Perron Investments Pty Ltd v Deputy Commissioner of Taxation (WA)

l CATCHWORDS

JUDGMENI h ,...,........ .. Sg6 L ........ . %9 ,

INCOME TAX - Adminlstratlve Law - validity of notices lssued pursuant to sub-s.264(1) Income Tax Assessment Act 1936 - whether notices on their true constructlon lnvalldly require recipients to bring copies of documents into existence - whether invalid portions of notices could be severed - legal professional privilege - whether notlces in terms requiring the production of documents prima- facie the subject of legal professional privilege are invalid - whether notlces invalid by virtue of ambiguity in description of documents to be produced - whether 5.264 notices requiring supply of Information may be directed to persons other than natural persons - whether time for compliance reasonable - test to be applied and significance of absence of evidence from applicant of actual difficulties.
Administrative Decisions Judicial Review Act 1977
Income Tax Assessment Act 1936 sub-s.264(1)
CARNEGIE RICHMOND HALLETT FIELDHOUSE V. THE DEPUTY COMMISSIONER
OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA
NO. NG 89 of 1989
PERRON INVESTMENTS PTY LIMITED v. DEPUTY COMMISSIONER OF
TAXATION, PERTH
No. NG 161 of 1989
CENTURY FINANCE PTY LII4ITED V. DEPUTY COMMISSIONER OF TAXATION,
PERTH
No. NG 162 of 1989

27 September 1989
PRESTIGE MOTORS PTY LIMITED v. DEPUTY COMMISSIONER OF TAXATION,
PERTH
No. NG 163 of 1989
Lockhart, Burchett & Hill JJ.
Sydney

IN THE FEDERAL COURT OF AUSTRALIA )
1
NEW SOUTH WALES DISTRICT REGISTRY )
)
GENERAL DIVISION

1 No. G 89 of 1989

i

!

I ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
I

BETWEEN: CARNEGIE RICHMOND HALLETT .
FIELDHOUSE
Appellant

AND: THE DEPUTY COMMISSIONER OF
TAXATION FOR THE COliIMONWEALTH
OF AUSTRALIA
Respondent

CORAM: LOCKHART, BURCHETT & HILL JJ.
PLACE: SYDNEY
DATED: 27 SEPTEMBER 1989

HINUTE OF ORDERS

THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The cross-appeal be dismissed.

3.

The appellant pay the respondent's costs of the appeal.
4. The cross-appellant pay the cross-respondent's costs of the cross-appeal.

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

1 )
GENERAL DIVISION

) NO. G 161 of 1989
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: PERRON INVESTMENTS PTY LIHITED
Appellant

AND: DEPUTY COMMISSIONER OF
TAXATION, PERTH
Respondent

CORAM: LOCKHART, BURCHETT & HILL JJ.
PLACE: SYDNEY
DATED: 27 SEPTEPIBER 1989

MINUTE OF ORDERS

THE COURT ORDERS THAT:
1. The appeal be allowed with costs.
2. The orders made at first instance be set aside, and in lieu thereof order that:
(a) The notice issued under s.264 of the Income Tax

Assessment Act 1936 be set aside;

(b)

The Deputy Commissioner of Taxation pay the applicant's costs of the application.

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

) )
GENERAL DIVISION

) No. G 162 of 1989
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: CENTURY FINANCE PTY LIMITED
Appellant

AND: DEPUTY COMMISSIONER OF
TAXATION, PERTH
Respondent

CORAM: LOCKHART, BURCHETT & HILL JJ.
PLACE: SYDNEY - ~ - ~-
DATED: 27 SEPTEMBER 1989

MINUTE OF ORDERS

THE COURT ORDERS THAT:
1. The appeal be allowed with costs.
2. The orders made at first instance be set aside, and in lieu thereof order that:
(a) The notice issued under s.264 of the Income Tax

Assessment Act 1936 be set aside;

(b)

The Deputy Commissioner of Taxation pay the applicant's costs of the application.

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

IN THE FEDERAL COURT OF AUSTRALIA )
1

NEW SOUTH WALES DISTRICT REGISTRY

) )
GENERAL DIVISION

) No. G 163 of 1989
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: PRESTIGE MOTORS PTY LIMITED
Appellant

AND: DEPUTY COMHISSIONER OF
TAXATION, PERTH
Respondent

CORAM: LOCKHART, BURCHETT & HILL JJ.
PLACE: SYDNEY
DATED: 27 SEPTEMBER 1989

PIINUTE OF ORDERS

THE COURT ORDERS THAT:
1. The appeal be allowed with costs.
2. The orders made at first instance be set aside, and in lieu thereof order that:
(a) The notice issued under s.264 of the Income Tax

Assessment Act 1936 be set aside;

(b)

The Deputy Commissioner of Taxation pay the applicant's costs of the application.

