Oates, A.G. v Commissioner of Taxation

[1988] FCA 468

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C A T C H W O R D S K

PRACTICE AND PROCEDURE - Taxation Appeal - specific discovery ,,
’ ,

sought - informal further discovery - delay - need to specify

documents or classes of documents said not to have been discovered t.,

- motion dismissed.

Federal Court Rules	0.15 r.8
Australian Broadcasting Commission	v Parish (1981) 48 FLR 292

ANTONY GORDON OATES V THE COMMISSIONER OF TAXATION OF THE

COMMONWEALTH OF AUSTRALIA

No. WAG 2039 of 1987

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FRENCH J.

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PERTH

17 AUGUST 1988

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IN THE FEDERAL COURT	1
OF AUSTRALIA	)

WESTERN	AUSTRALIA	1
DISTRICT	REGISTRY	1

GENERAL DIVISION ) NO. WAG 2039 Of 1907

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IN THE MATTER Of the Income Tax

Assessment Act 1936

and

IN THE MATTER Of an appeal

thereunder by ANTONY GORDON OATES

against an assessment of income tax

on income derived during the year

ended 30 June 1981

B E T W E E N :  ANTONY GORDON OATES

Applicant

and

THE COMMISSIONER OF TAXATION OF ! '

THE COMMONWEALTH OF AUSTRALIA

Respondent

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MINUTE OF ORDER l .

JUDGE MAKING ORDER: FRENCH J.

DATE OF ORDER:	17 August	1988
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1. The respondent's motion dated 11 August 1988 is

dismissed. !

2. The respondent to pay the applicant's costs of the

motion.	:
Note: Settlement and entry	of orders is dealt with in

Order 36 of the Federal Court Rules.

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J	IN THE FEDERAL COURT	1
OF AUSTRALIA	1
WESTERN AUSTRALIA	1

DISTRICT REGISTRY 1

GENERAL	DIVISION	1	No. WAG 2039 of 1987	'. .
I
IN THE MATTER of the Income Tax Assessment Act 1936
and

IN THE MATTER	of an appeal
thereunder by ANTONY GORDON OATES	. I
against an assessment of income	tax
on income derived during	the year
ended 30 June 1981

B E T W E E N :  ANTONY GORDON OATES

Applicant

and	I ,
THE COMMISSIONER OF TAXATION OF
THE COMNONWEALTH OF AUSTRALIA	i

Respondent

CORAM:  FRENCH J.

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17 AUGUST 1988

EX TEMPORE REASONS FOR JUDGMENT

ON I-IOTION FOR SPECIFIC DISCOVERY

This is a return of a motion by the respondent seeking

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an order that the applicant give specific discovery of the

following classes of documents:-

(a)	share transfers, scrip, registers and journals;
(b)	accounting and banking records;

(c) minutes of meeting;

(d) financial accounts statements and reports; and

(e) correspondence, memoranda, instructions,

agreements, loan applications and agreements,

guarantees, authorisations, proposals, forecasts

and development plans,

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relating to the surrounding circumstances , financial

transactions, commercial agreements, business

I undertakings, plans, program and scheme whereby the

applicant derived profit at issue in this appeal.

The application is brought under 0.15	r.8 of the Federal Court
-	Rules which provides:-

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"Where, at any stage of the proceeding, it appears	to the	.
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Court from evidence	o r from the nature or circumstances	_ I

I of the case or from any document filed in the proceeding I .

that there are grounds for a belief that some document or class of document relating to any matter in question

in the proceeding may be or may have been in the

possession, custody or power of a party, the Court may

order that party	-
(a)	to file any affidavit stating whether that document
or any document of that class is or has been in his
possession, custody or power and, if it has been but is not then in his possession, custody or power, when he parted with it and what has become of it; and

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(b) to serve the affidavit on any other party."

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This Court has already decided in Australian

Broadcasting Commission v	Parish (1981) 4 8	FLR 292, 295 (Franki
J.),	that notwithstanding that the grounds specified in 0.15	r.8

are established, it has a discretion whether or not to order

speclfic discovery.

The motion 1 s supported by an affidavit sworn by Mr

David Cook, an officer of the Australian Taxation Office in Perth.

