KBHN and Commissioner of Taxation (Practice and procedure)
[2025] ARTA 1875
•29 August 2025
KBHN and Commissioner of Taxation (Practice and procedure) [2025] ARTA 1875 (29 August 2025)
Applicant/s: KBHN
Respondent: Commissioner of Taxation
Tribunal Number: 2017/4047, 2017/4048, 2017/4049, 2017/4050, 2017/4051, 2017/4052
Tribunal:Senior Member J Lye
Place:Brisbane
Date of Decision 29 August 2025
Date of Reasons: 23 September 2025
Decision:The Applicant’s application for disqualification of the Member constituted to hear the application is refused.
.........................[Sgnd].............................
Senior Member J Lye
Catchwords
Practice and Procedure – application for recusal – reasonable apprehension of bias
Legislation
Taxation Administration Act 1953 (Cth) – s 14ZZK
Cases
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27
Builders’ Registration Board of Queensland and Rauber (1983) 5 ALN No 198 (1983) 47 ALR 55 (1983); 57 ALJR 376.
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
KBHN and Commissioner of Taxation (practice and procedure) [2025] ARTA 970 (23 June 2025
Statement of Reasons
INTRODUCTION
This statement records the oral reasons I delivered on 29 August 2025 to the parties in response to a recusal application made by the Applicant that same day, being the final day of a 5-day hearing.
The recusal application (the application) was opposed by the Respondent.
Brief details of the substantive tax dispute can be found in my reasons for decision on another interlocutory application in these proceedings (KBHN and Commissioner of Taxation (practice and procedure) [2025] ARTA 970 (23 June 2025)). I will not repeat those details here.
The only adjustments I have made to the ex tempore reasons I have set out below, are footnotes to acknowledge the authorities referred to, sub-headings to assist the reader, pseudonymisation of names, and additions of any missing or mis-recorded words or words in brackets to give necessary context for any reader who did not attend the hearing.
While the matter is not beyond doubt, the Tribunal determined the application on the basis that all grounds advanced in the written application were ultimately advanced.[1]
[1] Transcript 25 August 2025, page 492.
THE ORAL REASONS FOR DECISION ON THE APPLICATION
The application was brought orally and without notice on 29 August 2025. It was supported by:
a. a written outline of submissions from the Applicant;
b. a letter from the Applicant to the Respondent dated 8 July 2025; and
c. oral submissions in reply by the Respondent.
There was no other evidence lodged in support of the application.
The 8 July 2025 letter contained assertions about a number of people, to the effect that owing to my professional history as an Australian Government Solicitor (AGS) lawyer, I could not continue to hear the matter fairly.
During the course of submissions on the application, the Applicant informed the Tribunal that the assertions in the 8 July 2025 letter (about my professional history) were based on ‘results from internet searches’, by ‘talking to taxpayer counsel’ and ‘other searches’.
In addition, other allegations were made and I will work my way through them. However, the Applicant ultimately stressed that the grounds identified in the application should be read as cumulative and not considered individually.
In the course of responsive oral submissions, the Respondent tendered 3 other pieces of correspondence:
a. correspondence from Minter Ellison (the Respondent) to the Applicant dated 9 July 2025;
b. correspondence from the Applicant to the Respondent dated 12 July 2025; and
c. correspondence from Minter Ellison to the Applicant dated 16 July 2025.
I'll return to those shortly.
In the interests of preserving what is left of the hearing time for the proceeding, I formed the view that it is necessary for me to provide a summary of my reasons in refusing the application orally with written reasons to follow at a later time.
The correspondence
Returning to the evidence that was tended in response to the 8 July 2025 correspondence, the Respondent advised the Applicant on 9 July 2025 that any application for recusal would be resisted.
