 11.30 a.m. and was made by 37 officers of the Australian Taxation Office. They were assigned to different parts of Citibank's premises to which they went in six groups each of five persons. The officers were on the premises for a period of approximately four hours during which time they searched among the documents of Citibank. Copies of many documents were made and taken away. Each of the officers was armed with one or other or both of two forms of authority which purported to have been issued in accordance with sub.s.263(2) of the Act. Citibank in its proceedings challenged the validity of these authorities and sought a review of the decisions to issue them, of the decisions to enter the premises in accordance with s.263 and to make copies of books, documents or papers found on the premises. Lockhart J. made orders on 16 September 1988 which, stated generally, declared that the decisions to issue the authorities were bad in law, that the various persons who participated in the visit were not entitled to enter or remain on the premises or to take copies of documents of Citibank and that the authorities with which the officers were provided were not valid authorities. He also declared that the various decisions to enter and to make extracts from or copies of documents were an improper exercise of the powers conferred by s.263. The appellants appealed on a substantial number of grounds seeking that the orders all be set aside. Citibank also filed a notice of contention.
The search arose out of the following circumstances. The appellant Douglas Franklin Booth ("Mr Booth") who was a senior officer of the Australian Taxation Office engaged as a taxation auditor in Melbourne, had since November 1987 been investigating a taxation avoidance scheme described as an offshore redeemable preference share arrangement ("the preference share arrangement"). A number of companies, including some large public companies, were thought to be participating in this scheme. Mr Booth was of opinion that the amount of income tax involved in various arrangements was as high as one hundred million dollars. He believed that there were at the offices of Citibank books and records of the various companies which he believed were participating in the scheme and also documents relating to other similar schemes, the participants of which were not known to him. He was however not investigating Citibank but the activities of its clients who might be involved in preference share arrangements. Many visits had been made by him and other officers to Citibank's premises between December 1987 and June 1988 when discussions were had with various officers of Citibank, including a Mr Wilmot. He was Citibank's public officer and its manager of taxation. Based on a series of incidents over some weeks or months Mr Booth formed the opinion that Mr Wilmot was frustrating access to the records he desired to see. In late May 1988 Mr Booth made preparations for a search of Citibank's premises. These preparations are set out in Lockhart J.'s reasons for judgment and were not in dispute. They need not be repeated, at least at this stage. He gave his officers instructions that they were to look for material relating to the preference share arrangement, and that they were not engaged in a "fishing expedition" but were to use their discretion if they found anything else relevant for the purposes of taxation. In fact the search went far beyond the preference share arrangement and indeed far beyond the purpose therefor stated in a press release issued by the Taxation Department on the day of the search.
On the day prior to the search Mr Booth together with a Ms Rezek and a Ms Lim, two members of his audit team, visited the Citibank premises on three occasions and spoke with Mr Wilmot and Mr Chippendale, senior tax counsel for Citibank. On the next morning they again attended at 9.30 a.m. and spoke with Mr Wilmot. Mr Chippendale was in Canberra. Mr Booth then decided that his team of 37 officers should exercise a right of access under s.263. As previously mentioned, the officers had been organised into six groups of five each, with another group of three officers who had computer expertise. In each group two officers were directed to examine documents and to select those to be copied, one officer was to make the copies, one to carry documents and messages and one to liaise with Citibank staff, provide advice on rights under s.263 and any questions of legal professional privilege which might arise. There was in addition a taxation officer who was also a locksmith but he remained outside the premises.
Mr Booth was familiar with the premises of Citibank and he had selected seven areas to be searched. During the search many documents were inspected and copied and the copies were removed. Some only of the documents related to the preference share arrangement but the majority of those copied and removed related to other taxation matters, including arrangements which appeared to be tax avoidance or tax minimisation arrangements.
Section 263 of the Act is in the following terms:

"263(1) The Commissioner, or any officer authorised by him in that behalf, shall at all times have full and free access to all buildings, places, books, documents and other papers for any of the purposes of this Act, and for that purpose may make extracts from or copies of any such books, documents or papers.

(2) An officer is not entitled to enter or remain on or in any building or place under this section if, on being requested by the occupier of the building or place for proof of authority, the officer does not produce an authority in writing signed by the Commissioner stating that the officer is authorised to exercise powers under this section.

(3) The occupier of a building or place entered or proposed to be entered by the Commissioner, or by an officer, under sub-section (1) shall provide the Commissioner or the officer with all reasonable facilities and assistance for the effective exercise of powers under this section."

Section 263 was amended in 1987. Prior to the amendment it read only in the terms of sub.s(1) and the amendment, effective from 5 June 1987, added sub.ss.(2) and (3). Such amendment was consequential upon the decision of the High Court in O'Reilly v Commissioners of the State Bank of Victoria (No. 1) (1983) 153 CLR 1.
As members of the High Court have on a number of occasions said that s.263 should be construed in the light of s.264, the terms of the latter section are stated. It provides as follows:

"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 authorised 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 under his control relating thereto.

(2) The Commissioner may require this 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) The regulations may prescribe scales of expenses to be allowed to persons required under this section to attend."

Lockhart J. found that certain authorities with which the officers participating in the search were armed were invalid and that the decision to issue them was bad in law. Each of the officers was issued with what was described as a wallet authorisation and all but three had an additional authorisation which was referred to as a letter authorisation. The substance of the wallet authorisation was as follows:

" Australian Taxation Office Authorisation for Access In the exercise of the powers and functions delegated to me by the Commissioner of Taxation in accordance with the provisions of section 8 of the Taxation Administration Act 1953, I hereby authorise (blank space)

an officer of the Australian Taxation Office, whose signature and photograph appear below, to exercise all powers under

Section 263 - Income Tax Assessment Act 1936 Section 127 - Fringe Benefits Tax Assessment Act 1986

Section 12E - Sales Tax Procedure Act 1934 Section 44 - Estate Duty Assessment Act 1914 Section 68 - Payroll Tax (Territories) Assessment Act 1971

Section 4 - Taxation (Unpaid Company Tax) Assessment Act 1982 Section 4 - Trust Recoupment Tax Assessment Act 1985

Section 58 - Bank Account Debits Tax Administration Act 1982 This authorisation expires on 30 June, 1989 Deputy Commissioner of Taxation PHOTO"

The letter authorisation was in the following terms:

"In the exercise of the powers and functions conferred on me in accordance with the provisions of section 8 of the Taxation Administration Act 1953, I hereby authorise

Douglas Franklin BOOTH, an officer of the Australian Taxation Office, to exercise all powers under

Section 263 - Income Tax Assessment Act 1936 Section 127 - Fringe Benefits Tax Assessment Act 1986

Section 12E - Sale Tax Procedure Act 1934 and in accordance with the above Acts, to have full and free access at all times to all buildings, places, books, documents and other papers for any of the purposes of the Acts mentioned, and for that purpose to make extracts from, or copies of, any such books, documents or papers.

This authorisation expires on 30 June 1989. (T.P. Boucher)

COMMISSIONER OF TAXATION"

The three officers who did not hold a letter authorisation each held the following form of authorisation in addition to the wallet authorisation:

"I, Trevor Percy Winston Boucher, Commissioner of Taxation, hereby authorise

(Name)

an officer of the Australian Taxation Office, whose signature appears below, to exercise all powers under:

Section 263 - Income Tax Assessment Act 1936 Section 127 - Fringe Benefits Tax Assessment Act 1986

Section 12E - Sales Tax Procedure Act 1934 Section 44 - Estate Duty Assessment Act 1914 Section 68 - Payroll Tax (Territories) Assessment Act 1971

Section 4 - Taxation (Unpaid Company Tax) Assessment Act 1982 Section 4 - Trust Recoupment Tax Assessment Act 1985

Section 58 - Bank Account Debits Tax Administration Act 1982 This authorisation expires on 30 June 1989. (T.P. Boucher)

COMMISSIONER OF TAXATION

6.4.88

(Signature of officer)"

Lockhart J. was of opinion that a written authority was required to be issued to an officer before he could exercise the power of entry and access conferred by s.263. On this assumption careful consideration was required to be given by the person signing and issuing the authority to the particular circumstances which called for the issue of an authority. Furthermore he was of opinion that the written authorisation issued to an officer must show on its face the premises to be searched and the documents which were to be the subject of the search as well as the particular statute pursuant to which the search is to be made.
On the construction which we place upon s.263 we are unable to agree that these matters, however desirable, are necessarily required by the section to be disclosed on the face of the authority. For reasons which will ultimately appear, we consider that it is unfortunate that such a degree of specificity was not a mandatory obligation. If an authorisation on its face were to comply with Lockhart J.'s requirements an occupier would be made aware of the extent and nature of his obligation to facilitate and assist (s.263(3)). But, even more important the Commissioner and his officers would thereby have, at least in part, complied with the obligation to ensure that an occupier is not denied the opportunity by lack of notice to make a claim for legal professional privilege.
Section 263 is a provision in most general terms whereby the Commissioner gains a right of access for the purposes of the Act. It is trite law that in the words of Mason, Murphy, Brennan and Deane JJ., in O'Reilly's Case at p 48:

"Like all statutory powers, that power must be used bona fide for the purposes for which it was conferred and that involves that its exercise be not excessive in the circumstances of the case."

