Melkman v Commissioner of Taxation

[1988] FCA 231

3 U D G ~ ~ ~ T

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IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY	)	No. G.921 of 1988
1
GENERAL DIVISION	)

BETWEEN:

ALLEN ALLEN & HEMSLEY

Applicants

AND:

-

DEPUTY COMMISSIONER OF

TAXATION

First Respondent

- AND :

ROBERT LINDSAY FITTON

Second Respondent

EX-TMPORE REASONS FOR JUDGMENT

BURCEETT J.

In this matter, the applicants seek interlocutory relief

by way of an order restraining the respondents, by their servants

or agents, from seeking access to the 1981 trust account records

of the applicants until further order of the Court. The

of the issues raired in the case appear to bear some similarity
applicants are a well known firm of solicitors,	and it is also

well known that they are	an extremely large firm of	solicitors.
The respondents are the Deputy Commissioner	of Taxation and	a
taxation officer.

The respondents seek access to the trust account records

pursuant to 6.263 of the Income Tax Assessment Act 1936,	and some
to isrues which were	raised in the recent Full Court decision in

Bharp v. Deputy ?.decal	Comnissionor of Taxation (1988) 88	A.T.C.
4259.	A rignificant difference is that the applicants are a	firm

of solicitors, and questions of legal professional privilege

arire. A ratter of rimilarity ir that, in this case also, the

record8 to which accesr is sought are said not	to be clearly
related to tho taxation affairs of identified clients,	and indeed

the applicants say that the particular matter, to check which

they were advired access war required, is a matter they have

checked therrelver, and they have ascertained that there are no

recordr answoring the dercription	put to them	by the first
rerpondent'r officer.	That of course	does not mean in itself

that the Deputy Commirrioner is not entitled to check by his	own
officers the accuracy of	what he has been told.

The decision war made to have access to the solicitors'

trust accounts on or about 27 October last. As a result of the rairing of quertionr of legal professional privilege, and of

other matters, and communications between the parties,

implementation of that decirion has been delayed; but the Deputy

Commissioner has indicated he wishes to have access on Monday,

today being ?riday.

One of the delaying factors was a prompt request, which

war made, for reasons under 6.13 of the Administrative Decisions

(Judicial Review) Act 1977, that was not complied with until 29

April 1988. The applicants say that perusal of the reasons

supplied r h m s that questions of legal professional privilege,

and considorations related to the burdeneomeness for the

applicants of the particular requirements imposed upon them,	were
not mentioned, and the applicants say the inference should	be
d r a m they were not taken into account.	The applicants say that,

on a fair reading of the s.13 statement, only matters favouring

the having of access were taken into account, and no balancing

exercise to enable a discretionary judgment to be made was

entered into at all. The applicants contend that the

requirements of law, despite the extreme width of 6.263, demanded that such a balancing exercise be undertaken, and particularly in a case where, they say, it should inevitably have been realized, if any consideration had been given to the matter, that what was

sought would be extremely burdensome.

The precise matters relied on are set out in the

Application as follows:

"1. The making of the decisions was in breach

of the rules of natural justice.

PARTICULARS

(i) The Respondents, t in

circumstances, owed a duty to the

Applicants to allow them an

opportunity of being heard;

(ii)    The failure by the Respondents to

identify those taxpayers whose

affairs were being investigated

denied the Applicants the said

opportunity.

2. The making of the decisions was not

authorised by s.263 of the Income Tax

Assessment Act (Cth), ('the Act').

PARTICULARS

(i)     The said s.263 does not authorise

access to books, documents or

other papers beyond those required
for the purposes of the Act and
such further access is in fact
rought by the said decisions;

The raid 11.263 does not authorise

accear to books, documents or other paperr beyond those required for the purpores of administering the Act in rerpect to identified

or identifiable taxpayers;

The raid r.263 does not authorise accerr to books, documents or other paperr except for purposes

which are disclosed the to

Applicantr.

3. The making of the decisions was an

improper exercirc of power conferred	by
the raid s.263	by reason of the failure

account	into	take	relevant	to
conriderationr.

PARTICULARS

The fact that accers was sought to information beyond that which was

required by the Rerpondents	for
the purpoaes of the Act;

The fact that access was sought to information beyond that which was required by the Rerpondents for

the purpose8 of the Act, such

information being communicated in

confidence to the Applicants;

The fact that accers was sought to

information which is in fact

confidential;

The fact that invoking a right of

accear would expose the Applicants

to excersive and unreasonable

burdenr ;

The fact that such information as war rought may be or is in fact in whole or in part the subject of a

claim for legal professional

privilege;
The fact that such information as

war rought could have been or is

in fact available from other

rourcer.

