Nestle Australia Ltd v Commissioner of Taxation

[1986] FCA 368

LIMITED DISTRIBUTION

CATCHWORDS

PRACTICE AND PROCEDURE - Application for stay of an order for discovery of documents - Last day for compliance with order - Intended application for leave to appeal against order -

Failure of applicant to take any steps to obtain leave - s.16 of Income Tax Assessment Act - Necessity for parties to

move promptly for leave to appeal against interlocutory	order
- Application for stay refused.
Income Tax Assessment Act 1936 s.16

NSW G.184 Of 1985

NESTLE AUSTRALIA LIMITED v THE COMMISSIONER OF TAXATION OF THE

COMMONWEALTH OF AUSTRALIA

Wilcox J

Sydney

13 August 1986

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA

1

NEW SOUTH WALES DISTRICT	REGISTRY	)	No. G.184 of 1985
)
GENERAL DIVISION	)

BETWEEN :

NESTLE AUSTRALIA

LIMITED

Applicant

AND :

Respondent

CORAM :	WILCOX J
PLACE:	SYDNEY
DATE :	13 AUGUST 1986

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The application for a stay of the order made on 30 July 1986 be refused.

2 .

2 . The Commissioner of Taxation pay to Nestle Australia Limited its costs of this application.

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

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY	) No. G.184 of 1985
1
GENERAL DIVISION	)

BETWEEN :

NESTLE AUSTRALIA

LIMITED

Applicant

AND :

Respondent

CORAM :	WILCOX J
PLACE :	SYDNEY
DATE :	13 AUGUST 1986

EXTEMPORE REASONS FOR JUDGMENT

This is an application by the Commissioner of

Taxation of the Commonwealth of Australia, the respondent in proceedings G.184 of 1985, for a stay of an order made by me

. On 30 July 1986.

2.

By that order it was directed that within fourteen

days the respondent produce for inspection by the applicant in documents which were specified.

the proceedings, Nestle Australia Limited, copies of all

documents referred to in part I1 of schedule I of the List of

The order that was made on 30 July was the most

recent of a number of orders and directions made in regard to

the production of documents.

The principal proceeding is an application by Nestle

Australia Limited for review of a decision by the Commissioner

not to grant an extension of time for the payment of the

amount due under a number of income tax assessments. The

principal proceedings were commenced on 18 July 1985.

A question arose as to the discovery of documents and

I dealt with those questions in a judgment delivered on 14

February 1986. At that time I made an order requiring the respondent to give discovery in respect of all documents, recording the steps taken during the course of (a) the investigation undertaken by or on behalf of the respondent in relation to the business conducted by the applicant during the years 1970-1982 inclusive: or (b) the formation of an

- estimate by the respondent of the amount of the taxable income

3 .

that might be expected to arise from that business, but not including documents relating merely to the basis upon which

the said estimate was made.

No application was made for leave to appeal against

that order. However, the Commissioner subsequently claimed

that the production of documents in accordance with that order

would involve the disclosure of documents which ought, in the

public interest, not be disclosed. This matter came before me

on a number of occasions and various directions were made as

to the filing of affidavits.

There was some delay in the various affidavits being

filed. This, no doubt, was at least partly attributable to

the number of documents which had to be considered, but I must say that I felt that the process of sorting out the documents and specifying the grounds of objection took much longer than

the period which I would have thought necessary. However,

. eventually the matter came before me for hearing on 10 July

1986.

At that time, the objections which were pressed fell

into three categories. There was first a general objection in

relation to the production of any documents. The basis of

this objection was s.16 of the Income Tax Assessment Act 1936

- which was said to preclude the production of documents by an

officer of the Taxation Office. In the event, I held against

the submission made by the Commissloner on this ground.

4 .

The second and third objections were more restricted. The second objection related to documents and information provided by trading competitors of the applicant. To a very large extent, I upheld that objection. The variations made by me between the documents and parts of documents which were the subject of objection to production and the documents and parts of documents which I ordered to be disclosed were quite minor. The main difference related to documents of two companies who were, and possibly still are, trading competitors of the applican't, but who have expressly agreed to the production to the applicant of their documents. I took the view that having regard to that attitude, there was no public interest in refusing access to those documents.

The third category consisted of documents and

information provided by foreign governments. This objection

was upheld almost entirely. Any variations made by me in

regard to those documents consisted merely of very minor

variations to the extent of the document which I thought ought

not to be produced.