The High Court has commented on a number of occasions prior to the amendments made to the section in 1987 on the generality of the right or power conferred on the Commissioner by the section.
We regret that we are unable to attach the same significance to the decision to sign an authorisation and the form of it as did Lockhart J. Prior to the amendment the section merely provided that an officer conducting a search be authorised by the Commissioner. There was no express requirement that this authorisation be in writing. Furthermore the Commissioner himself would not require any form of authority and doubtless could orally authorise any officer who accompanied him on a search. The Commissioner is also entitled to delegate his power of entry to any person in accordance with his power of delegation under s.8 of the Taxation Administration Act 1953. A delegate would not require any authorisation from the Commissioner, whether in writing or otherwise to enter. He would merely require a written delegation of, inter alia, the relevant statutory power of the Commissioner. The amending sub-sections would not appear to place any obligation on a delegate of the Commissioner to produce his delegation and in default to leave the premises.
Sub-sections (2) and (3) of s.263 were inserted in the section in 1987 following the decision of the High Court in O'Reilly's Case. The Court there held that s.263 as it then stood did not oblige a person to take positive steps to enable the Commissioner more easily or effectively to enjoy his right of access. The addition of sub.s.(3) did no more than impose such an obligation on the occupier. Sub-section (2) may well have been added in aid of this obligation as a form of protection to the person obliged to render assistance. It provides that, if requested, an officer must produce an authorisation in writing, failing which he is not entitled to enter or remain in the building. The sub-section is silent as to the form or content of the authorisation. The fact that this written authorisation is only required to be produced on request tends to indicate that its existence is not, as a matter of law, a condition precedent to the exercise of the right of access. In these circumstances we do not see that s.263 provides that as a matter of law an authorisation must comply with the requirements specified by Lockhart J. It follows that the issue of an authorisation in the form of the wallet or letter authorities did not vitiate the exercise of the power of access. Nor can it be said that the decision to issue authorisations in this form were bad in law or that they were not valid authorisations for the purposes of s.263. We would uphold the submissions of the appellants on this aspect of the appeal.

The topic of legal professional privilege is a different matter. We agree with the conclusion of Lockhart J. that the decision of Mr Booth to conduct the search in the manner in which it was conducted and the actual conduct of the search effectively denied to Citibank the right of asserting legal professional privilege. To be more specific, Citibank in our opinion was denied the opportunity to make adequate claims for privilege in relation to the documents of its clients which were being perused and copied.
In placing emphasis upon the preservation of legal professional privilege it is in this matter important to appreciate that it is not the privilege of Citibank which is to be protected. It is the privilege of its many clients who had deposited documents with the bank and who were not present during the search to assert a claim. However the basis upon which Citibank had an obligation to preserve legal professional privilege probably arises out of the status of documents rather than out of any contractual obligation to its customers. As Lindley M.R. said in Calcraft v. Guest (1898) 1 QB 759 at p 761 the privilege attaches to the document and "one may say, once privileged always privileged". It follows that Citibank held on behalf of its clients documents of value enjoying a special status, namely documents to which legal professional privilege attached. That special value attached for the benefit of the client who, ex hypothesi, had by the documents sought or obtained legal advice. He was the only person who was entitled to the benefit of the privilege and the only person who was entitled by waiver to detract from the special status of the documents. These documents were such that if other persons became aware of their contents in consequence of access having been given to them the clients could have lost the practical benefit of the privilege. Citibank was holding documents on behalf of its clients in the position at least of a gratuituous bailee of the documents. As a gratuituous bailee its obligation existed independently of any specific contract with its clients and arose out of its possession of the documents. It had a duty to take such care of them as a reasonable owner would take of his own property of a similar kind. (Halsbury 4th Edit. Vol. 2 para. 1517). Thus an obligation was imposed on Citibank as the custodian of a document of a special character to take steps to preserve and maintain its status. In the present circumstances it was obliged to make claims in respect of documents where legal professional privilege might reasonably be expected to exist. It must do its best to ensure that a claim for privilege was not lost.
As Mason J. said in Baker v. Campbell (1983) 153 CLR 52 at p 80 -

"According to authority, it seems that the availability of the claim for privilege is lost once the document passes into the possession of another who may then tender it in evidence (Waugh v. British Railways Board (1980) AC 521 at p 536). The same holds true for a copy (see generally Bell v. David Jones Ltd (1948) 49 SR (NSW) 223 at pp 227,228; Kuruma v. The Queen (1955) AC 197 at pp 203,204; Calcraft v. Guest (1898) 1 QB 759). These rules have been criticised and the decisions on which they are based may perhaps require some qualification, particularly in relation to documents obtained by illegal means or by deception."

If a copy of a document to which privilege attached was obtained by virtue of the failure of the custodian to make a claim for privilege, such a copy could not be said to have been obtained "by illegal means or by deception". Furthermore information obtained by a perusal of a document prior to a claim being made, even if the document was not copied, could be used in such a way as to diminish if not destroy the practical benefit of the privilege.

Both Wilson and Deane JJ. in Baker v. Campbell emphasised the public interest which is involved in the maintenance of legal professional privilege. Wilson J. said on p 95:

"The multiplicity and complexity of the demands which the modern state makes upon its citizens underlines the continued relevance of the privilege to the public interest. The adequate protection according to law of the privacy and liberty of the individual is an essential mark of a free society and unless abrogated or abridged by statute the common law privilege attaching to the relationship of solicitor and client is an important element in that protection. It is not only a matter of protection of the client. The freedom to consult one's legal adviser in the knowledge that confidential communications will be safeguarded will often make its own contribution to the general level of respect for and observance of the law within the community - see an article by Charles A. Miller, 'The Challenges to the Attorney - Client Privilege', Virginian Law Review, vol. 49 (1963), p 262."

On p 118 Deane J. said:

"I am also influenced by the fact that I am persuaded that the general and substantive principle underlying legal professional privilege is of fundamental importance to the protection and preservation of the rights, dignity and equality of the ordinary citizen under the law in that it is a precondition of full and unreserved communication with his lawyer".

On p 119 he continued:-

"What is important for present purposes, however, is that the doctrine of legal professional privilege was plainly accepted by the European Court as a general principle which effectively protects privileged documents from production or seizure by administrative compulsion or in the course of an administrative enquiry. In words reminiscent of what had been said by Knight Bruce V.C. in Pearse v. Pearse 1846 1 DeG & M 1212 at pp 28-29, 63 ER 950 at p 957, the members of the European Court explained the rationale of the general principle which they held to be part of the law of all member States: 'That confidentiality serves the requirement, the importance of which is recognised in all of the member states, that any person must be able, without constraint, to consult a lawyer whose profession entails the giving of independent legal advice to all those in need of it.' The general principle represents some protection of the citizen - particularly the weak, the unintelligent and the ill-informed citizen - against the leviathan of the modern state. Without it, there can be no assurance that those in need of independent legal advice to cope with the demands and intricacies of modern law will be able to obtain it without the risk of prejudice and damage by subsequent compulsory disclosure on the demand of any administrative officer with some general statutory authority to obtain information or seize documents."

Deane J'.s reference to the "demands and intricacies of modern law" is particularly applicable to the complexities of the Income Tax Assessment Act.
Lockhart J. held correctly in our opinion, that the doctrine of legal professional privilege applied to restrict the powers of the Commissioner under s.263. He went on to say that in his view Mr Booth, whose decision it was to make a search and who had the conduct thereof, paid only lip service to that doctrine. We think with respect, that that comment underestimates the attention which Mr Booth gave, particularly in providing that one member of each team, was given the task of advising on such matters. But in making that decision Mr Booth appears to have completely overlooked the necessity to ensure that in a search so extensive Citibank had the opportunity adequately to protect its clients' documents and to make claims on their behalf. Mr Booth failed to give adequate or any consideration to this aspect and his manner of conducting the search denied Citibank the opportunity adequately to protect the interests of its clients. He concentrated his attention on the determination of the question whether a claim for privilege could properly be made, appointing to each team an officer whom he considered to be qualified to advise on this question. Attention was even given to the qualifications of certain of Citibank's officers and in particular whether those who were legally qualified held practising certificates. As neither Mr Chippendale nor his predecessor Mr Crameri held these certificates, a Tax Department officer, Mr Dinsdale, was of opinion that he would decide whether documents were subject to legal professional privilege.
Counsel for the applicants argued that by its terminology s.263 abrogated the common law principle of legal professional privilege. He was of course bound by the decision of the majority in Baker v. Campbell to concede that if the principle was not abrogated it applied to a s.263 search even though it was not a judicial or a quasi-judicial proceeding. In Baker v. Campbell it was held that the privilege was not ousted by the terms of s.10 of the Crimes Act. The first question in this matter therefore is whether the common law principle remained notwithstanding the amplitude of the powers granted by s.263 to the Commissioner. Deane J. dealt with the interpretation of s.10 of the Crimes Act in Baker v. Campbell on pp 116-117. He said:

"It is a settled rule of construction that general provisions of a statute should only be read as abrogating common law principles or rights to the extent made necessary by the express words or necessary intendment ... Both logic and authority support the present day acceptance of the preservation of that confidentiality as a fundamental and general principle of the common law. It is to be presumed that if the Parliament intended to authorise the impairment or destruction of the confidentiality by administrative action it would frame the relevant statutory mandate in express and unambiguous terms."