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

IN THE FEDERAL COURT OF AUSTRALIA )
) No. G 89 of 1989

NEW SOUTH WALES DISTRICT REGISTRY ) G161 of 1989
1 G162 of 1989

GENERAL DIVISION ) G163 of 1989
ON APPEAL FROM A SINGLE JUDGE OF THE
FEDERAL COURT OF AUSTRALIA
BETWEEN: CARNEGIE RICHMOND HALLETT
FIELDHOUSE
PERRON INVESTMENTS PTY. LIMITED
CENTURY FINANCE PTY. LIMITED
PRESTIGE MOTORS PTY. LIPIITED
Appellants
Respondents

THE DEPUTY COMMISSIONER OF TAXATION FOR THE COMI-IONWEALTH OF AUSTRALIA, SYDNEY

Cross Appellant
CARNEGIE RICHMOND HALLETT
FIELDHOUSE
Cross Respondent

COURT: LOCKHART, BURCHETT, HILL JJ.
27 SEPTEMBER 1989

REASONS FOR JUDGMENT

LOCKHART J.
These four appeals from a single Judge of this Court, being heard together by consent, concern the validity of four notices issued by a Deputy Commissioner of Taxation pursuant to sub-S. 264(1) of the Income Tax Assessment Act 1936 ("the Act"), one to each of the three corporate appellants and one to Mr. Fieldhouse. The appeals ultimately turn on three questions: first, whether the notices to the three companies, by requiring the production or provision of copies of documents to the Deputy Commissioner, require each recipient to create copies of documents described in the notices or otherwise obtain copies of them whether or not such copies are in the recipient's custody or under the recipient's control when it received the notice. This is a question of construction of the notices. If they require copies of documents to be produced other than those in the custody or under the control of the recipients at the time they received the notices it is common ground that they are bad, at least to that extent. The second question concerns legal professional privilege, in particular, whether notices

are bad, either by requiring, expressly or by implication, the production to the Deputy Commissioner of documents which

are prima facie privileged or by failing to make clear on the face of the notices themselves that the recipients are not required to produce privileged material. The third question is whether the notices are invalid for ambiguity or want of clarity in the description of the documents or classes of documents, production of which is required. Other questions were argued which I shall mention later.

A separate proceeding was brought in this Court's original jurisdiction by each appellant against the Deputy Commissioner of Taxation to review his decision to Issue a notice to each appellant under sub-S. 264(1)(b). The proceedings were brought under the Administrative Decisions (Judicial Review) Act 1977 (the "Judicial Review Act"). The learned primary Judge dismissed each application for review with costs. The appellants appealed to the Full Court from his Honour's judgment. The Deputy Commissioner cross-appealed from the alleged failure of his Honour to declare the notice issued to Mr. Fieldhouse to be valid.
Section 264 of the Act is in the following terms:
"264(1) The Commissioner may by notice in writlng require any person, whether a taxpayer or not, including any officer employed in or in connexion with any department of a Government or by any public authority -

(a) to furnish him with such information as he may require; and
(b) to attend and give evidence before h ~ m or before any officer authorized by him in that behalf concerning his or any other person's income or assessment, and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto.
264 (2) The Commissioner may require the information or evidence to be given on oath and either verbally or in writing, and for that purpose he or the officers so authorized by him may administer an oath.
264(3) The regulations may prescribe scales of expenses to be allowed to persons required under this section to attend."

Paragraph 264(1)(a) of the Act thus empowers the Commissioner to require any person to furnish him with such information as he may require. Paragraph 264(1)(b) has two limbs: the first empowering the Commissioner to require any person to attend and give evidence before him concerning his or any other person's income or assessment; and the second empowering the Commissioner to require any person to produce documents in his custody or under his control which relate to the income or assessment of any person. The words in para. (b) "relating thereto" refer back to the words "income or assessment" and not to the word "evidence", so that the power conferred by the second limb, namely, the power to require the production of documents is independent of that conferred by the first limb: Smorgon v Australia and New Zealand Banking Group Limited (1976) 134 CLR 475 per Stephen J. at 485-486; Federal Commissioner of Taxation v Australia and New Zealand Banking Group Limited (1979) 143 CLR 499 per Gibbs A.C.J. at 523-524, Mason J. at 535 and Murphy J. at

