Munro v Deputy Commissioner of Taxation

[1999] FCA 194

FEDERAL COURT OF AUSTRALIA

Munro v Deputy Commissioner of Taxation [1999] FCA 194

KEVIN JOHN MUNRO V DEPUTY COMMISSIONER OF TAXATION

NG 1170 of 1998

EMMETT J
2 MARCH 1999
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 1170 OF 1998

BETWEEN:	KEVIN JOHN MUNRO Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent
JUDGE:	EMMETT J
DATE OF ORDER:	2 MARCH 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The applicant pay the costs of the notice of motion filed 1 February 1999, including the costs of the hearing of the motion on 2 March 1999.

2.Leave be given to the applicant to file an amended application for order of review, such amended application to be filed and served no later than 12 March 1999.

3.Leave be given to the applicant to file a further application in relation to the notices served under cover of letters dated 18 February and 1 March 1999.  Any such further proceedings to be returnable before Emmett J on 14 April 1999.

4.The applicant furnish, within seven days, any particulars sought by the Respondent in respect of the amended application for review, so long as that request for particulars is made no later than 19 March 1999.

5.The applicant pay any costs thrown away by the amendment of the application.

6.The proceedings be stood over for further directions on 14 April 1999 at 9.30am.

7.The exhibits tendered in conjunction with the hearing of the motion be returned.

8.The fixture for 26 March 1999 be vacated.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 1170 OF 1998

BETWEEN:	KEVIN JOHN MUNRO Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	EMMETT J
DATE:	2 MARCH 1999
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

1. These proceedings concern a decision on 22 September 1998 by the Commissioner to issue a notice (“the September Notice”), purporting to be a notice under section 264 of the Income Tax Assessment Act 1936 (Cth,) (“the first decision”), and a decision by the Commissioner not to extend the time to comply with the notice (“the second decision”).  In the application for an order of review the following claims are made:

   “The applicant is aggrieved by the first decision because:

   1.the first decision was not authorised by the enactment in pursuance of which it was purported to be made;

   2.the making of the first decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made;

   3.        the first decision involved an error of law.”

   For the reasons that:

   4.the September 264 notice requires the disclosure by the applicant of documentary material wholly the subject of the client professional privilege;

   5.the September 264 notice is too uncertain and ambiguous as to permit accurate and proper compliance.

   The applicant is aggrieved by the second decision because:

   6.the respondent failed to take into account relevant matters, namely:

   (a)the loss of productive time and energy of the applicant inherently involved in purported compliance with Notice, within the time stipulated, and the applicant being a legal practitioner engaged full time in the pursuit of his sole legal practice thus having substantial demands on his professional time and energies.

   (b)the circumstances that within the proceeding months of this year commencing in February the respondent had already subjected the applicant to substantial inroads into his professional time and thus disruption to his practice as a sole legal practitioner because of notices issued by the respondent to the applicant pursuant to section 264 of the Income Tax Assessment Act 1936 and an inspection pursuant to section 263 of the Income Tax Assessment Act 1936.”

2. When the matter came before me on the first return date on 11 December, I gave directions by consent as follows: 

   (1) give leave to the applicant to have a notice to produce served on the respondent by Thursday 17 December returnable before the Registrar on 3 February 1999;

   (2)direct the applicant to provide particulars sought by the respondent by 17 February 1999;

   (3)direct the applicant to file and serve any further affidavits on which he proposes to rely on or before 24 February 1999;

   (4)direct the respondent to file and serve any affidavits on which he proposes to rely on or before 24 March 1999. 

   I stood the matter over for further directions on 26 March 1999.

3. I have before me a notice of motion filed by the respondent, the Commissioner of Taxation, seeking an order that a notice to produce dated 17 December 1998 served on the respondent by the applicant be set aside.

4. The applicant is a solicitor and the evidence suggests that he has from time to time given advice in connection with taxation matters to various clients. On 17 December, the applicant served a notice to produce requiring production of a series of documents. The notice to produce seeks production of all documents relating to several other notices under section 264 served on the applicant by the Commissioner. At least one of the earlier notices under section 264 has been complied with, as is acknowledged by the Commissioner in his letter of 16 July 1998 to the Applicant.