He later dealt with the particular provisions of s.10 in a manner equally applicable to s.263 when he said on pp 117-118:

"As can be seen, s.10 contains no express reference to communication between a person and his legal advisers. It neither expressly includes them in, nor expressly excludes them from, the things to which it refers. There is nothing in either s.10 or in any other provisions of the Act which indicates either that the Parliament directed its attention to the particular matter of modifying or destroying the confidentiality of relevant communications between a person and his legal advisers or that there existed a legislative intention to modify the common law principle that the confidentiality of such communications should be preserved. In accordance with the ordinary principles of construction, the section should be construed as not including, in the things which it authorises to be inspected or seized, documents whose confidentiality would be protected in the Courts of the land by the doctrine of legal professional privilege ... The consequence of that construction of the section is that the search warrant in the present case should be read as not referring to documents to which legal professional privilege attaches."

In our opinion like reasoning applied to s.263 leads to the conclusion that there is a restriction on the operation of s.263. The power of the Commissioner to search and make copies of documents should be read as not referring to documents to which legal professional privilege attaches. This conclusion follows as a matter of course from Deane J.'s reasoning particularly as s.263, as the High Court has indicated on a number of occasions, is in the most general of terms. Those general terms are not to be construed as granting an unrestricted power of search and entry but are subject to the right to claim legal professional privilege in respect of the documents to which the Commissioner seeks access. It is in our opinion nothing to the point that material obtained under s.263 is subject to the secrecy provisions of s.16 of the Act.
Counsel for the appellants contended that if s.263 was, contrary to his submissions, subject to the doctrine of privilege his clients complied with the requirements of the doctrine. Mr Booth was, he said punctilious to ensure that all of his team were aware of the possibility of claims for privilege and of the response which should be made. He had arranged that each team should have one member with experience in dealing with questions of privilege and who would advise, if a claim for privilege was made, whether it was possibly justifiable. Only if the claim was clearly made out would the document be excluded from access.
It was in this regard in our opinion that Mr Booth fell into error. It was not sufficient for him to give consideration only to the question whether a claim made for privilege was justified. He was obliged to ensure that Citibank and in particular its staff had in the circumstances an adequate opportunity to make claims of privilege.
In our opinion a search of the nature and extent of the present one imposed insuperable difficulties on Citibank and made it impossible for it and its employees to make adequate claims for the protection of its clients' privilege. Mr Booth should have been aware and taken account of the confusion which his contemplated search would obviously create amongst Citibank's employees. Citibank was under an obligation to protect the interests of its clients to make claims and to ensure that by the actions of its employees its clients did not lose the benefit of privilege. Mr Booth should have taken into account, in considering whether the employees of Citibank could make adequate claims, the fact that it was a large concern holding many documents on behalf of its clients. They were in many if not most instances documents the contents of which were probably not known to Citibank. Citibank was expected, whenever access to a document was sought, to have available an employee ready and able to make a claim.
The evidence on this topic as stated in summary form by counsel for the appellants indicated clearly the attitude of the searchers. Only if a Citibank staff member was available to be asked was an enquiry made whether there were any documents in respect of which privilege was claimed. Counsel said that "where no Citibank staff were available to respond to such an enquiry he did not require his team to stand idly by". If the bank's staff were not "interested to put forward a claim" it was treated as not being made.
The circumstances of the search indicate clearly to our mind that Citibank was denied the capacity to make an adequate claim of privilege on behalf of its clients. Doubtless Citibank should be held to have been aware of the possibility of an entry and the fact that it might have to protect the interests of its clients by making claims for privilege. If it had received adequate warning that the Commissioner would be seeking access to the premises and to documents of a particular nature, Citibank could have been prepared to make effective claims. Citibank however had no warning either that the search would extend beyond the preference share arrangement or that it would be carried out simultaneously in six different places in the bank. Moreover there would be two persons seeking access to and arranging for copying of documents in each place. The evidence indicates that in most instances the employees of Citibank had no opportunity to segregate documents or otherwise to protect the interests of their clients.
The evidence makes it clear that the extent and the intensity of the search took Citibank by surprise. In consequence of lack of adequate warning it had not made sufficient preparations to ensure that its staff could protect the privileged documents of its clients. Certainly it had been alerted to the fact that Mr Booth was contemplating exercising the right of entry under s.263 for it had been so advised by letter of 30 May 1988. However that letter expressly stated that the Commissioner's interest was in respect of documents having relevance to the redeemable preference arrangements. No mention was made of a search which would encompass all documents which could have some relevance to tax avoidance or minimisation. This limitation on the area of a contemplated search was reiterated by Mr Booth on a number of occasions between the date of this letter and the day of the search. In fact on two occasions on the day before the search Mr Booth expressly referred to the fact that his interest lay in the preference share arrangement documents.
It is apparent that Citibank was aware of its right and its obligation to claim legal professional privilege and some steps were taken to this end. Mr Wilmot had segregated a number of documents and these were in a marked filing cabinet. Once the claim was made the taxation officers very properly agreed not to examine these documents and they were set aside. However no consideration had been given to a search extending beyond the preference share arrangement documents nor how to ensure that adequate claims were made in respect of these documents. Certainly Citibank was not sufficiently prepared to enable it to have responsible officers who were capable of assessing documents and making claims in the six different areas in which the tax officers were searching its files. In consequence extremely junior members of its staff were confronted by officers of the Tax Department claiming the right to search all documents in the particular offices. An illustration of this, albeit an extreme case, occurred in the office of Mr Chippendale and Mr Wilmot, Citibank's tax counsel, where it was extremely likely that privileged documents would be found. However the only person in attendance, at least initially in this office, was a secretary. She had been employed at that stage only for one day and she used the adjective "hectic" to describe the happenings. She was not prepared to make or capable of making claims of privilege in respect of documents in her or adjoining offices.
As Lockhart J. found, the events of the day were confusing. A number of senior officers of Citibank, Messrs Wilmot, Sime and Thom asked for the search to be suspended whilst legal advice was obtained. Only in the case of Mr Wilmot was the request granted, in consequence of which arrangements were made about the treatment of certain documents for which Citibank was making a claim for legal professional privilege. We agree with Lockhart J.'s finding that it was unreasonable for the taxation officers to refuse the other requests. Likewise the refusal to supply copies of documents which had previously been copied was unreasonable. These requests were both reasonable and wholly justified in the light of the lack of warning given of the nature and extent of the search. The evidence disclosed that a number of documents in respect of which Citibank should have been entitled to claim privilege on behalf of its clients were perused and copied. The significance of this is readily apparent when it is appreciated that, as Lockhart J. found, the documents copied related to matters other than the preference share arrangements. Lockhart J.'s opinion was that it was permissible for documents other than those which fell within the ambit of the specific purpose of the search to be inspected and copied. We would agree with this view but on the assumption that sufficient warning of the search had been given so as to enable adequate claims to be made that certain of the documents were covered by privilege. These documents could then be segregated. Mr Booth gave no consideration to the need for sufficient warning for this to be done. He only gave consideration to the assessment by his officers of the validity of such claims as were made.

Doubtless the practical application of the doctrine of privilege is in extra-judicial circumstances extraordinarily difficult. This matter indicates clearly that it is well nigh impossible for an institution such as Citibank to be in a position to safeguard the interests of its clients unless it is warned as to the nature of the documents to which access is to be sought. Only in the most exceptional circumstances can an entry without adequate warning be justified. Very few employees would unless previously instructed be capable of identifying at a glance the nature of a document and making a claim. But once the contents are seen by an officer of the department, even if not copied, the client could lose the practical benefit of the privilege in subsequent proceedings if no claim was made on his behalf. We refer to the comments of Mason J. in Baker v. Campbell at pp 76-77, Wilson J. at p 95 and Deane J. at p 118 on this topic.
Both Gibbs C.J. and Mason J. discuss in Baker v. Campbell the practical difficulties of establishing a satisfactory procedure in administrative enquiries if privilege prevails. This was one of the grounds upon which each held that there was no room for the extension of the doctrine to cover administrative action. Gibbs C.J. acknowledged the practical difficulties of executing a search warrant in a solicitor's offices. The bank, in that it held documents many of which might be privileged on behalf of clients was in an analogous situation. The Chief Justice said on p 70 of Baker v. Campbell in words which have application to a search such as the present:

"It must be acknowledged, however, that the execution of a search warrant in a solicitor's office does create some practical difficulties and calls for tact and consideration. Any search must be conducted reasonably and, particularly when there is no suggestion that the solicitor himself has been guilty of complicity in any offence the officer executing the warrant should ensure it is executed in a way that will cause the least possible inconvenience and embarrassment."

Later, on p 71 in reference to a decision of the European Court of Justice to which he had earlier referred said:

"However it seems to me to have been critical to the decision finally reached that some procedure should be available for the independent verification of claims to privilege. The European Court of Justice, in moulding the law of the Community, was able to provide such a procedure, under which, in the end, disputes as to the production of documents would be decided by the court itself (1983) QB at pp 951-952. This strengthens my view that s.10 of the Crimes Act, which provides no such procedure, leaves no room for any extension of the doctrine of privilege. Nevertheless, if the opinion which I hold had prevailed, I should have thought it right to suggest that the time is ripe for Parliament to give consideration to such sections as s.10 of the Crimes Act and s.264 of the Income Tax Assessment Act with the purpose of at once extending the doctrine of privilege to documents sought under such provisions and providing a procedure under which an independent authority, whether judicial or administrative, might determine claims that any documents so sought are privileged from production. If, as I now understand, a majority of the Court takes the view that documents which would be privileged cannot properly be made the subject of a search warrant issued under s.10 of the Crimes Act, it is all the more necessary that a means should be made available for the prompt and independent determination of disputes as to whether the privilege exists in the case of particular documents sought to be seized under a warrant."