In that affidavit he refers to a letter written on 20 August 1984

to the applicant in which various documents and items of

information were sought. The letter runs to some five and a half

pages and seeks an extensive range of documentation and

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information. Mr Cook says that on 8 October 1984 he was informed

by Ray Anderson of Coopers & Lybrand, the tax agents for the

applicant, that he had spoken with a Mr Mews of Price Waterhouse,

until recently the auditors for Bond Corporation Holdings Ltd, on

4 October 1984 and that it would take some time for the

information requested in the letter to be obtained. On 12 October he was informed by Anderson in a further telephone conversation,

that the information requested was being compiled.	A number of
exchanges took place over the next few months and	on 8 May 1985,
Anderson told Cook that he had checked with Bond Corporation and	I.
had been advised that all documents requested had been extracted
and some answers to requests for information had been drafted.
Anderson further told him that the respective advisors of	the
applicant and Messrs. Bond, Mitchell and Beckwlth, his fellow

directors in Rowdore Pty Ltd, would meet that week or the

following week to prepare a consolidated reply. Correspondence

with the National Trust	was said to be contained in the two lever
arch files.

On 9 August 1985 Cook attended the office of Price

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Waterhouse and there spoke to Mews. Mews produced a lever arch file which, he ' said, contained photocopies of the documents requested in the letter of 20 August 1984. The photocopied

documents had been arranged in the same order that they were

sought in the letter. The file appeared to Cook, to contain

several hundred folios. Examination of it, if it commenced, was

not completed however as Cook and Mews were diverted by

discussions relating to matters of evidence, the intention of the

parties and related issues. It was agreed that they would return

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to an examination of the file if necessary depending on the

outcome of further discussions and submissions on the merits	of
the case generally.

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On 19 January 1986, Mews advised Cook in the course of a

discussion at the Australian Taxation Office, that he would tell

him later whether he could make the information compiled in the

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file available to him	on an informal basis. Cook was referred to
John Chandler of Parker	& Parker, solicitors for the applicant,

and on	21 January was informed by Mr Chandler that he	had	t.:
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instructions from senior counsel not	to volunteer the file	to the	’~
Taxation Office.

In June 1986 Mr Antony Siopis, a partner in the firm,

took over the	conduct of the applicant’s appeal. He already	had	I
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the conduct of litigation on behalf of Bond Corporation Ltd and	t
its directors against the Western Mail Newspaper for defamation arising out of articles dealing with events relating to the
transaction upon which the assessment	is based. He received from

1-Ir Chandler a collection of papers which comprise copies of

numerous documents from the files of the companies, Rowdore Pty

Ltd, Arkindale Pty Ltd, Bond Corporation Ltd and Bond Corporation	I /
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Holdings Pty Ltd, relating to the transaction. In addition, there

were documents obtained by Chandler under a freedom of information

request directed to the Commissioner of Taxation.

When the applicant filed his affidavit of discovery on

19 October 1907 he discovered, according to Mr Siopis, only

documents within his sole custody, power and control and did not

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discover the company documents.

Paragraph 5 of the applicant's list of documents was in

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the following terms:-

"This party was a director along with three other persons
of Rowdore Pty Ltd until October 1980 and is and was at
all material times a director of Bond Corporation Pty

Ltd. While performing duties pursuant to these offices,

I this party handled documents relevant to the issues

herein. These documents are now under the control of

other	directors	or	this	party	and	other	directors
jointly.	This	party	has	been	instructed	by	his

solicitors and verily believes that in the circumstances

these documents do not properly fall to be listed

herein. However, this party has instructed his i ,-

solicitors to request that those who exercise

possession, power or custody over the said documents

release the relevant documents to the solicitors in

order that they may be produced to the respondent."

Mr Siopis explained in his affidavit that the reference to this

direction to the applicant's	solicitors was inserted "because m	i !
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Oates has always been keen to get the matter to trial as soon as

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possible and instructed us to co-operate with the respondent as

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far as possible in the production to him of the company documents,	I
notwithstanding they were in strict terms not discoverable by him. We subsequently obtained the consent of the companies to produce
the documents".

In accordance with these instructions, Siopis said he

had made it known that his instructions were to co-operate in

relation to the production of the documents without the need of	a
subpoena and to seek to	obtain from the companies such documents
as were relevant.