The Applicant, in responding on 12 July 2025, sought further information from the Respondent, which I would add had previously been sought in the 8 July 2025 correspondence. He also made statements which are suggestive of a view that, as at that date, the Applicant thought there may be a basis for an application for recusal and further, he advised the Respondent that should one be made, it would be done expeditiously. In particular, in that letter the Respondent was advised by the Applicant:
Our client remains firmly of the view that there may be a reasonable apprehension of bias sufficient to warrant recusal, but we cannot finalise our position without disclosure from the Commissioner. If an application is made, it will be done so expeditiously.
On 16 July, the Respondent responded and relevantly pointed out to the Applicant:
Our client reiterates his position that any application you currently contemplate making needs to be made without delay and should not be allowed to imperial the upcoming dates.
In making oral submissions to the Tribunal, the Applicant has defended (his) decision not to bring the application until the final morning of the hearing on the basis of certain cumulative events identified late in the day on 28 August 2025.
Prior relevant steps in the proceeding
The reinstatement of the application
To backtrack with some necessary factual history, I was constituted to this matter in December 2024 and presided over a directions hearing shortly thereafter.
I am not aware of the dates on which Counsel for either party were (first) briefed in the proceeding.
In April 2025, guillotine directions were issued. That was a matter that occurred without any application from the Respondent. It was a decision made by the Tribunal based on repeated failure on the Applicant's part to comply with Tribunal directions.
The Applicant subsequently failed to comply with those orders, having negotiated the time frame by which they would operate.
An application for reinstatement was made and it was heard in June 2025. The background to that and my reasons are in my reasons for decision on KBHN.
The application for reinstatement was granted over the opposition of the Respondent and in deciding to reinstate the application, I was required to turn my mind to the merits of the application on the basis of submissions from the Respondent that the application lacked merit.
In stating that I did not agree, I noted that while I was aware of the onus that the Applicant faced in the proceeding, I believed he should be afforded an opportunity to have his case heard and determined and it was on that basis, in addition to some other factors, that I granted the reinstatement of the application.
The interlocutory hearing concerning the requests for summons
On 29 July 2025, an interlocutory hearing was convened to hear late applications brought by the Applicant for leave to issue summonses for records to be produced.
At that hearing and on a negotiated outcome, I granted leave to the Applicant to issue a summons to the Queensland Police Service for production of records.
As matters transpired, the Applicant failed to serve that summons (on the Queensland Police Service) until after the date on which the documents were due to be returned.
On the first day of the hearing, 25 August 2025, I heard an application from the Applicant for leave to reissue that summons. After hearing from the parties, I denied that application on AON risk grounds.[2]
[2] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27.
However, I did make directions to the Respondent to produce documents and an affidavit that responded to issues raised by the Applicant about the Audit Decision[3] to provide a sense of certainty about what the documents were that related to those paragraphs.
[3] Hearing Book Tab 11, Audit Decision, [34]-[38] and Table 5 and Appendix A.
That affidavit was lodged and the documents were produced in accordance with the directions the following day, on 26 August 2025.[4]
[4] Affidavit of Andrew Charles Ramsden, dated 26 August 2025.
The summons
At the (interlocutory) hearing on 29 July 2025, in the course of discussion about the scope of the matters that were relevant and the potential scope of a summons to be issued to the Queensland Police Service, discussion between myself and Mr Henry occurred and both parties have taken me to that this morning.
That discussion forms the basis of another (ground) that has been alleged by the Applicant to the effect that I made a comment suggesting that I thought that the Applicant's case was like an episode of Ripping Yarns.[5]
[5] British television program (1976-1979).
As has been noted in the hearing this morning, the transcript of that hearing reveals that in the context of the negotiation of the scope (of the summonses), the discussion between Mr Henry and myself led to a comment on my part:[6]
[6] Transcript 29 July 2025, page 46.
SENIOR MEMBER: But the whole point of this application, and I am
listening to you, is that you’re saying you don’t have the documents, that’s why I’m testing the waters with you and entertaining the idea that the scope of a summons might be in accordance with paragraph 26. As to the hows, whys and wherefores, and who wronged who - - -
MR HENRY: That’s right, it’s - - -
SENIOR MEMBER: - - - I think I’ve said to you before, I feel sometimes like I’m in an episode of Ripping Yarns. But anyway, at the risk of going back to that. I can see that what you’re saying is that there is a gap, there’s an evidential gap that your client wishes to fill in terms of those
reimbursement documents. You’re also saying that it would always be good and as a matter of policy, speaking generally, I agree with you, it’s always good to have a set of financial statements to look at.