Mason J. said on p 83-84:

"My attention has been drawn to the decision of the European Court of Justice in A.M. & S. Europe Ltd. v. Commission of the European Communities (1983) QB 878, in which that Court exercised its power to mould procedures for the independent verification of claims to privilege or confidentiality affecting communications relating to legal advice. Section 10 of the Crimes Act makes no provision for such a procedure and this Court has no power to prescribe one."

Subsequently Fox J. in Arno v. Forsyth (1986) 65 ALR 125 at p 129 when dealing with claims for professional privilege in respect of documents in the chambers of a tax consultant said:

"It is not easy to determine what practice should be followed to deal with this dilemma. The whole matter may have to be the subject of legislation. The solution will be found in agreement or by recourse to judicial proceedings. There is an existing requirement that the execution of a warrant be carried out 'reasonably'. This requirement should take full account of the factors concerning the possibility of documents being the subject of legal professional privilege. It is unnecessary for me, in this case, to attempt to prescribe what course is best to be adopted. An important step, as it seems to me, will be for the matter to be dealt with adequately in police regulations or instructions. These will have to make provision for the giving of prior notice (of greater or less extent, depending upon the circumstances) to persons who may have documents (or other 'things') in respect of which it appears that privilege may reasonably be claimed. The result may well be that these are immediately placed in neutral custody, pending a decision, or agreement, respecting their status. In some cases, the police officers may not have any desire to inspect or seize any documents, the subject of the warrant, to which privilege does attach. In the present case, the warrant related to the chambers of a legal practitioner who might reasonably be expected to have many copies of legal opinions in his files. Some of these would not be the subject of the warrant and, assuming a valid warrant, they would have to be segregated. As to others, the police officers, even without an application for an injunction, would plainly be on notice that they may be the subject of privilege. In my view, subject to a matter I will mention, it would have been improper for them to have entered Mr Forsyth's chambers without first consulting with him, or other persons having control of the chambers for the time being."

Both Baker v. Campbell and Arno v. Forsyth arose in relation to a warrant under s.10 of the Crimes Act. It was contended that these decisions are not applicable to an entry under s.263. It is our view that there is greater justification to adopt a like approach in respect of an entry by the Commissioner particularly if the only information available to an occupier is an authorisation in form of the letter or wallet authorisation in this matter. A warrant issued under s.10 is invariably the consequence of evidence placed before a Justice of the Peace who has the opportunity to consider its sufficiency. In the warrant itself reference is made to the nature of the documents, the purpose of the search, the place to be searched and the relevant statutory provisions. That information, for example as appearing on p 127 of Arno v. Forsyth, is in stark contrast to the authorisations in this matter.
It is of course a dilemma, in the words of Fox J. which can be resolved not only by legislation but by agreement. Reference can be made to the code of procedure enacted in respect of Income Tax matters by the Canadian legislature mentioned in Re Borden & Elliott and The Queen 70 DLR (3d) 579 at p 591. Arnup, J.A. there said :

"Secondly, what procedure should be adopted by the solicitors whose premises are being searched, where they regard themselves as under a duty to raise their client's privilege? At the present time their remedies would appear to be limited to bringing a motion to quash the search warrant. If the Crown authorities are not as reasonable and co-operative as they were in this case, the damage may have been done before the legal question can be resolved. In extreme cases there may even be a breach of the peace.

In cases arising under the Income Tax Act, RSC 1952, c.148, as amended by 1970-71-72, c.63, s.232 provides a code of procedure for deciding these difficult questions of solicitor-and-client privilege arising under that Act. The section was enacted only after a protracted series of representations from the bar and others. We were invited in this case to set out our views with respect to the appropriate procedures, for the benefit of the Crown and of the legal profession. We do not think it appropriate for us to do so. The need for considering possible legislation is abundantly apparent from cases such as the present, but the Court's function must be limited to dealing with each individual case as it arises."

Another document "Guidelines on the execution of search warrants on lawyers' premises in circumstances where a claim of legal professional privilege is made" which guidelines are stated as agreed between the Commissioner of the Australian Federal Police and the Law Council is an example of what can be done by agreement. These guidelines were published on 7 November 1986, some nine months after Fox J.'s comments.
Since preparing these reasons, our attention has been drawn to the fact that the Tax Office has issued guidelines to members of its staff who exercise the access powers provided under s.263 and equivalent provisions.
As has been mentioned, Citibank filed a notice of contention. We have not overlooked the matters raised in that notice. Counsel for Citibank addressed generally on these matters in the course of his submissions. We have dealt with the matter in the same way.
In the result, we are of opinion the appeal should be dismissed with costs.

JUDGE2

Citibank Limited is an American owned bank, authorised since 5 December 1985 to carry on banking business in Australia. It is the largest of the foreign banks so authorised and claims, as part of its customer base, 250 major Australian corporations, institutions, and government authorities and 200,000 individual customers. Its business has included some transactions involving investment by clients of the bank in redeemable preference shares in companies incorporated outside Australia. In the first half of 1988 these transactions attracted the attention of officers of the Australian Taxation Office who formed the opinion that they, or like dealings, reflected the operation of a tax avoidance scheme promoted by the Bank.

On their view, based upon audit inquiries and examination of certain documents, the scheme worked in the following way. A client company of Citibank would borrow money ostensibly for working capital then transfer it to a subsidiary. The subsidiary would apply the money or an approximately equivalent amount, to purchase or subscribe for redeemable preference shares in a company incorporated outside Australia (eg the Cook Islands). That offshore company would invest the money or an equivalent amount in an offshore bank eg Citibank NA (Singapore), being part of the Citibank group. On this basis, the parent company claimed a tax deduction in relation to interest on the original borrowing and its subsidiary would receive dividends from the offshore company in an amount closely related to the interest received by the latter on the funds invested with the foreign affiliate of Citibank. Prior to 1986 amendments to s.46 of the Income Tax Assessment Act 1936, the Australian tax payable on the dividends remitted by the offshore company to the subsidiary was fully rebateable.
It was primarily in the investigation of the suspect arrangements that on 15 June 1988, 37 officers of the Australian Taxation Office entered the premises of Citibank in Margaret Street, Sydney and, in what was the most massive operation of its kind undertaken in this country, began to search generally through the Bank's documents and records and to take copies and notes of them. In doing so, they relied upon powers conferred by s.263 of the Income Tax Assessment Act. Citibank, however, contended that their reliance was misplaced, that they lacked proper written authorities, and that the manner in which they conducted their search was unlawful in failing to provide adequate opportunity for the exercise of legal professional privilege. The Bank applied to the Court for relief under the Administrative Decisions (Judicial Review) Act 1977 and s.39B of the Judiciary Act 1903. After an eleven day hearing, Lockhart J. found in its favour. He made declarations that certain actions associated with the search were unauthorised or an improper exercise of power and ordered the return of all copies and notes made from documents inspected.
The Commissioner of Taxation now appeals against his Honour's decisions on various grounds relating to the process by which the exercise of powers under s.263 is authorised, the constraints upon their execution and in particular, the operation of the section in relation to legal, professional privilege.
Trial Judge's Findings
His Honour found that since November 1987, Mr D.F. Booth, a senior officer of the Taxation Office, had been investigating a scheme of the kind outlined in the introduction to these reasons, involving the acquisition of redeemable preference shares from offshore companies and the possible avoidance of up to $100 million in income tax. He believed there were books and records at the offices of Citibank relating to the taxation affairs of participants in that and similar schemes. Between December 1987 and June 1988, he made many visits to the bank and had discussions with its senior officers. He formed the view that his access to the relevant documents was being frustrated and decided that a search should be made of the Citibank premises. He briefed some 36 selected officers on the way in which it should be conducted. They were specifically directed to look for material relating to the preference share arrangement, but to use their discretion if they found anything else on the premises which they thought relevant for the purposes of taxation.
Following further meetings with representatives of Citibank on 14 June and on the morning of 15 June, Booth decided that the group of 36 officers which he had co-ordinated should exercise the right of access under s.263, search the Citibank building for the documents in question and make copies of them.
He entered the premises at 11.30 am with his party and carried out the search now under challenge. Many documents were inspected and copied. Some related to the suspect preference share arrangements, but most concerned other taxation matters, including other arrangements, said by his Honour to have a flavour of tax avoidance or at least of tax minimisation.
Each of the officers carried a written authorisation in a black wallet bearing the words "Australian Taxation Office" and the Australian Coat of Arms. Its text was as follows:

"

Australian Taxation Office Authorisation for Access In the exercise of the powers and functions delegated to me by the Commissioner of Taxation in accordance with the provisions of section 8 of the Taxation Administration Act 1953, I hereby authorise (blank space)

an officer of the Australian Taxation Office, whose signature and photograph appear below, to exercise all powers under

Section 263 - Income Tax Assessment Act 1936 Section 127 - Fringe Benefits Tax Assessment Act 1986

Section 12E - Sales Tax Procedure Act 1934 Section 44 - Estate Duty Assessment Act 1914 Section 68 - Payroll Tax (Territories) Assessment Act 1971

Section 4 - Taxation (Unpaid Company Tax) Assessment Act 1982 Section 4 - Trust Recoupment Tax Assessment Act 1985

Section 58 - Bank Account Debits Tax Administration Act 1982 This authorisation expires on 30 June, 1989 SERIAL NUMBER

Deputy Commissioner of Taxation PHOTO"

In addition, each bore an authorisation in the form of a letter, signed by the Commissioner of Taxation, Mr T.P. Boucher, which was in the following terms in all but three cases:

"In the exercise of the powers and functions conferred on me in accordance with the provisions of section 8 of the Taxation Administration Act 1953, I hereby authorise (name inserted), an officer of the Australian Taxation Office, to exercise all powers under

Section 263 - Income Tax Assessment Act 1936 Section 127 - Fringe Benefits Tax Assessment Act 1986

Section 12E - Sales Tax Procedure Act 1934 and in accordance with the above Acts, to have full and free access at all times to all buildings, places, books, documents and other papers for any of the purposes of the Acts mentioned, and for that purpose to make extracts from, or copies of, any such books, documents or papers. This authorisation expires on 30 June 1989. (T.P. Boucher)

COMMISSIONER OF TAXATION"

Three officers received a different form of letter which simply authorised each of them to exercise powers under s.263 and a number of like provisions of other Acts. There was no reference in these letters to s.8 of the Taxation Administration Act 1953. His Honour found the differences not to be material for the purposes of the proceedings before him.

