McCarthy v Commissioner of Taxation

In the matter of McCarthy v Commissioner of Taxation, the applicants sought to set aside tax assessments in the Federal Court, under section 39B of the Judiciary Act, while also challenging the validity of search warrants in pending criminal proceedings in the Supreme Court of New South Wales. The applicants, who were defendants in the criminal proceedings, argued that the Federal Court lacked jurisdiction due to the operation of section 39B(1C) of the Judiciary Act. The court was tasked with determining whether the Federal Court had jurisdiction to hear the matter and, if not, whether the entire section 39B proceedings should be transferred to the Supreme Court.

The court considered whether the Federal Court's jurisdiction was affected by the pending criminal proceedings. It examined whether the decision to issue the search warrants under the Customs Act was a “related criminal justice process decision” within the meaning of section 39B(1C) of the Judiciary Act. The court referred to the Full Court's decision in Chief Executive Officer of Customs v Jiang, where it was held that such decisions were indeed part of the criminal justice process. The court also noted that the underlying purpose of the legislation was to prevent unmeritorious delaying tactics in criminal proceedings. The court had to identify the relevant offence and the related criminal justice process decision, which in this case was the decision in connection with the investigation of each defendant or the issue of a search warrant.

The court found that the Federal Court did not lack jurisdiction, and the application to transfer the proceedings to the Supreme Court was refused. The court stood over the orders sought in the interlocutory application and the criminal proceedings generally, reserving costs and allowing liberty to apply on three days' notice. The orders were to be entered in accordance with Rule 39.32 of the Federal Court Rules 2011.