MR HENRY: Of course.
SENIOR MEMBER: We all find them interesting and informative. I can see that those two categories might well be something that we should talk further about. But as to the what’s gone wrong, that’s not a question for this tribunal. This tribunal is looking at the proper application of the tax laws.
MR HENRY: And that’s accepted. What we’re simply saying is that we have to persuade the tribunal, in the face of opposition, from the Commissioner, that there is a reason why we can’t produce these documents and I’m very clearly limiting to those that would be necessary to discharge an evidentiary onus. Obviously, yes, financial statements are ideal, documents about the payments made by the company or to the company, any sort of financial document can be relevant to the making out of an evidentiary onus in a part IVC litigation.
That exchange occurred in the context of a discussion and the Ripping Yarns comment occurred in the context about the scope of the documents that would be sought (by summons), not the merits of the Applicant's case.
Turning to the conduct of the hearing, there have been other allegations that have been brought.
The first is that there have been constant references by the Tribunal to the fact that documents weren't seized (from the Applicant and his associates).
I have considered that complaint.
It is true that I have corrected the submissions from the Applicant to the effect that documents were seized during the QPS raid by the Commissioner of Taxation on the basis that, as the evidence shows and Mr Henry accepts, the Commissioner of Taxation does not have the power to seize documents. The seizure, such as it was, was effected by the Queensland Police Service.
There's also been a complaint that I have described the charges against the Applicant as being held in abeyance rather than being stayed.
There has been discussion between the Tribunal and counsel for the Applicant this morning and I have reflected on that allegation.
My description about the ‘matter being held in abeyance’ was at all times a reference to the Tribunal placing the tax dispute (this proceeding) in abeyance pending the outcome of any prosecution against the Applicant. That process was undertaken on the basis of an application brought by the Applicant and by my review of the directions issued by the Tribunal prior to my being constituted in the matter.
It was not a comment about the prosecution. I can state for the record I have not had any recourse to materials outside what has been produced to the Tribunal about the Applicant or his affairs.
Settlement of objections to evidence
There has also been a complaint that I have acted as an advocate in the proceedings and in particular, there was a complaint about my involvement in a process whereby objections were heard and determined on 28 August 2025 in respect of 2 affidavits lodged by the Applicant (during the hearing) – one dated 25 August 2025 and one dated 26 August 2025.
The Respondent had made extensive objections to the first of those affidavits and had objected to the whole of the second affidavit.
Relevantly, and reflecting from the transcript of (yesterday 28 August 2025), that objection process was heard in an environment where the Tribunal was informed that engagement directly between the parties was, to put matters diplomatically, difficult and in the circumstances where I thought it appropriate to try to work with the parties to negotiate an outcome as best I could on the objections.
Ultimately, all but one objection was resolved by consent on the first affidavit. As to the second affidavit, 2 sections of that affidavit were ruled to be irrelevant to the matters before the Tribunal, but some of the affidavit was admitted into evidence.
The phone incident
The next complaint relates to what has been described as the phone incident on 28 August 2025 and again I've had recourse to the transcript.[7] Again, the context in which that the exchanges that occurred took place is important. The Applicant was giving evidence and was being cross examined. He had been the subject of a number of occasions where he had to leave the room, sometimes for very lengthy periods of time. This was a result of objections to the cross-examination questions.
[7] Transcript 28 August 2025 pages 402,410-411.
I make no comment about the objections or the cross examination but, interspersed with the objection, there were allegations made of potential interference by the advisors for the Applicant with their witness.