On the threshold issue whether the written authorisations were valid and the officers authorised to exercise the access and other powers that they did, His Honour held in substance as follows:

(a) That s. 263(2) prohibits officers entering or remaining on the premises if, on being requested by the occupier for proof of authority, they do not produce an authority in writing signed by the Commissioner stating that the officer is authorised to exercise powers under the section.

(b) Section 263, encroaching as it does on the liberty of the subject, should be construed so that the encroachment is no greater than the statute allows.

(c) The Commissioner or his delegate when called upon to authorise the exercise of section 263 powers, must apply his own mind to that question, must consider the relevant circumstances and must decide whether it is appropriate in all the circumstances to authorise the exercise of the power to enter a person's premises and search for and copy documents.

(d) An authorisation under s.263 must identify, on its face and with sufficient particularity, the premises to which access is sought and the documents or class of documents to be searched for and copied.

(e) The authorities relied upon in this case were limited only to the extent of their duration. None had reference to the particular buildings, books, documents or classes of documents to which access was sought whether described specifically or in general terms. All the authorities with which this case is concerned were bad for want of specificity and particularity.

Passing from the deficiencies in the written authorisations, his Honour identified as the "critical decision" that made by Booth to enter the Bank's premises and gain access to its documents. It was accepted that in doing so he acted in the genuine belief, on reasonable grounds, that Citibank was promoting the preference share scheme or like arrangements. In the execution of the search, however, he decided not to forewarn the bank and conducted it with a view to completion in no more than 2 hours. The object of this stratagem, as his Honour found, was to prevent Citibank from obtaining any practical legal benefit from its legitimate right to approach the Courts for an injunction. This purpose, which lay at the heart of the decision to enter the premises, was an irrelevant consideration and was sufficient, in his Honour's view to lead to the decision being set aside.
In the course of the search two senior executives of the Bank, Messrs. Sime and Thom, requested that it be delayed for sufficient time to enable them to obtain legal advice. Given that it was obvious to all officers that Citibank would have documents to which legal professional privilege attached, the refusal to accede to this request was held to be unreasonable. Central to this proposition was his Honour's acceptance of the view that s.263 does not override legal professional privilege.
There was evidence, and his Honour found, that each team of five or six officers involved in the search was to have appointed to it "competent experienced officers" to consider questions of privilege and provision was made for documents to which privilege was claimed to be placed in a sealed envelope until determination of the claim by a Court or third party. His Honour, however, regarded these measures as inadequate:

"For a decision to be made leaving the question of a determination of legal professional privilege to officers who were competent and experienced, but who did not necessarily have any legal qualifications, in circumstances where the visit was made by some 37 officers who were instructed to complete their task within a maximum of two hours, was in fact to pay little more than lip service to the recognition of the possibility of the claim being made."

In the circumstances of the case, he held that the failure to pay proper regard to the question of legal professional privilege vitiated the decision to undertake the search. He held that that decision and the method of search adopted each denied to Citibank the fundamental right of asserting or claiming legal professional privilege recognised by the High Court in Baker v Campbell (1983) 153 CLR 52 and based on considerations of public policy there referred to.

His Honour made declarations to the effect that the decisions to issue the wallet and letter authorities were bad in law, that the officers of the Australian Taxation Office were not authorised to enter or remain on the bank's premises or there take notes or copies of the records, and that the decisions to enter upon the premises and make extracts or copies from documents thereon were improper exercises of the power conferred by s.263 of the Income Tax Assessment Act 1936. He ordered that all copies made and all notes dictated or otherwise made of books, papers, documents and other records at the applicant's premises on 15 June 1988, together with all copies of such copies or notes or recordings thereof be delivered within 48 hours to the applicant or its solicitors and all tape recordings containing such notes be erased. The Commissioner of Taxation was also to pay Citibank's costs of the application.
Grounds of the Appeal and Respondent's Contentions
The grounds of appeal challenge his Honour's view that a written authority is required under s.263 of the Act and that any such authority must show on its face the premises and the documents to be searched (Grounds 1 and 2). Nor, on the Commissioner's contention, is it necessary that he or his delegate, authorising the exercise of power under s.263, should apply their minds to a particular proposed exercise or consider its circumstances, appropriateness, necessity or desirability, the classes of documents to be inspected or the procedures to be adopted (Grounds 3 and 4). His Honour therefore erred, it is said, in holding that the authorities relied upon in this case were bad for want of particularity (Ground 5). And there is no requirement that an officer deciding to conduct a search under s.263 should have regard to its effect on the interests of others or, in the case of a Bank, upon its ability to comply with duties of confidentiality towards its clients (Ground 6). There is said to have been a failure, on the part of the trial judge, to differentiate between the decision to take access under s.263 and the manner in which it was carried out although, in the event, this ground was not argued (Ground 7). Some factual conclusions were attacked, including the findings that Booth feared the likelihood of an injunction issuing to restrain the further conduct of the search if it lasted longer than 2 hours and that this was his reason for not forewarning Citibank of his proposed course. His Honour was wrong, it was said, in concluding that Booth did not entertain a legitimate fear that documents might be moved about or outside the premises of the Bank to frustrate the search, and that officers attending on the search were under instructions to keep it to a maximum of 2 hours (Ground 8). In any event it is contended that he erred in holding that Booth was wrong to take into account the consideration that the search could be so conducted that it would, or might, prevent Citibank from obtaining any practical benefit from its legitimate right to approach the court for injunctive relief (Ground 9). The conclusion that it was unreasonable to refuse the request by Messrs. Sime and Thom that the search be delayed to enable them to obtain further legal advice is also said to be erroneous (Ground 10), as is his Honour's view that s.263 does not override legal professional privilege and that the search should have been conducted so that any claim for legal professional privilege could be invoked. Also attacked is the related finding that failure by Booth to have regard to the question of legal professional privilege vitiated his decision to exercise the power under s.263 (Ground 11).
By their final ground, the appellants attack his Honour's conclusions that Booth failed to pay proper regard to the question of legal professional privilege, did not establish a sufficient mechanism to enable claims of privilege to be made, and that one of his officers, Ms. Rezek, took the view that she was not bound to accord to any person the opportunity of knowing what had been copied or of making a claim for privilege. The appellants also attack his Honour's finding that Citibank was denied a fundamental right of asserting or claiming legal professional privilege (Ground 12).
The respondent filed a notice of contention asserting that his Honour ought to have held the letter authorities to be delegations and not authorities (para.2) and that the wallet authorities were not "signed by the Commissioner" within the meaning of s.263 (para.12). Both sets of authorities, it was said, were bad for their reference to a number of statutes (para.1). Further, his Honour should have found that an officer acting under s.263 was obliged to seek out some person in authority on the premises and allow that person a reasonable opportunity to inspect his written authority (para.6) and in those cases where authorisations had not been produced, the officers failing to produce them were not entitled to remain on the premises (para.7). He should have concluded that the Commissioner acted under Booth's direction in exercising his discretion to issue authorities under s.263 (para. 3) and that Booth should first have resorted to the use of powers under s.264 (para.5). The exercise of the Commissioner's discretion in issuing letter authorities was said to have been affected by a policy of the Australian Taxation Office to target or single out appropriate persons in the community and to couple action against them with publicity (para.4). Findings that the Australian Taxation Officers were entitled to a search for and to inspect documents outside the ambit of the specific purpose of the search were also attacked (paras. 10 and 11). The decisions taken by Booth to enter and remain on the premises and copy documents thereon were wrong in law and his Honour should have so found on a variety of broadly stated grounds taken from s.5 of the Administrative Decisions (Judicial Review) Act 1977 (paras. 13 and 14). Complaint was also made of the admission of evidence on the question whether the documents copied concerned tax avoidance schemes of one kind or another (para.8).
Statutory History and Framework
Section 263 of the Income Tax Assessment Act 1936 derives from the first Commonwealth legislation on the topic of income tax namely the Income Tax Assessment Act 1915. Section 55 of that Act provided that:

"55. The Commissioner, or any officer authorized by him in that behalf, shall at all times have full and free access to all buildings, places, books, documents, and other papers for the purpose of ascertaining the taxable income of any person and for that purpose may make extracts from or copies of any such books, documents, or papers."