On 27 June 1988 he received a call from Mr Windsor of

the Australian Government Solicitor's office, indicating that Mr

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Windsor and junior counsel would be going to Melbourne the

following week to see senior counsel in connection with the appeal

and requesting that copies of the company documents be forwarded

so that they might be shown to senior counsel. Mr Siopis then

forwarded to Mr Windsor what he describes	in his affidavit as
"copies of the documents requested". He says that to the best of his knowledge and belief he forwarded all the relevant company documents in their possession. Because of the urgency of the request he did not ensure that a list was made of the documents	I _:
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sent. Mr Cook says he examined the bundle of documents and that i t

the documents so made available did not appear on the list lodged

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by the applicant and verified by affidavit on 19 October 1987.

They formed, he said, only some of the documents referred to in

his affidavit. I do not take that as clear evidence that the

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documents formed only some of the documents contained in the two	I-
files.

Siopis was unable to refer Cook's affidavit to Mews who t ..

is out of the country, but was able to say that at all material

times Mews had not been the applicant's tax accountant, but was

the tax accountant for Mr Alan Bond and 1-lr Peter Mitchell.

Chandler had informed Siopis that 1-lews forwarded a lever arch

file,	evidently	that	referred	to	in	Cook's	affidavit, and
containing	documents	obtained	from	the	files	of	the several

companies already mentioned. After receiving the file Chandler

had disassembled it and incorporated the documents contained

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therein into the collection of documents which Siopis subsequently

obtained from him.	Siopis says, therefore, that the position is
that all such documents	as were previously in Mews' file which are

relevant have, to the best of his knowledge and belief, already

been forwarded to the respondent.

No explanation was given in evidence for the length of

time it has taken the respondent	to seek specific discovery, it
having had the affidavit of discovery since	19 October last year.
However, counsel for the Commissioner has informed	me from the bar

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table without objection, that there have been a number of

discussions which, it was hoped, would lead to informal disclosure

of the full range of	documents and that those discussions not	i I
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having resulted in a satisfactory outcome	so far as the respondent
is concerned, this motion	was brought.

The relief that is sought has, notwithstanding the

existence of informal discussions been brought after a long delay.

At this stage the width of the order sought by the respondent is	I
based, not upon a concern that particular identifiable classes of

documents have not been discovered, but that there may be

documents within the classes for which discovery is sought that

have not been discovered. The respondent	has participated in	a
process of informal discovery and it is not satisfied with what	it	. ,	!

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has been given. If the respondent is in a position	at some stage
to lndicate that there are particular documents	or classes of ,- _ .

documents which are in fact missing and which it would expect to i

have been discovered by the applicant then,	of	course, it can
bring a further motion in respect of such documents	o r	classes.

At this stage I am not prepared to remedy an alleged general

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defect in the affidavit of discovery given by the applicant,

having regard to what has passed between the parties up to date.

The respondent has received what, on the unchallenged evidence of

Mr Siopis, is all the documents that had comprised the now

disassembled file. I think it is up to the respondent, if it

feels that there is	some particular class of	document which has
not been disclosed and	which ought to have been disclosed,	to
identify it on the basis	of	an examination of those documents

which have been made available to it and	not on the basis of some
rather generally expressed belief that not everything that was	in
the files has been shown.	That, I should observe, would require

me to draw the inference that everything in the files was relevant

and discoverable in the hands of the applicant. The motion is

dismissed without prejudice to the respondent's right, if the

position should arise, and provided it is done promptly, to bring

a further application if there are particular documents whose

existence can be inferred whether individually or by class that

have not been discovered.

I certify that this and	the preceding
seven (7) pages are a true copy	of the
Ex tempore Reasons of rJudgment	of hls
Honour Justice French.
Associate: ?a	'ik,
Date: I 7 Y	r y

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Counsel for the Applicant: M r A.V. McCarthy Solicitors for the Applicant: Parker ti Parker

Counsel for the Respondent: Mr R.E. Birmingham

Solicitors for the Respondent: Australian Government Solicitor

Date of Hearing:  17 August 1988

Date of Judgment: 17 August 1988

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