546.
For a notice under para. 264(1)(b) to be valid it "must of necessity identify with sufficient clarity the documents which are required to be produced": Federal Commissioner of Taxation v Australia and New Zealand Banking Group Limited per Gibbs A.C.J. at 525. The notice must also "show the person to whom it is addressed that any document which he is required to produce is one whose production the Commissioner is entitled to require". Where the notice is addressed to one person requiring him to produce the documents of another then the notice must show that those documents relate to the income or assessment of a particular person who must be identified. See Federal Commissioner of Taxation v Australia and New Zealand Banking Group Limited (supra).
A notice which requires the production of documents and is not in terms related to the income or assessment of some person is invalid. A notice which is valid may, however, be of considerable breadth, for, as Mason J. said in Federal Commissioner of Taxation v Australia and New Zealand Banking Group Limited at 537:

"What par. (l) (b) has in mind is that a notice may be given requiring the recipient to produce 'all books, documents and other papers' in his custody or control 'relating thereto', that is, to the income or assessment of the person whose name is stated in the notice. It is then for the recipient to decide for himself, difficult though the task may be, which of the documents answer the description. If his decision is wrong he exposes himself to prosecution and penalty."

Although sub-S. 264(1) does not itself impose any express duty on the person to whom a notice is given, there is nevertheless a statutory duty to comply with such a notice by virtue of the provisions of ss. 8C, 8D, 8K, 8N and 8P of the Taxation Administration Act 1953.
Copies of Documents
I turn to the question whether, when properly construed, the notices require the three corporate recipients to bring documents or classes of documents into existence by copying or otherwise to obtain copies of them as distinct from merely requiring documents already in existence to be produced to the Deputy Commissioner.
there is a fair degree of overlap between the

contents of these three notices, it is desirable to consider
each notice separately.

~lthough

(a) The Notice to Perron Investments
This notice is dated 11 November 1985 and signed by the Deputy Commissioner. It is eight pages in length and contains four paragraphs with numerous sub-paragraphs. It requires Perron Investments to furnish the Deputy Commissioner with "the following information". The particular requirements then follow in the body of the notice so that everything that follows the opening paragraph falls within the overall description of "the following

various matters and includes requirements,that the recipient information". The notice seeks information relating to

"provide copies of" various documents and classes of documents there described. There is no point in giving many examples of the documents so described; it is sufficient to say that they include copies of certain deeds, accounting journals, powers of attorney, agreements, minutes of meetings, correspondence and financial records including cheque butts, bank statements, cash books, journals, ledgers, brochures and invoices.
Does the notice, properly construed, require the
recipient to provide either the originals of the documents
described, or, if the recipient prefers it, copies of them?

I have the impression that the draftsman of the notice probably intended the requirement to provide copies as imposing a lesser burden upon the recipient than a demand to produce origlnals of documents. I suppose thls is simply a recognition of the ease with which documents are produced by modern copying processes.

The notice in this respect is cast in plain language, it requires the provision of copies. The notice does not require the production of originals and does not, on its face, purport to give to the recipient an option as to whether to provide originals or copies. Such an option could have been clearly and simply given by requiring the provision of "originals or copies" of documents. The notice is limited, however, to copies. The analysis of what is meant

provision of originals must satisfy the notice and therefore by "copies" should not start from the premise that the

must be included in the requirement to provide copies. Rather the words of the notice must be read as deliberately chosen words in a document with serious legal consequences. When used precisely the word copy does not include the original, rather it is something derived from it. I therefore conclude that what these notices require is the provision of copies of specified documents, not the origlnals.

However, if the company decides to provide an original document rather than a copy, that could hardly be treated as non-compliance with the requirements of the notice, not because on its proper interpretation, the notice requires the provision of the original, but because the best evidence is always preferable and the Deputy Commissioner could not be heard to complain if he got that.

There is some force in the view that the notice requires the provision only of existing copies but it is, I think, unreal. A sensible recipient of the notice would consider that he is not obliged to provide the originals of documents, but is required to provide copies of the documents or classes of documents specified in the notice however he obtains them e.g. existing copies in his possession, copies from other persons or by thereafter copying documents so that he may produce a copy to the Deputy Commissioner. He would know that the notice must be complied with, otherwise he may be liable to prosecution for an offence against the Act. In my

view the recipient would be likely to conclude that, however

he obtains one, a copy must be produced. The notice could by appropriate language have made it clear that only copies in existence when the notice is served are to be provided; but the notice to Perron Investments does not do this. Indeed, the notice is not even confined to the production of copies of documents in the recipient's custody or under his control. This is the language of para. 264(1)(b) and it is not mentioned in the notice. Paragraph 264(1)(b) only extends to documents in the custody or under the control of the recipient when he receives the notice and does not support a construction that requires copies to be brought into existence. If it did, a serious question would arise as to whether the section was in that respect a valid exercise of the power of the Commonwealth Parliament under the Australian Constitution (see S. Sl(xxxi)). It follows that the notice is bad at least in so far as it requires the recipient to provide copies.