That provision was not original, reflecting as it did, the language of sub-s.52(2) of the Land and Income Tax Assessment Act, 1907 (WA) which in turn adopted the text of sub-s.83(2) of the Land and Income Assessment Act, 1900 (NZ). The same form of words was used in the Land and Income Taxation Act 1910 (Tas) s.171(II) and was adopted by New South Wales in s.85 of the Income Tax (Management) Act 1928 (NSW). It also appears in s.44 of the Estate Duty Assessment Act 1914 (Cwth). Like s.263, and its State and trans-Tasman predecessors, s.55 was accompanied by a more coercive partner in s.56, the predecessor of the present s.264. Some of the history of the "full and free access" formula in later statutes was summarised by Murphy J. in Federal Commissioner of Taxation v Australia and New Zealand Banking Group Ltd (1979) 143 CLR 499 at 544-545.

The section was amended in 1918 to insert the words "any of the purposes of this Act" in place of the words "the purpose of ascertaining the taxable income of any person" (No. 18 of 1918 s.36). In the original text the words "that purpose" could be read as a reference to the single purpose of "ascertaining the taxable income of any person". It could not so easily be construed in the amended form having regard to the plurality of purposes for which access could be exercised, namely "any of the purposes of this Act". There was either a grammatical slip in the amendment process which has been perpetuated in successive Acts, or a deliberate legislative intention to refer to the single purpose of "full and free access". The Act of 1915 was repealed by the Income Tax Assessment Act 1922 (No. 37 of 1922) and s.55 replicated as s.96 of the new Act. Section 56 reappeared as s.97. The former section remained unaltered until 1936 when the 1922 Act was repealed and the Income Tax Assessment Act 1936 enacted. That Act took the text of s.96 and reproduced it as s.263. In that form it remained unchanged until 1987 when it was redesignated as sub-s.(1) and new sub-ss.(2) and (3) were added. The amendment, effected by the Taxation Laws Amendment (No. 2) Act 1987, came into operation on 5 June 1987. The section now reads:

"263(1) The Commissioner, or any officer authorized by him in that behalf, shall at all times have full and free access to all buildings, places, books, documents and other papers for any of the purposes of this Act, and for that purpose may make extracts from or copies of any such books, documents or papers.

(2) An officer is not entitled to enter or remain on or in any building or place under this section if, on being requested by the occupier of the building or place for proof of authority, the officer does not produce an authority in writing signed by the Commissioner stating that the officer is authorised to exercise powers under this section.

(3) The occupier of a building or place entered or proposed to be entered by the Commissioner, or by an officer, under subsection (1) shall provide the Commissioner or the officer with all reasonable facilities and assistance for the effective exercise of powers under this section. Penalty for a contravention of this subsection: $1,000"

The companion provision, s.264, is in the following terms:

"264(1) The Commissioner may by notice in writing require any person, whether a taxpayer or not, including any officer employed in or in connexion with any department of a Goverment 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 authorized by him may administer an oath.

(3) The regulations may prescribe scales of expenses to be allowed to persons required under this section to attend."

In relation to the exercise of delegated powers reference should also be made to sub-ss.8(1) and (2) of the Taxation Administration Act 1953 which provide:

"8(1) The Commissioner may, either generally or as otherwise provided by the instrument of delegation, by writing signed by the Commissioner, delegate to a Deputy Commissioner or any other person all or any of the Commissioner's powers or functions under a taxation law or any other law of the Commonwealth or a Territory, other than this power of delegation.

(2) Subject to sub-section (5) a power or function so delegated, when exercised or performed by the delegate, shall, for the purposes of the taxation law or the other law, as the case may be, be deemed to have been exercised or performed by the Commissioner."

Sub-sections (3) to (6) are not relevant for present purposes.

Construction of Section 263 - General Issues

It may be a measure of contemporary legal culture that there is no reported case-law on either ss.263 or 264 prior to 1973. Section 97 of the Income Tax Assessment Act 1922, which became s.264 in the 1936 Act, inspired the enactment in like terms of s.87(1)(b) of the Income Tax Management Act 1928 (NSW). Following the institution of a prosecution (later dropped) of a Sydney solicitor who refused access to privileged documents, some concern was expressed about the interaction of that provision with legal professional privilege in Beale - Professional Privilege and the Income Tax Acts (1933) 7 ALJ 71; see also 7 ALJ 138. And in an early commentary on ss.263 and 264 reference was made to the "very wide and drastic powers" they conferred on the Commissioner, albeit it was not contended that those powers were so wide as to displace legal professional privilege - Ratcliffe and McGrath - The Law of Income Tax (The Commonwealth) (1938) at 923; see also Professional Privilege in Relation to Enquiries by the Commissioner of Taxation (1950) 23 ALJ 640, 644. Judicial constructions since 1973 support that early prognosis. The words "shall have full and free access" have been said to confer a right which is unrestricted except by the requirement that it be exercised in good faith for the purposes of the Act - O'Reilly v The Commissioners of The State Bank of Victoria (1983) 153 CLR 1, 41 and 48. The concept of "full access" prima facie conveys that the availability of entry or examination extends to all parts of the relevant place or building and to the whole of the relevant Bank's documents and other papers. "Free" conveys an absence of physical obstruction - O'Reilly (supra) at 48. While O'Reilly's case must be read subject to the judgments of the majority in Baker v Campbell (supra) on the scope of legal professional privilege, it is clear that the rights conferred by s.263 are wide and not readily amenable to implied restrictions. - see also Southwestern Indemnities Ltd v Bank of New South Wales (1973) 129 CLR 512, 520 (Barwick CJ); Smorgon v Australia and New Zealand Banking Group Ltd (1976) 134 CLR 475, 489 (Stephen J.) Dicta relating to s.264, but applicable to s.263, suggest that its application is not limited by the usual curial constraints against fishing expeditions. That is to say, it is not a condition of the operation of the section that an issue or dispute of fact has arisen between the relevant taxpayer and the Commissioner - Commissioner of Taxation v Australia and New Zealand Banking Group Ltd (supra) at 536 (Mason J.). Nor is the right of access confined to records relating to the income of the person in whose possession they are: ibid 534; Southwestern Indemnities (supra) 519-520 (Barwick CJ); Clyne v Commissioner of Taxation (1985) 8 FCR 130, 133 (Morling J.). And there seems little doubt that it will override contractual duties of confidence of the kind that arise between banker and customer and solicitor and client - Smorgon v Australia and New Zealand Banking Group Ltd (supra) at 488 (Stephen J.); Commissioner of Taxation v Australia and New Zealand Banking Group Ltd (supra), 521 (Gibbs ACJ), 540 (Mason J.), 546 (Murphy J.); Clyne v Commissioner of Taxation (supra) 133. The right is conferred directly on the Commissioner and on such officers as he may authorise. The power or function of authorisation is a power or function to which s.8 of the Taxation Administration Act 1953 applies and may therefore be delegated. While the provisions of that section require a written instrument of delegation, no such requirement is expressly imposed by sub-s.263(1) in relation to the exercise of authorisation.
Sub-section 263(2) however, extinguishes the right of access conferred by sub-s.(1) upon an authorised officer where such officer, on being requested by the occupier of the relevant place or building for proof of authority does not produce "an authority in writing signed by the Commissioner...". Such statutory licence as he had to enter or remain upon the premises would then expire subject, on ordinary principles, to an allowance of reasonable time to leave - Cornish v Stubbs (1870) LR 5 C.p 334; Cowell v Rosehill Racecourse Co. Ltd (1937) 56 CLR 605, 631 (Dixon J); Robson v Hallett (1967) 2 QB 939, 935 (Parker LJ), 954 (Diplock LJ), 955 (Ashworth J). And although a person who enters land by authority of law and abuses that authority may be treated as a trespasser ab initio the doctrine does not apply without an act of positive misfeasance - Six Carpenters' case (1610) 8 Co Rep 146a; Trindade and Caine - The Law of Torts in Australia (1985) pp 93-94. Mere failure to produce a written authority is not an abuse of power and is at most nonfeasance. I would for the preceding reasons respectfully disagree with his Honour's view that sub-s.263(2) prohibits officers from entering or remaining on premises if they do not produce the requisite written authority upon request by the occupier. The failure to produce extinguishes a statutory entitlement and if there be otherwise no leave, licence or authority to enter or remain, the common law and laws relating to criminal trespass will supply their own prohibition.
Whether the Authorisation Required by Section 263(1)
Must be in Writing

His Honour saw an assumption underlying sub-s.263(2) that written authority is required before an officer can exercise the right of access. It is sub-s.263(1) which confers the substantive right and sub-s.263(2) which provides for its defeasance. Sub-section (1) as s.263 before the introduction of sub-ss.(2) and (3) in 1986 required no such assumption to be made. As Gibbs ACJ observed of s.263 as it stood in 1979:

"...it is not expressed to be subject to the production of any warrant or authority, or to be limited in any other way." - Federal Commissioner of Taxation v Australia and New Zealand Banking Group Ltd (supra) at 525.