The third category consisted of documents and

information provided by foreign governments. This objection

was upheld almost entirely. Any variations made by me in

regard to those documents consisted merely of very minor

variations to the extent of the document which I thought ought

not to be produced.

5.

When I handed down judgment on 30 July 1986,

reference was made by counsel for the Commissioner to the

possibility of an application for leave to appeal and to the

question of whether there ought to be a stay of my order in

the meantime. I intimated to counsel my view, namely that no

. stay ought to be granted until it appeared that leave to appeal would be granted. No application for leave to appeal has yet been made, despite the fact that today is the final day for compliance with the directions of 30 July.

Yesterday afternoon a Notice of Motion was filed

returnable this morning seeking a stay of the orders of 30 July pending determination by a Full Court of a motion for leave to appeal against the judgment of 30 July. From a

Principal Legal Officer in the office of the Australian supporting affidavit sworn by Miss Barbara Pearson, a the Commissioner are to seek leave to appeal not only against the decision of 30 July, but also against the decision of 14 February.

It is submitted on behalf of the Commissioner that

having regard to the intention to seek leave to appeal,

particularly against the more recent decision, a stay of

proceedings ought to be granted, otherwise an appeal would be

nugatory. I accept that an appeal against the decision of 30

6.

July would be nugatory in relation to the particular documents if no stay is granted and if it is therefore necessary for the respondent to comply with the direction by producing the documents before close of business today.

I must say that my impression is that the concern of

the Commissioner in respect of my decision of 30 July is not

so much concern regarding the particular documents which would

have to be produced, but rather regarding the general question

.	of the application of s.16 of the Income Tax Assessment Act.
I say this because, as I have already mentioned, the

Commissioner almost entirely succeeded in respect of the documents which were covered by an objection other than s.16.

I can understand that the question of the application

of s.16 has some general importance, and is a matter which the

Commissioner may at some stage wish to take on appeal;

although I observe that there have already been a number of

cases, including decisions in the High Court, in which the

application of s.16 to discovery andproduction of documents on

subpoena has been considered.

In relation to the desire to appeal against the

decision of 14 February, I do no more than observe that it is

now exactly six months since that decision was reached, and

. this the first which has been said about any such desire.

l .

I am of the opinion that a stay of proceedings ought

not to be granted. I think that the Commissioner of Taxation

no less than any other litigant is obliged to act promptly and

decisively if he wishes to preserve his position. The

situation is that the hearing of the principal proceedings has

been extensively delayed because of arguments regarding the production of documents. As I have mentioned, when I handed down judgment on 30 July, I made clear that, so far as I was concerned, the granting of a stay of proceedings would be

dependent upon a successful application for leave to appeal.

I should have thought that it would be abundantly clear to the

Commissioner and those representing him that it was most

important to take prompt action to obtain a hearing of an

application for leave to appeal. If it had been desired to have the application for leave heard by a Full Court, steps

could have been taken to approach the Chief Judge to

constitute a Full Court for that purpose. No action in that

regard has been taken until now, and, even at this moment,

counsel is unable to give me any indication as to when a Full

Court might be constituted to hear the leave application.

Alternatively, if there was a problem about

constituting a Full Court, an application €or leave to appeal

against the decision of 30 July could have been made to a

single Judge of the Court. No such application has been made.

8.

I do not think that it is good enough for any

litigant to wait until the last day for compliance with an order, and then to come to the Court seeking a stay of the

order, thus imposing upon the opponent a further delay. I

think that a litigant who desires to appeal against a

particular order has a responsibility to ensure that there is

an opportunity for the application for leave to appeal to be

heard before the matter becomes critical. Although I

lppreciate the desire of the Commissioner to have a ruling of

a Full Court of this Court in relation to the matter of s.16

and discovery, I think that the principle that litigants are

expected to act promptly and efficiently is more important.

There will no doubt be other opportunities for s.16 to be

argued at an appellate level.

I therefore refuse the application for a stay of

proceedings.

I order that the Commissioner of Taxation pay to the

applicant in the principal proceedings its costs of this

application.

I certify this and the seven ( 7 )

preceding pages to be a true copy of

. the Reasons for Judgment of

his Honour Mr Justice Wilcox.

Associate: - /j..&

Date: 27 August 1986

9.

Counsel €or the Applicant:

Mr A H Slater

Solicitors for the Applicant:

Minter Sirnpson

Counsel for the Respondent:

Mr C J Stevens

Solicitors for the Respondent:

Australian Government

Solicitor

hearing: Date(s) of 13 August 1986