Lombardo, M. v Commissioner of Taxation

[1989] FCA 126

NOT FOR GENERAL DISTRIBUTIOX

JUDGMENT No. /ab .... g.? .....

IN THE FEDERAL COURT	)
OF AUSTRALIA	)
WESTERN AUSTRALIA	)
DISTRICT REGISTRY	)
GENERAL DIVISION	) NO. WAG 2129, 2130 and 2131 Of 1987
B E T W E E N :	MICHELE LOMBARDO

Appllcant

and

THE COMMISSIONER OF TAXATION

Respondent

No. WAG 21312 and 2133 of 1987

B E T W E E N :  LOMBARDO MARINE PTY LTD

Applicant

and

THE COMHISSIONER OF TAXATION

Respondent

MINUTE OF ORDER

JUDGE IilAKING ORDER: FRENCH J.

DATE OF ORDER:	10 IrlARCH 1989
WHERE MADE:	Perth

2133 and in relatlon to interrogatories 2 and 3 in 2132 of

the draft interrogatories filed on 3 March

THE COURT ORDERS THAT:

1.    That there will be leave to the applicants to interrogate in relation to interrogatorles 4 and 5 In 2129, 2130, 2131 and

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2 .    That the respondent do file and deliver in each case answers to these interrogatories on or before 17 March.

3 .    That the parties do give further discovery of documents relating to the issues raised by the amendments to the statement of grounds of appeal on or before 17 March.

4 .    Costs in the cause.

Note:  Settlement and entry of orders is dealt

with in Order 36 of the Federal Court Rules.

. 1.

NOT FOR GENEXAL DISTRIBUTIO:~

IN THE FEDERAL COURT	)
OF AUSTRALIA	)
WESTERN AUSTRALIA	)
DISTRICT REGISTRY	)
GENERAL DIVISION	) No. WAG 2129, 2130 and 2131 Of 1987
B E T W E E N :	MICHELE LOMBARDO

Applicant

and

THE COMMISSIONER OF TAXATION

Respondent

No. WAG 2132 and 2133 of 1987

B E T W E E N :  LOMBARDO MARINE PTY LTD

Applicant

and

THE COMMISSIONER OF TAXATION

Respondent

CORAM: FRENCH J.

- 10 March 1989

EX TEMPORE REASONS FOR JUDGMENT

This is a motion seeking orders for further discovery of

documents and leave to interrogate in pending appeals brought

under Part V of the Income Tax Assessment Act 1936. The hearing	of the appeals has been listed for 4 days commenclng on 28 March.
By their further re-amended statement of grounds of appeal, the applicants are challenging assessments sald to have been served on Centniv Pty Ltd In matters WAG 2129, 2130, and 2131 of 1987 and on Bulan Pty Ltd in matters WAG 2132 and 2133 of 1987 pursuant to the provislons of the Taxation (unpaid Company Tax) Assessment Act
1 9 8 2 ("TUCTA Act") and as putative vendor shareholders exercising
the rights of appeal under Part V of the Income Tax Assessment Act that the company taxpayer would have had the right to exerclse itself In each case.
By a motion filed on 24 February, the applicant in each case sought leave to amend its grounds of appeal and an order was made accordlngly with a direction that the respondent have leave to file and serve an amended response to the statement of grounds of appeal within seven days. I understand that the amended responses have not yet been filed, but wlll be filed shortly. In the meantlme the appllcant in each case seeks orders in the following terms:

1.   The parties do give further discovery of documents relating to the issues ralsed by the amendments to the statement of grounds of appeal and the response within 7 days.

2.    That the applicant have leave to Interrogate in accordance with a Minute of Interrogatories filed and served herewith.

3 .    Service of the interrogatories be dispensed with and the 13lnute do stand as the interrogatories; and

4.   The respondent to answer the interrogatories on or before 17 March 1989 .

So far as the question of dlscovery goes, general discovery had

been ordered previously on these appeals and there was evidently no dispute about the propriety of such an order at that time. It follows, I think, that where an amendment has been allowed such supplementary discovery as may be necessary to deal with the additional issues raised by the amendment should be ordered and I am satisfied that an order in those terms can and should be made.

Most of the debate today, however, has revolved around

the questlon of leave to Interrogate. proposed The

interrogatories address two questions. The first question relates to service of a notice of assessment and copy notices under sub-s.l8(1) of the TUCTA Act and addresses the issue raised by the

applicant that on materials presently available to it, it would appear that only copy notlces of assessment or notices of assessment labelled "copy notice of assessment" were served on the

various vendor shareholders affected by these proceedlngs. The

point made by the applicant is that sub-s.18(1) requires that the
Commlssloner, in order to effect deemed service on the company for
the purpose of the provisions of the Income Tax Assessment Act,
must, if he is to follow the procedure in s.18, serve the notice
of assessment on one of the vendor shareholders and copy notices
on the others. The interrogatory seeks to ellclt lnformation as
to which, if any, of the vendor shareholders the respondent served
the notice of assessment on for the purposes of sub-s.18(1).
There is obviously a question of law involved as to whether the
fact that a notlce 1 s labelled "copy" excludes It from

categorisation as "the notice of assessment" for the purposes of

out and identified as "the primary notice" and the notices as

sub-s.l8(1) and whether some notlce has to be as it were picked

"copies only". It seems to me that the form of interrogatories 1 and 2 in 2129 do involve the respondent, ~f It were required to answer them, in addresslng matters which are essentially matters of argument and perhaps questions of law, and I am not prepared to grant leave to interrogate in those terms.