There is ample authority for the proposition that one statute may be used as an aid to the construction of another prior enactment whose terms are ambiguous - Attorney-General v Clarkson (1900) 1 QB 156, 164 (Lindley MR), 165 (Sir F.H. Jeune); Cape Brandy Syndicate v Inland Revenue Commissioners (1921) 2 KB 403, 414 (Lord Sterndale); Ormond Investment Co. Ltd v Betts (1928) AC 143, 164 (Lord Atkinson); Grain Elevators Board (Victoria) v Dunmunkle Corporation (1946) 73 CLR 70, 86 (Dixon J); In Re MacManaway (1951) AC 161, 177 (PC); Kirkness (Inspector of Taxes) v John Hudson & Co. Ltd (1955) AC 696, 710-712 (Viscount Simonds), 725 (Lord Morton of Henryton), 735 (Lord Reid) 738 (Lord Tucker); Thompson v J.T.Fossey Pty Ltd (No. 1) (1978) 20 ALR 496, 501 (Franki J.). In the Kirkness case (supra), Lord Reid at 735, referring to Ormond Investment Co. (supra), excepted from this limiting principle the case where the later enactment amends the former. There he said, "the later Act operates directly by its own force". But given that the 1987 amendments to s.263 did not purport to operate other than by way of addition to the existing provision, I would respectfully agree with the observation of Franki J. in Thompson v Fossey (No. 1) (supra) at 501:

"I cannot see why the prerequisite of an ambiguity should not apply when it is sought to use an amendment to an Act to assist in the interpretation of the original Act. I think a Court should be careful not to assume that the legislature has not amended the Act for the purpose of clarifying it in the eyes of the layman."

In my opinion there is no ambiguity in the terms of s.263(1) which would be resolved by reference to s.263(2). The description in sub-s.(1) of the repositories of the right of access as "authorized by him in that behalf" refers to the act or process of authorisation and not to the production or existence of a document by which it may be proven. The right of access is not, in my opinion, conditioned upon the existence of a written authority. I accept in so saying, that it is no doubt a practical consequence of the operation of sub-s.(2) that written authorities will be carried whenever it is intended to exercise access under s.263.

Whether Authorisation Must be Specific

The question next arises whether the authorisation under s.263(1) must be directed to a specific proposal to enter some building or place and examine documents therein. The statutory language does not support such a limited construction. The right of access is general so far as it relates to the Commissioner. The same words describe the scope of the right enjoyed by "any officer authorized by him in that behalf". Accepting that the Commissioner or his delegate may condition or limit the authority conferred on particular officers, there is nothing in the section which requires them to do so. And if there be ambiguity on this matter in sub-s.(1), sub-s.263(2) weighs against the proponents of specific authorisation. For it refers to production of a written authority stating that the relevant officer "is authorized to exercise powers under this section". That verbiage contemplates the existence of an authority in general terms. Words similar to those used in s.263(1) appear in sub-s.264(1)(b) empowering the Commissioner to, by notice in writing, require any person to attend and give evidence before him or before any officer "authorized by him in that behalf". It was contended in O'Reilly's case (supra) that such authority must relate to the particular matter on which the notice was given. Although it was unnecessary to decide the point neither Gibbs CJ (at 14) nor Mason J. (at 21) were inclined to agree with the submission.
In the present case his Honour's confinement of the scope of the authority for which sub-s.263(1) provides turned upon the general proposition that the section is an encroachment on liberty and so should be read narrowly. He relied upon the principle that a statute should not be construed as taking away long standing legal rights unless by clear words to that effect.
That principle is itself a particular case of the rule that "statutes are not presumed to make any alteration in the common law further or otherwise than the act does expressly declare" - Arthur v Bokenham (1708) 11 Mod. 148, 150. In the 12th Edition of Maxwell on The Interpretation of Statutes at p 116 it is expressed thus:

"It is thought to be in the highest degree improbable that Parliament would depart from the general system of law without expressing its intention with irresistible clearness, and to give any such effect to general words merely because this would be their widest, usual, natural or literal meaning would be to place on them a construction other than that which Parliament must be supposed to have intended."

The particular application of the rule to the statutory alteration of existing common law rights is equally emphatic. Such rights, it has been said, ought not to be invaded except by "plain words" - re Cuno (1889) 43 ChD 12, 17 (Bowen LJ) or necessary implication - Melbourne Corporation v Barry (1922) 31 CLR 174, 206 (Higgins J.) and see generally Craies on Statute Law 7th Edition, 118 et. ff,; Pearce - Statutory Interpretation in Australia 2nd Edition para.116. These propositions are said to have had their origins in the early struggles of the common law to establish itself against the claims of the King and the efforts of the judges to shield it from statutory encroachment - Bennion - Statutory Interpretation (1984) p 319. And in that context it is not surprising to read in Coke 2 Inst. 200 "that a statute made in the affirmative without any negative expressed or implied, doth not take away the common law" nor to find in Blackstone reference to the "inconveniences" which have often followed "whenever a standing rule of law, of which the reason perhaps could not be remembered or discerned, hath been wantonly broken upon by statute or new resolutions" - Commentaries on the Laws of England (1765) Vol.1 p 70.

Modern responses to this approach to statutory construction have not been entirely uncritical:

"It is certainly clear that there has long been a canon of construction requiring within vague limits, that statutes "in derogation of" the common law shall be strictly construed. However that be and however harmless such a canon might have been in former times when legislation was but a rare footnote to the law developed by the Courts, the effects today when legislation is a major (perhaps the major) source of law must obviously be serious." - Julius Stone - The Province and Function of Law (1946) p 198

In Maunsell v Olins (1975) AC 373 at 394, Lord Simon of Glaisdale (with whom Lord Diplock agreed) referred to the presumption in statutory construction against a change in the common law and, noting its sometimes wide and crude statement as a presumption against change in pre-existing law generally, observed that:

"We are inclined to think that it may have evolved through a distillation of forensic experience of the way Parliament proceeded at a time when conservatism alternated with a radicalism which had a strong ideological attachment to the common law. However valid this particular aspect of the forensic experience may have been in the past, its force may be questioned in these days of statutory activism."

Conceding that it was reasonable to look for plain words where the abrogation of a long standing rule of law was in question, his Lordship went on to say:

"Whatever subsisting scope any canon of construction may have, whereby there is a presumption against change of the common law, it is clearly a secondary canon...of assistance to resolve any doubt which remains after the application of "the first and most elementary rule of construction," that statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances."

Australia is a liberal democracy with a broad tradition of at least nominal resistance to encroachment upon established rights and freedoms. That view is reinforced by its adherence to the International Covenant on Civil and Political Rights, which relevantly provides in Article 17, inter alia, that:

"No-one shall be subject to arbitrary or unlawful interference with his privacy, family, home or correspondence..."

The nature of this society and its tradition of respect for individual freedoms, will support an approach to construction which requires close scrutiny and a strict reading of statutes which would otherwise remove or encroach upon those freedoms. But where the natural meaning of the words is clear, the will of the Parliament must be respected.