An alternative view of the notice is that Perron Investments would be left in doubt as to its obligations, namely, whether to furnish only copies already in existence and in its custody or under its control at the time it receives the notice or to bring copies into existence, if none are currently in its custody or under its control, or to obtain copies from other persons. If that interpretation of the notice were correct the notice would be bad for uncertainty.

Section 264 uses the word "produce" with respect to documents. Argument was advanced before us about the verbs "provide" and "produce" and their respective dictionary meanings. I have not found much assistance from the dictionaries on this question, although they suggest that the verb "produce" is more readily susceptible of an interpretation of bringing something into existence than the verb "provide". Ultimately, the question is the meaning of the words of obligation contained in this notice when read in the context of the notice as a whole and in the framework of S. 264 itself. In the notice to Perron Investments the word used is "provide". In the notice to Century Finance and Prestige Motors both "produce" and "provide" appear. Nothing turns on the use of the particular word "produce" or "provide" in the notices in question.

Severance of the S . 264 notice addressed to Perron Investments is not possible in this case by excising so much of the notice as requires the provision of copies. The requirement to provide copies is central to the notice; and at least in one instance, if excised, leaves requirements remaining which are unintelligible without reference to the part excised: see paragraph l.vi. The invalid components are so inextricably mixed with the valid that it would be unduly onerous to require the recipient to disentangle them by delicate papyrian exercises with scissors and paste. The notice is in reality a composite requirement and severance of the parts requiring the provision of copies is not practicable: see Royal Bank of Canada v Inland Revenue

Commissioners [l9721 2 WLR 106 at 122; [l9721 1 All ER 225;

and Parker v Churchill (1985) 9 FCR 316 per Burchett J. at
321-322 and, on appeal, (1985) 8 FCR 334 at 350.

(b) The Notice to Century Finance

This notice requires Century Finance "to furnish me with and produce" ... "the following information relating to the income or assessment of Century Finance Pty. Limited" for certain specified years of income. The notice has some nine pages and four paragraphs with numerous sub-paragraphs. The notice, so far as the present point is concerned, is in substantially the same terms as the one directed to Perron Investments, so what I have said about the latter governs the former. The only material difference that I can discern, with respect to the present question is in the introductory paragraph of the notice which requires the recipient not only to furnish the Deputy Commissioner with "the following information" but to furnish him with "and produce" that information. I do not regard that difference as being of any significance on the present question. Strictly speaking it means the notice requlres the recipient to furnish the Deputy Commissioner with and produce to him at a certain place and time "the following information" consisting, so far as relevant, of the provision of copies of certain documents; but that adds nothing to the form of notice in the case of Perron Investments. This notice is also bad.

(c) The Notice to Prestige Motors The notice to Prestige l$otors contains eight pages and it too has paragraphs and many sub-paragraphs. It requires the company "to furnish me with and produce" on or before a named date at a named place "the following information relating to the income or assessment of Prestige Motors Pty. Limited as trustee for the Prestlge Toyota Unit Trust" for certain years of income. The notice then proceeds in similar terms to the notice in the case of Perron Investments in so far as it requires the provision of copies of documents. What I said about the Perron Investments notice applies to this notice also. It too is bad.

(d) The Notice to Mr. Fieldhouse

The notice to Mr. Fieldhouse is two pages in length and requires him to attend and give evidence at a named date before named officers of the Australian Taxation Office. It proceeds, so far as relevant, to say in its opening paragraph:

"AND IN CONNECTION THEREWITH I DO FURTHER REQUIRE YOU to produce ... all books, documents and other papers whatever in your custody or under your control relating to the income or assessment of
... for the period ... and, in particular, all
deeds, correspondence, memoranda, minutes of director's meetings, file notes and other

. I 1

documents relating to ....

There then follow some fourteen numbered paragraphs which record the names of companies, transactions of alleged loans

units, the issue of units in trusts, release of obligations or assignments of interest in property, issue of shares or and other matters.