In the circumstances, I formed the view that the best way to preserve the proceeding was to have recourse to the step of ensuring that when the witness left the room there could be no suggestion that he had been in contact with the advisors for the Applicant. With hindsight, it was a measure that should have been taken at the beginning of his evidence, but I did not, at that point, foresee what was going to ensue.
THE AUTHORITIES
Turning to the case law, as has been said this morning, the relevant test is that in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (Ebner), where the High Court considered the question of apprehended bias and the majority provided guidance:[8]
[6] Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that, subject to qualifications relating to waiver (which is not presently relevant) or necessity (which may be relevant to the second appeal), a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.
[7] The apprehension of bias principle may be thought to find its justification in the importance of the basic principle, that the tribunal be independent and impartial. So important is the principle that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined. There are, however, some other aspects of the apprehension of bias principle which should be recognised. Deciding whether a judicial officer (or juror) might not bring an impartial mind to the resolution of a question that has not been determined requires no prediction about how the judge or juror will in fact approach the matter. The question is one of possibility (real and not remote), not probability. Similarly, if the matter has already been decided, the test is one which requires no conclusion about what factors actually influenced the outcome. No attempt need be made to inquire into the actual thought processes of the judge or juror.
[8] The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.[8] Ebner pages 344–345 per Gleeson CJ, McHugh, Gummow and Hayne JJ.
As I referred to this morning, what is emphasised in Ebner when looking at a question of whether recusal is appropriate on the basis of an apprehension is the fact that a bare assertion by a party will not be sufficient to satisfy the apprehended bias rule.
And what is required to satisfy the rule is a demonstration of a possibility that as counsel for the Applicant has pointed out, a fair minded lay observer, not a judge or a Tribunal member or a lawyer, might apprehend that I might depart from impartial hearing and determination of these applications.
In practical terms, what is required of me as the decision maker in these proceedings, is not a clean slate or a blank mind, but a sense of confidence that I am open to persuasion and that I remain open to persuasion on the case. So the test is not whether I would decide the case favourably or unfavourably for one party, but the question of whether I am capable of hearing and determining it fairly.
As counsel for the Applicant drew attention to as well, the case law also points out that in extreme circumstances it may be necessary for consideration to be given whether, despite a certain apprehension, it might be necessary for the member hearing the matter to remain hearing in circumstances where any removal of the member would involve positive and substantial injustice to one or other or both parties. And I believe here he referred the Tribunal to the Builders’ Registration Board of Queensland and Rauber[9] in support of that proposition, but contended that the exception should not apply in this instance.
[9] (1983) 5 ALN No 198 (1983) 47 ALR 55 (1983) 57 ALJR 376.
Evaluation
The Respondent is of the view that, should I recuse myself, this hearing would need to be restarted and that it would not be practicable for it to be completed by another member.
First and foremost, returning to the fact that the application has been brought without evidence other than the 8 July 2025 correspondence, it is very difficult for me to substantiate the (Applicant’s) allegation about my prior relationship with the Respondent.
But in the circumstances, I would observe that, as lawyers, we have numerous professional relationships and those professional relationships should not, of themselves, preclude someone (appointed to the Tribunal) from hearing a matter.
The question is whether the issue here goes further than that. The Tribunal has processes for determining whether there is conflict (when assigning matters). In this instance it was determined there was not a conflict of interest as I had had no prior relationship with any issue in this application or in fact the broader law enforcement operation (Operation H).
There is no evidence before the Tribunal this morning other than bare assertions which I am informed have been formed and perhaps may not be entirely accurate on the basis of ‘internet searches’, ‘talks with other people’ and ‘other searches’.
That alone is not sufficient to form the basis of a successful application for recusal, but I note that aspect of the application is brought in conjunction with other (grounds).
I do not believe there is a basis for saying that on the 29 July 2025, my conduct as a Tribunal member was such that it evidenced impartiality of the sort that would prevent there being confidence on the part of a lay observer that a fair hearing would not be granted. The most obvious reason for this was that the Applicant emerged successful from that hearing, as it did from the June 2025 hearing. I say this because, though not all of the summonses were issued, all of them were made on applications (to issue summons) that were out of time and in circumstances where the Tribunal had previously warned extensions (to the Applicant’s evidence) would not be granted. Despite that, a further extension was granted and an opportunity for the Applicant, just as it was when the (application) was reinstated.
