McArdle, J.W. v The Commissioner of Taxation for the Commonwealth of Australia

[1988] FCA 93

Re: JEFFREY RALPH SHARP and GREENWOODS & FREEHILLS PTY LIMITED
And: THE DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA;
ROBERT FITTON; PETER HASSARANI and MALCOLM RILEN
No. G263 of 1988

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett J.(1)

CATCHWORDS

Practice and Procedure - principles upon which leave to appeal may be granted from an interlocutory order.

Federal Court of Australia Act 1976, s.24(1A)

HEARING

SYDNEY

#DATE 11:3:1988

Counsel for the Applicants: Mr. D.E. Horton, QC Mr. D. Ryan Mr. R. Edmonds

Solicitors for the Applicants: Freehill Hollingdale & Page

Counsel for the Respondents: Mr. K. Handley, QC Mr. R.M. Henderson

Solicitors for the Respondents: Australian Government Solicitor

ORDER

The applicants have leave to appeal from the decision of the Honourable Mr. Justice Beaumont delivered 7 March 1988.

Upon the applicants renewing until further order their existing undertakings to the Court it be directed that exhibit A be retained by the Court in a sealed envelope and not be made available for perusal by any person until further order.

Costs of this application be reserved.

NOTE: Settlement and entry of orders is dealt with in Order 36

of the Federal Court Rules.

JUDGE1

This is an application for leave to appeal made under s.24(1A) of the Federal Court of Australia Act 1976. The applicants wish to appeal from a decision of Beaumont J., given on 7 March 1988, by which his Honour refused an application for interim relief in respect of certain documents, referred to as "fax books", copied by an officer of the Commissioner of Taxation in asserted reliance upon s.263 of the Income Tax Assessment Act 1936. Interlocutory relief by way of an order preventing perusal of the copies by officers of the Commissioner had been sought in connection with an application for judicial review of the decision to exercise the power contained in s.263. The interlocutory application was denied on the ground that it had not been shown that there was a serious question to be tried.

1. On the application for leave to appeal, senior counsel for the applicants pointed out that this is a case in which in substance the refusal of interlocutory relief, if not reversed, will deny the applicants the whole benefit of any victory they might achieve at a final hearing.

2. Senior counsel outlined to me a submission which the applicants would desire to put to the Full Court. Reliance is placed on the words in s.263(1) "for any of the purposes of this Act". It is said that it is not a purpose of the Act to give power to the Commissioner to range through the affairs of citizens merely in a speculative hope or expectation that he might find something to lead him to investigate a particular person thereafter. It is argued that, in the circumstances of this case, the power claimed to be exercised by the Commissioner is of that breadth. Senior counsel for the applicants further submits that, while s.263 does not require the Commissioner to nominate the individual whose affairs he is investigating, its use is only justified where he is in fact investigating or initiating the investigation of the affairs of some particular taxpayer or potential taxpayer. It is the contention of the applicants that the evidence before Beaumont J. showed that the real purpose of the Commissioner was to engage in an examination of the fax books for purposes much wider than those which were argued to be the purposes falling within s.263.

3. I was referred to Southwestern Indemnities Limited v. Bank of New South Wales (1973) 129 CLR 512, but it was argued that there an identified taxpayer and its affairs were in question. I was also referred to Kerrison v. Federal Commissioner of Taxation (1986) ATC 4103 and particularly to the comments of Bollen J. at 4112 concerning what was required to enable the investigator to say that he was seeking access under s.263 "for the purposes of this Act".

4. Senior counsel outlined too an argument that a power to look at correspondence and records at large, without relation to any investigation or assessment of any particular taxpayers, would lack sufficient connection with the subject of taxation, and that s.263 should accordingly be construed in a narrower sense.

5. Senior counsel for the Commissioner argued that I should refuse leave because the appeal would be hopeless. He referred to several additional cases concerned with the section: The Commissioner of Taxation of the Commonwealth of Australia v. The Australia and New Zealand Banking Group Limited (1979) 143 CLR 499; O'Reilly v. The Commissioners of the State Bank of Victoria (1983) 153 CLR 1 at 41, 48; and Clyne v. Deputy Commissioner of Taxation (NSW) (1985) 16 ATR 938 at 940, 941.

6. In my opinion, when a single judge is exercising the power conferred by s.24(1A) to grant or withhold leave (from which it has been held there is no further appeal: Reid v. Nairn (1985) 60 ALR 419 at 421, 425-6; General Motors-Holden's Limited v. Noack (Smithers, Lockhart and Neaves JJ., unreported, 7 March 1986)), it is neither necessary nor appropriate that he should examine the merits of the proposed appeal in the way that a Full Court might choose to do. The Full Court of the Supreme Court of Victoria in Niemann v. Electronic Industries Ltd (1978) VR 431 at 441 (per Murphy J., with whose view of the law McInerney J. and Gillard J. agreed, though Gillard J. dissented as to the result) has noted as an important matter that, under a rule referring to a grant of leave by the judge who dealt with the original application, the position may be different from that which obtains in the Full Court, if an application for leave is made to it. When the application is made to another single judge, the test should not, I think, vary from that which the original judge would have applied had it been made to him.

7. So far as the prospects of the proposed appeal are concerned, I take the test to be whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court. Niemann's case is authority for this view. The second major consideration stated in that case is whether substantial injustice would result if leave were refused, supposing the decision to be wrong.

8. The second consideration is of course particularly likely to work in favour of an applicant where the interlocutory decision is in effect final. In Ex parte Bucknell (1936) 56 CLR 221 at 225-6, the joint judgment of Latham C.J., Rich, Dixon, Evatt and McTiernan JJ. stated that such cases raise "little difficulty", there being "a prima facie case for granting leave to appeal," which, at least in some such matters, "would be granted almost as of course." These views were accepted as applicable to the grant of leave to appeal by the Supreme Court of Victoria in Niemann's case (supra, at 440).

9. In my opinion, the sufficiency of the doubt in respect of the decision and the question of substantial injustice should not be isolated in separate compartments. They bear upon each other, so that the degree of doubt which is sufficient in one case may be different from that required in another. Ultimately, a discretion must be exercised on what may be a fine balancing of considerations.

10. A significant factor in this application is the finality in effect of the refusal of interlocutory relief. If the respondents are not restrained from reading the fax books before the hearing of the judicial review application, any success of that application will deliver to the applicants only Dead Sea fruit. In Ex parte Bucknell at 226-7, such a case was described as one where "leave would readily be granted."

11. Senior counsel for the respondents accepted in argument that the formulation of the question as involving whether there is a sufficient doubt takes account of all the elements of the situation, including the finality in effect of the interlocutory decision.

12. Having regard to all the circumstances, I have concluded that the case is one in which it is appropriate to grant leave to appeal, as I do.

13. No separate argument was addressed to me to suggest that, if I came to this conclusion, I should nevertheless decline the applicants' further application for an extension of the measure of relief granted by Beaumont J. for a limited period to enable the application for leave to be made. I think it is proper to accede to that application also, provided the applicants proceed with the application with expedition. The respondents should not be delayed, except as a result of a decision in the application, for any longer than is absolutely necessary. It would be possible for a Full Court to hear the matter on 31 March 1988, and I propose to fix that date for the hearing of the appeal and then extend the relief until further order. I reserve costs.