4. The making of the decirionr was an

improper exercire of power conferred by the said r.263 by rearon of the exercise of power being so unreasonable that no

rearonable person could have so exercised

that power.

PARTICULARS

(i) Applicants The repeat those

particulars set forth	in
paragraphr 1, 2, 3 and 5 hereof.

(ii)    The failure by the Rerpondents to

pursue other means open to it to

secure that information which was in fact sought from the Applicant..

5. There war no evidence or other material

to jurtify the making	of the decisions.
The applicantr rely upon the facta	set

out in the Applicantr' letter of 11

November, 1987 to the Deputy Commissioner of Taxation.

6.   The making of the decision was otherwise contrary to law.

PARTICULARS

The Applicant. repeat those particulars

rot forth in paragraph6 1 to	5	hereof
(inclusive)."

The applicant. claim that the balance of convenience

clearly supports them, rince the whole point of the case would be

lost to them if no rertraint were imposed, and no urgency has

been ruggerted, as a balancing consideration in respect of

convenience, on the part of the Commirsioner. NO damage has been ruggerted to be likely to be incurred if relief is granted, and

the leirurely way in which the 8.13 reasons were prepared

ruggertr that in fact no urgent need	was felt to have access.
For the respondents, it was put that an explanation of the absence of the considerations, the absence	of which from the

r . 1 3 statement was relied	upon by the applicants, is that	those
conriderations went, not to	the decision to have access, but	to

the enforce8ent of it. It seems to me that this argument

inevitably raiser a serious question as to whether that is so or not. The applicants, in reply, say that a decision to have access ir - one decision, which involves all that is incidental to

the exorcire 02 that accerr, and it reems to me that it cannot be

raid that that reply is unarguably wrong.

It war also put, on behalf of the rerpondents, that a

number of the matters which the applicants claim should have been

taken into account, ar pointing to the burdensomeness	of access,
were matters which were	only raised subsequently to the decision.

It seems to	80	that there must	be a serious question whether
those matters, or	any of	them, were so obviously likely to	be
involved that they should have been considered,	so	that	the

raising of them subsequently	is merely an evidentiary matter, the
conriderations the8selver being conriderations which as	a matter

of lav the Commissioner was bound to take into account, at least

as reasonably ikely to arise. Again, the applicants'

proposition8 on that subject do not seem to me to be propositions of the kind which could be rejected as unarguable, and I think

there is a rerious quertion to be tried.

Having regard to what was said in the two Full Court

decirionr in Aboriqinal Development Commission v. Ralkon

Agricultural Co. Pty. Ltd. (1987) 74 A.L.R. 505 at 509-10

.. ..

7 .

(supra), I do not think that I should fail to take into account

the strength of the arguments with respect to the balance of convenience when considering whether there is a serious question

to be tried. If I add the strength of the considerations

relating to the balance of convenience into the scales, it	seems
to me that the decision comes down quite definitely in favour	of

the applicants. Accordingly, I propose to grant the relief

sought.

It was suggested by counsel for the respondents that the

relief should be subject to a condition relating to the

identification of the documents in respect of which privilege is

claimed. I do not think that I should impose that condition at this stage, in view of the fact that the serious question to be tried does not seem to me inevitably to relate only to those documents for which privilege is claimed, but rather to the decision. It may be that in the course of the preparation of the case for final hearing what the respondents eek will have to be done anyway, but I think that is a matter I do not need to decide with the same urgency with which at this stage I have to decide

whether or not interlocutory relief should be granted to prevent

something happening on the next working day.

There has been no suggestion that, if I came to these

views, the relief as sought in paragraph 1 of the notice of motion is inappropriate. Accordingly I make an order in terms of paragraph 1 of tho notice of motion. I direct that the

directions hearing be brought forward to a date to be fixed by

arrangement with the parties.	I order that the respondents pay
the costs of	today's motion.
I	certify that this and the
preceding sovon (7) pages	are
a true CO	of the Reasona for

Jud-ent Ry erein of hi. Honour

Hr. Juatice Durchett.

Aaaociatt

Counsel for the Applicant:	Mr. G. Flick
Solicitors for the Applicant:	ninter Ellison
Counsel for the Reapondent:	Mr. A. Robertson
Solicitors for the Respondent:	Australian  Government
Solicitor
Date of hearing:	13 nay 1988