Section 263 will plainly in some, if not all cases, operate to interfere with privacy and in particular that kind of privacy recognised by the rights to quiet possession of land and personal property which are protected by the common law relating to trespass.
In my respectful opinion, the approach taken by his Honour did not involve the choice of a narrow over a broad construction although it might have been seen in practical effect as the choice of a lesser over a greater encroachment on private rights. For there is nothing to suggest that a specific authorisation may not reach as far into the territory of private rights as the process of general authorisation. A judicial requirement for such authorisation involves the imposition of a procedural safeguard on the exercise of the Commissioner's power. The concept of curially imposed procedural safeguards is not entirely novel. The rules of natural justice are an obvious example. In my opinion, however, it is not open to the Court in the present case to create a new category of rules which would impose a procedural fetter on the exercise of this "wide" statutory power in order to ensure that its repository gives due regard to common law rights.
It follows from the above that the written authority to be produced on demand pursuant to sub-s.263(2) will constitute proof of a general authorisation if it contains a statement by the Commissioner that the officer is so authorised. There can be no superadded requirement that it show on its face the premises to be searched and the books, documents and other papers which are the subject of the search. In this regard, the approach which would generally require these details to be shown reflects the imposition of ancillary procedural rules that cannot be found in the language of the section.
The respondent asserts in its notice of contention, that the wallet and letter authorisations were bad at law by reason of their reference to a number of statutes and because they were not authorisations but instruments of delegation under s.8 of the Taxation Administration Act. In the context of sub-s.263(2) the only relevant question is whether each of the authorisations constituted "an authority in writing signed by the Commissioner stating that the officer is authorised to exercise powers under this section." As to the first point, the fact that the authorisations refer to the exercise of powers under other Acts does not alter their character for the purposes of sub-s.263(2).
As to the second point, it is clear that the letter authorities carried by all but three of the officers purported to confer authority on them pursuant to s.8 of the Taxation Administration Act 1953 to exercise "all powers under section 263". Section 8, however, contemplates a function of delegation logically distinct from authorisation. The power to authorise officers to exercise access under s.263 is conferred directly on the Commissioner by the section itself, although it is a power he may delegate to another under s.8. The terms of these authorities were therefore misconceived. Nevertheless, they did each embody a statement signed by the Commissioner that the relevant officer was authorised to exercise powers under s.263. The reference to s.8 in the wallet authorities merely indicated that their signatory, the Deputy Commissioner of Taxation, had acted as a delegate of the Commissioner in authorising the named officers to "exercise all powers under section 263". The letter authorisations were said to have been prepared because of problems perceived to flow from the judgment of the Full Court in Sharp v Deputy Commissioner of Taxation (1988) 18 FCR 475. The Court in that case held, on an appeal from the refusal of interlocutory relief, that there was a serious question to be tried on the issue whether an authority signed by a Deputy Commissioner, acting under delegation from the Commissioner, was a sufficient signature for the purposes of sub-s.263(2). It is difficult, with respect, to see why sub-s.263(2) should not be read in the light of s.8 of the Taxation Administration Act 1953 and the signing there contemplated regarded as a function which may be delegated like any other. Sub-section (2) was enacted in a statutory context which included s.8 and if that means that the range of persons who may, under delegation, sign such authorities is undesirably wide, that seems to me to be a matter for legislative correction. As to the other grounds of contention relating to the authorities, there is no requirement under sub-s.263(2) that an officer entering premises must seek out some person in authority and produce his authorisation. And given the general character of the authorisations, it is difficult to accept that they were issued in pursuance of a "tall poppy" campaign. Further, the language of the statute strongly supports the view that officers entering premises pursuant to sub-s.263(1) may exercise the right of access "for any of the purposes" of the Act. They are not limited to any specific purpose for which the access was initially intended.
Legal Professional Privilege
- A Fetter on Section 263
Both the generality of the language of s.263 and its evident purpose were invoked in support of the proposition that it authorises access to documents which would otherwise be the subject of legal professional privilege. The precise ways in which claims of privilege would arise and their merits in relation to documents held by the Bank were not explored on the hearing of the appeal. These proceedings are, of course, concerned with the way in which the exercise of the right of access was approached and conducted, rather than the merits of any claims of privilege that might be made. It certainly seems likely, and there was evidence, that among the papers held by the Bank were advices from its solicitors (affidavit of J.D.P. Williams para. 12). And no doubt there would be advices and other communications between the Bank and its salaried legal officers which would also ordinarily attract the privilege provided that they were communications sent or received by them in their capacities as lawyers - Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No. 2) (1972) 2 QB 102, 131 (Lord Denning MR), 136 (Karminski LJ), 138 (Orr LJ). (The point was conceded in the House of Lords); Re Kearney (1984) 55 ALR 545, 551 (Woodward and Neaves JJ), 557 (Fisher J.). The position with respect to papers relating to the Bank's customers will be more complex. It may depend in a given case on whether the Bank holds them as agent for the customer in relation to communications with the customer's legal advisor or for the purpose of procuring legal advice on his or her behalf. Where the Bank is not its customer's agent, the position is further complicated. If it holds communications received from, or copies of communications sent to, its customers' solicitor for the purpose of legal advice to that customer, the law was that such communications were privileged only if made in contemplation of existing or anticipated litigation - Wheeler v Le Marchant (1881) 17 ChD 675, 681 (Jessel MR), 683 (Brett LJ), 684 (Cotton LJ). Grant v Downs (1976) 135 CLR 674 is authority for the proposition that the purpose of any communication for which legal professional privilege is claimed must relate solely to the obtaining of legal advice. The suggestion that it is also authority for the proposition that the privilege is restricted to communications between solicitor and client was rejected by Lockhart J. in Trade Practices Commission v Sterling (1979) 36 FLR 244, a judgment which helpfully sets out the various classes of document in respect of which privilege may be claimed. That issue does not require further analysis here for these observations are made not to express any view on the merits of possible claims of privilege, but to indicate the difficulty that may attend their resolution.
Returning to the threshold question, whether s.263 overrides legal professional privilege, involves a return to those canons of construction which apply when a statute is said to affect common law rights. Legal professional privilege emerged from the early recognition of the lawyer's duty of confidence to his client, but later came to be based upon broader considerations of public policy - Cross on Evidence 3rd Australian Edition, paras. 13.41-13.42. An early statement of its rationale is found in the judgment of Brougham LC in Greenough v Gaskell (1833) 1 MY and K 98 at 103:

"The foundation of this rule is not difficult to discover. It is not (as has sometimes been said) on account of any particular importance which the law attributes to the business of legal professors, or any particular disposition to afford them protection, though certainly it may not be very easy to discover why a like privilege has been refused to others, and especially to medical advisors. But it is out of regard to the interests of justice, which cannot be upholden , and to the administration of justice, which cannot go on, without the aid of men skilled in jurisprudence, in the practice of the Courts, and in those matters affecting rights and obligations which form the subject of all judicial proceedings. If the privilege did not exist at all, every one would be thrown upon his own legal resources; deprived of all professional assistance, a man would not venture to consult any skilful person, or would only dare to tell his counsellor half his case. If the privilege were confined to communications connected with suits begun, or intended, or expected, or apprehended, no one could safely adopt such precautions as might eventually render any proceeding successful, or all proceedings superfluous."

This traditional rationale appears to have been accepted by the High Court in Grant v Downs (supra), but not without recognition of "powerful considerations which suggest that the privilege should be confined within strict limits." (at 685) (Stephen J., Mason J. and Murphy J.). And it was the potential for a development of the privilege beyond its underlying rationale in cases involving claims by corporations that caused their Honours to confine it "to those documents which are brought into existence for the sole purpose of submission to legal advisors for advice or for use in legal proceedings..." (at 688). Nevertheless, they had accepted at 685 that:

"As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision."

That entrenchment and a judicial acceptance of the fundamental importance of the privilege interacted with the canons of construction to which I have already referred to produce the result that in Baker v Campbell (supra) it was held not to be overridden by the widely expressed provisions of s.10 of the Crimes Act 1914 which authorises the issue of search warrants in relation to offences against Commonwealth and Territory laws. This required an acceptance by the majority in that case, contrary to the view shortly before expressed in O'Reilly, that the privilege was not confined to the use of lawyer/client communications in judicial or quasi judicial proceedings. The importance of the privilege in modern times was expressed thus by Wilson J. at 95:

"The multiplicity and complexity of the demands which the modern state makes upon its citizens underlines the continued relevance of the privilege to the public interest. The adequate protection according to law of the privacy and liberty of the individual is an essential mark of a free society and unless abrogated or abridged by statute the common law privilege attaching to the relationship of solicitor and client is an important element in that protection".

His Honour went on to apply the principle of construction then most recently stated in Sorby v The Commonwealth (1983) 152 CLR 281, 309-310, that a statute will not be construed to take away a common law right unless a legislative intent to do so clearly emerges whether by express words or necessary implication and concluded at 97:

"I do not think there can be any doubt about the matter. The statute does not evince any intention to oust the privilege. "

Deane J. at 116 enunciated the constructional principle in like terms and went on to say of the privilege:

"Both logic and authority support the present-day acceptance of the preservation of that confidentiality as a fundamental and general principle of the common law. It is to be presumed that if the Parliament intended to authorise the impairment or destruction of that confidentiality by administrative action it would frame the relevant statutory mandate in express and unambiguous terms."

And Dawson J. expressing the principle as a presumption in statutory construction said at 123:

"Legal professional privilege, whatever the extent of its application, is clearly a doctrine which falls within the presumption."

In my opinion the decision in Baker v Campbell leaves no room for the proposition that the mere generality of the language of s.263 will displace legal professional privilege.

The rights or powers conferred by s.263 are therefore limited to the extent that they will not authorise access to or copying of books, documents or papers which attract the common law privilege. Where no practical or realistic opportunity is provided for the assertion and testing of claims of legal professional privilege, then the purported exercise of the right of access travels beyond that limit and is beyond power. What arrangements will answer the minimum requirement for a practical and realistic opportunity to assert claims of privilege will depend upon the circumstances of the particular case. There may be situations where the documents to be examined are highly unlikely to contain any privileged items, e.g. the financial records of a service station or other small business. But due consideration must be given to their possible existence in any case where s.263 is invoked and to the fact that, for reasons already outlined, claims of privilege may involve difficult questions of fact or law which are not capable of resolution instanter.
I respectfully agree with the view expressed in the joint judgment and for the reasons there set out that Citibank was denied the capacity to make an adequate claim of privilege on behalf of its clients. As indicated in the judgment some steps have already been taken to develop appropriate guidelines for the exercise of powers under s.263. It is not for the Court to prescribe particular procedures which should be adopted. That is a matter for those who have the responsibility for implementing them.
It is not necessary in the circumstances, to address all the other grounds of appeal raised by the Commissioner. The need for the Commissioner and his officers to take account of legal professional privilege as a limiting factor, however, reflects a broader principle. The right of access may only be exercised for the purposes of the Act. On premises such as those occupied by the Bank, there will be many documents the subject of a contractual duty of confidence between banker and customer, the examination and copying of which would serve no purpose contemplated by the legislation. In my opinion, the Commissioner and his officers in planning an exercise such as that presently in issue, must take into account those limits on their rights to ensure that so far as is practicable they are not exceeded. And to the extent that such planning would seek to deny to the subject of the access a reasonable and legitimate opportunity to approach the Court for relief, it is calculated not to respect those limits and the access is an improper exercise of power. The Commissioner and his officers are armed with powerful investigative instruments in ss.263 and 264. The very width of those powers demands a watchful concern that their limits not be exceeded.
For present purposes, in my opinion, it is sufficient to say that having regard to the appellants' failure to make proper provision for the assertion and testing of claims of legal professional privilege, the way in which the right of access was exercised was beyond power. Subject to appropriate orders relating to the declarations as to the invalidity of the written authorities, the appeal must be dismissed.

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Citations

Commissioner of Taxation & Ors v. Citibank Ltd [1989] FCA 161 (20 FCR 403)

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[1989] FCA 161

19 APRIL 1989