The general criterion by which one judges whether or not to grant leave to interrogate is whether or not it will expedite the proper conduct of the case and I don't think interrogatorles in those terms will. It may well be, however, that there is a proper case for partlculars to make clear what, if any, contention the respondent raises on that issue.

Proposed interrogatory 3 In 2129 asks whether at the
time of service of copies of the notice, vendors recoupment tax
was payable by vendor shareholders or any of them and if so by

whom such tax was payable. Again, it seems to me, that these

lnterrogatorles necessarlly raise questlons of argument in law and

I am not prepared to grant leave to interrogate in those terms.

The principal interrogatories and those which attracted
the most argument are in 2129, numbers 4 and 5, and they go to the
question whether the respondent personally formed an opinion that

vendors recoupment tax is likely to become payable under

sub-S. 18	(	1) of the TUCTA Act and if the answer to that question 1s
no, then	who formed the	opinlon, what position dld he hold, was he

and by whom was he so authorlsed to form such an opinion. The a delegate, if not, was he authorised, and how was he authorised importance of that question of course arises out of sub-s.18(1),

where a pre-condition to the deemed service, whlch is effected

pursuant to that question, is the formation of an opinion by the

Commlssloner that vendors recoupment tax is likely to become payable by a person or persons in relation to ordinary company tax

OK undistributed profits tax as the case may be, that is payable

or may become payable by the relevant company in relation to the

year of income.

It is not the first time that the Court has been
confronted with appllcations for leave to interrogate or requests
for particulars relating to the formation of that class of oplnlon

under the TUCTA Act and the Court has previously rejected such

applications where there is no basis upon which they rest beyond a desire to find out whether there is a case to be made in relation to that issue. I recently had occasion to say in West Australian Capital Investment Co. Ltd v The Commlssioner of Taxation [l9881 ATC 4,562, in rejectlng an application for leave to administer interrogatories:

"The Court has said it will not lend the facilities

of interrogation and discovery to a mere fishing expedition designed not to make a case but to see whether there is a case to be made - W.A. Pines Pty

-575 (Lockhart J.). The minimum requirement for	Ltd v Bannerman (1980) 30 ALR 559,567 (Brennan J.),
resort to these facilities is that there should be some ground for suspicion of a good case on the matter in respect of which it is desired to administer interrogatories or to obtain discovery - Nestle Australia Llmited v Deputy Federal Commlssioner of Taxation 86 ATC 4,130 at 4,134
(Wilcox J.)." (at p.4,564)

In this case the appllcants seek to demonstrate that

there is some suspicion that they have a case In relatlon to the
assertion contained In the re-amended statement of grounds for
appeal, that the relevant oplnlon was not formed. Part of that is
based upon an affldavlt of Mr Pickering, an articled clerk
employed by the solicitors for the appllcant, who was previously
employed as an officer of the Australian Taxation Office for some

b .

22 years and who deposes as to his experience of usual practices in that offlce and that his inspection of documents provided pursuant to the general discovery did not yield any document

evidencing the forming of an opinion pursuant to s.ub-s.l8(1) of

the TUCTA Act. The point is also made that the assessment for the year in question in 2129, which was relied upon as supporting the issue of the TUCTA assessments was, in fact, an assessment disclosing a credit. There 1 s also, in relation to M r Pickering's affidavit, evidence of a conversation with an officer of the Australian Taxation Office, the manager of the Freedom of Information Section, to the effect that beyond a document of authorisation which was dated 18 Aprll 1984 and therefore post

dating the dates relevant for present purposes, there was no other document evidencing any authorisation by the Deputy Commissioner of Taxation, Perth to an officer of the AT0 under the TUCTA Act in existence which related to the period of the request. That is to say the period from 13 December 1982 and 14 April 1983, which is the day after the date of issue of the last assessments relevant to these appeals.

Mr Pullin, for the Commissioner, rightly says, that exclude the possibility of oral authorisation. The documents these observations are not conclusive of the matter, they do not

themselves, and he pointed to one of them exhlbited to H r Pickering's affidavit, may support an argument that, in fact, the relevant opinion was formed. It 1 s not for me at this stage, of course, to come to any concluded vlew on that questlon. All I have to be satisfied of, is that there is some basis in the

applicant's case and that it is not simply a matter of

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interrogating with a view to seeing whether or not he has a case to make on this question. I am satisfied that although it really doesn't rise above the level of suspicion that there is sufficient basls to allow the applicant to interrogate In terms of questions 4 and 5 as they appear in Appeal No. 2129 of 1987 and I do propose to give leave to interrogate In those terms.

The orders that I propose to make are in the following

terms :

1. That there will be leave to the applicants to

interrogate in relation to interrogatories 4 and 5 in 2129, 2130, 2131 and 2133 and in relation to interrogatories 2 and 3 in 2132 of the draft interrogatories filed on 3 March 1989.

2.   That the respondent do file and deliver in each case answers to those interrogatories on or before 17 March.

3.   That the partles do give further discovery of

documents relating to the Issues raised by the

amendments to the statement of grounds of appeal on

or before 17 March.

4. Costs in the cause.

. 8.

I certify that the preceding

seven ( 7 ) pages are a true copy
of the Ex Tempore Reasons for

Judgment of his Honour Justlce French.

Date :  / o 3 B Y

Counsel for the Applicants: M r T. O'Connor QC
Solicitors for the Applicants: Freehill Hollingdale & Page

Counsel for the Respondent: Mr C. Pullin QC with Mr G. Windsor Solicitors for the Respondent: Australian Government Sollcitor

Date of Hearing: 10 March 1989 Date of Judgment: 10 March 1989