5. In the course of argument on the motion, counsel for the solicitor applicant indicated that there were several grounds upon which the September Notice was said to be bad.  First, it was confirmed that the two grounds specified in the application are to be pursued, namely, that there would be an infringement of legal professional privilege and secondly, that the notice is too uncertain and ambiguous to permit accurate and proper compliance.

6. However, in the course of argument, counsel indicated that there was a third possible ground, namely, that the purpose for issuing the series of notices under section 264 was to achieve the “closing down” of the solicitor.  That is not alleged in the present application.

7. It was acknowledged that the earlier notices related to different taxation matters, that is to say it was not suggested that the notices relate to the same matter.  On the other hand, a further complaint is made that two fresh notices have been issued by the Commissioner to the solicitor on 18 February and 1 March 1999, the latter of which withdraws the former.   However, both of those notices are concerned with the same subject matter, as is the subject of the September Notice.

8. The Commissioner contends that the time for compliance with the September Notice has now expired and that it is no longer possible to comply with it.  That was put forward as an explanation as to why further notices relating to the same subject matter had been issued in February and March.  That being so, the view might be taken that there is little utility in the further prosecution of the proceeding presently before me.  The one possible utility is that it would determine whether or not the September Notice was in fact valid.  If it were not, then there could be no offence committed by any failure to comply with it.

9. Counsel for the solicitor applicant has indicated that he wishes to amend this application.  It may well be that the amendment will overcome any complaint about lack of particulars.  Counsel intimated that it was proposed to raise the validity of the February and March notices, although I expressed some reservation as to whether, in the absence of consent by the Commissioner, it is open to the solicitor to raise, in these proceedings, causes of action relating to those notices which arose after the commencement of the proceedings.

10. Counsel indicated that he proposed to rely on Order 13 Rule 2(7).  However, I am not presently convinced that that rule has any application to an amendment to raise a cause of action which arose only after the commencement of the proceedings.  The alternative would be to commence fresh proceedings challenging those notices.

11. The notice to produce was returnable before the Registrar on 3 February 1999.  I am told that there was some administrative difficulty in the Registry in that the matter did not appear in the court list on that day.  Nevertheless, the Commissioner was represented by his solicitor.  However, there was no attendance by the applicant's solicitor and, accordingly, the notice to produce was not called.  I have been told that the reason for the non-attendance was the absence of any mention of the proceedings in the published list for that day.  The solicitor acting for the solicitor applicant was on leave and no one else in his office was aware that the matter was intended to be listed for that day.

12. Be that as it may, it seems to me that the notice to produce has now lapsed.  It required production on 3 February 1999.  The motion to set it aside had been filed before that time.  However, that would not obviate the need to call on the notice to produce or to adjourn it.  In the circumstances, it seems to me that there is no utility in setting it aside, although I have formed the firm view that, in the light of the present form of the application, I would have set the notice to produce aside.  It goes wider than would be allowed, having regard to the issues which are raised by the application.

13. In the circumstances, I propose to order that the applicant solicitor pay the costs of the notice of motion filed on 1 February 1999 which includes the costs of the hearing today.  I would also give leave to the applicant to file an amended application for order of review, such amended application to be filed and served no later than 12 March 1999.  I will also give the applicant leave, if he is so advised, to file a further application in relation to the notices served under cover of letters dated 18 February and 1 March 1999. Any such further proceedings may also be made returnable on the day fixed for further directions in relation to proceedings NG1170 of 1998. 

14. I direct the applicant in these proceedings to furnish, within seven days, any particulars sought by the Commissioner in respect of the amended application for review, so long as that request for particulars is made no later than 19 March 1999.  I order that the Applicant pay any costs thrown away by the amendment of the application and I stand the proceedings over for further directions on 14 April at 9.30 a.m.  I order the return of the exhibits tendered in connection with the hearing of the motion.  I also vacate the fixture for 26 March 1999.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett J.

Associate:

Dated:             2 March 1999

Counsel for the Applicant:	P.M. Fraser
Solicitor for the Applicant:	Eakin McCaffery Cox
Solicitor for the Respondent:	Mr S. Catt, Australian Government Solicitor
Date of Hearing:	2 March 1999
Date of Judgment:	2 March 1999