As was said at that hearing, this was done in recognition that the Applicant was seeking to have every opportunity to be able to demonstrate as best he could what records he could produce (to support transactions).
As has been acknowledged by the Applicant, there was no certainty about what the result of that summons would be. It could have been good (for KBHN), it could have been bad, it wasn't known.[10]
[10] Transcript 25 August 2025, page 86.
Despite that, the opportunity was afforded. Then, even when the application to reissue (the summons) was refused, the Tribunal still required the Respondent to step in to provide documents in an attempt to ensure fairness.
Having worked through all of the facts of what has happened here (as set out in the Applicant’s written submissions), I am not satisfied on the basis of the test in Ebner that there is evidence from what has been raised that I am not capable of bringing an impartial mind to this matter.
However, in the event that I am wrong, I would turn to the fact that we are on day 5 of a 5-day listed hearing and in circumstances where the Applicant is about to complete his evidence, where there have been numerous interlocutory steps and considerable transcript.
To relegate the parties to a position at this late stage of the hearing where they would have to begin (the hearing) afresh with a new member, in my view would be an unjust result. It would be unjust, not only to the Respondent but also to the Applicant who would effectively be put to the time and cost of an entirely fresh hearing and the circumstance of potentially having to give further evidence where it could be avoided with the benefit of a very short further hearing time.
So, for both of those reasons, the application is refused.
OTHER MATTERS
69.Evidence closed and the substantive hearing concluded on 29 August 2025, and directions were issued by consent for each party to lodge their closing submissions in the substantive proceeding.
70.Subsequently, on 17 September 2025, the Applicant’s representative (the accountant), lodged a 4 page letter with the Tribunal. The 17 September 2025 letter was not copied to the Respondent but it advised, ‘we will provide a copy of this correspondence to the Respondent’.
71.By that letter, the Applicant:
a. requested:
i.information about the Administrative Review Tribunal’s (ART) internal processes for assessing conflicts of interest;
ii.a copy of any account of the past association of Senior Member Lye presented in a manner consistent with the decision in Seeto v Uber Australia Pty Ltd [2025] FCA 1032[11]; and
[11] Per Shariff J, dated 27 August 2025.
iii.clarification about the intended timing for publication of the written decision concerning the refusal of the recusal application;
b. sought to make submissions on:
i.the relevance of Seeto to the recusal application;
ii.the legal test in s 14ZZK of the Taxation Administration Act 1953 (Cth);
iii.the relevance of evidence about the roles and powers of the Tax Officers who assisted with the execution of the warrant on the Applicant and his associates to the substantive proceeding; and
c. alleged that during the hearing of the substantive proceeding, I had expressed:
a preference for the judicial reasoning of certain judges who are perceived to align closely with the Commissioner’s stated interpretation of Australian taxation law and whose have authored decisions are the subject of substantial controversy within the community of legal professionals who act for taxpayers.
71.In light of the Applicant’s request for reasons, the Tribunal wrote to the parties, attaching a copy of the 17 September 2025 letter. By that communication, the Tribunal advised the parties that these reasons would be produced within 7 days and that the Applicant’s request for documents would be referred to the Registrar of the Tribunal.
72.On 19 September 2025, the Respondent wrote to the Tribunal. He objected both to the correspondence having been provided to the Tribunal without the Respondent’s consent, and to its contents.
73.In preparing this statement, I have not had regard to any of the matters raised by the Applicant in the 17 September 2025 letter as they post-date my decision on the application.
Date of hearing: | 29 August 2025 |
Date final submissions received: | 29 August 2025 |
| Counsel for the Applicant Solicitors for the Applicant: | Michael Henry Nil |
| Counsel for the Respondent Solicitors for the Respondent: | Vince Brennan Minter Ellison |
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