The point relating to copying which applies to the three notices to corporations was not taken with respect to this notice; but it is useful to note that this notice casts the obligation to produce documents in terms of the language of para. 264(1)(b) of the Act. In so far as the description of documents in the opening paragraph of the notice is apt to encompass copies it does not require that they be brought into existence; it requires that, if they do exist, they be produced.
Generality of the Notices

It was submitted on behalf on the appellants that the notices were all defective in form as each of them was expressed too widely or ambiguously, and, therefore on their face exceeded the powers conferred upon the Deputy Commissioner by S. 264. Again it is convenient to consider this question with reference to each notice.

(a) Perron Investments

The notice to Perron Investments seeks information (I leave aside the requirement that copies of documents be provided as I have already dealt with this) relating to a large number of transactions, and it requests information in

considerable detail about each of them. A few examples will

suffice. The information which is required includes the
following:-

in relation to the acquisition by Perron Investments of certain units in a unit trust, a detailed account of the circumstances which led to the acquisition of the units, including the names of persons involved in the negotiations which led to the arrangements being made, a detailed description of the negotiations and the reasons for Perron Investments agreeing to enter into them;
the basis for the valuation of certain property;
full details of all improvements to certain real estate;

the terms of loan agreements including rates of interest, periods of the loans and terms for repayment of principal and interest;
the nature of any relationship between Perron Investments and certain persons and companies.
The notice is far reaching in its pursuit of information and requires careful and detailed attention before providing the information sought. The draftsman has gone to considerable lengths to be precise about the information which is sought. Although considerable effort is involved in

requirements for information to be uncertain, ambiguous, supplying the information I do not find any of the
oppressive or too general.

Exception was taken by counsel for the appellants to the use of the word "explain" where used as a requirement to "explain" certain events, incidents or circumstances or the nature of certain relationships on the ground of undue width.
I suppose it is always possible for a draftsman to use a
different word to "explain", but I see no vice in its use in
this context.

Complaint was made that one of the requirements of the notice, repeated more than once, is to provide copies of documents which "evidence" certain matters. It was said that the use of the word "evidence" in this context is inherently ambiguous. I fail to see the ambiguity. The word "evidence" may be used in a variety of senses, that much is true. But the word is used in the context of this notice in the sense that copies of documents are to be provided which bear witness to or demonstrate the matters referred to in the notice.

(b) Century Finance

The position is substantially the same with respect to the notice to Century Flnance.
(C) Prestige Motors

The position is also substantially the same with respect to this notice; but one further matter was relied on by
counsel for the appellants to support the argument that this
notice was defective in form, namely, that in paragraph 3 the
recipient of the notice is asked to:
"advise whether ... any of the income distributed from the Prestige Toyota Unlt Trust to RLAV during the period 1 March 1979 to 30 June 1983 has been applied for the benefit of, recouped, reimbursed, or paid, either in Australia or overseas, to Prestige Motors or the Perron group of companies or a person or company related to or associated with Prestige Motors or the Perron Group of companies" .

It was argued that this passage in essence restated the language of ss. 99B and 99C of the Act so that it was akin to asking someone whether certain facts fell within a statutory provision, and that was really a question of law. This argument is fallacious. The notice does not ask the recipient to decide whether certain matters fall within the terms of a section. It would be different if the question was to ask the recipient to construe the relevant provisions of a section of the Act. Indeed, ss. 99B or 99C are not even mentioned in the notice. The recipient is asked to look at the paragraph and answer it according to ordinary English usage. There is nothing wrong with this.

(d) Mr. Fieldhouse
There is nothing in this notice which renders it bad on the ground presently under consideration.

None of the four notices is expressed too widely,
generally, obscurely or ambiguously or is otherwise defective
in form.
Notices not Directed to Natural Persons
Although three of the four notices were addressed to the Public Officer of each company, it was conceded by the Deputy Commissioner that they were to be read as directed to the companies themselves. It was submitted, however, on behalf of the appellants that those three notices were bad because S. 264 permits notices thereunder to be directed only to natural persons. It is true that only a natural person can attend and give evidence, so that a company cannot be the recipient of a notice under the first limb of para. 264(1) (b) (see Smorgon v Federal Commissioner of Taxation (1976) 134 CLR 475 per Stephen J. at 481-5). There is no difficulty, however, in law with the notion of a company furnishing the Commissioner with information (para. 264(1)(a)) or producing documents to him (second limb of para. 264(1)(b)) (see Smorgon v Federal Commissioner of Taxation per Stephen J. at 485-6). The submission is fallacious.
The Notice to Mr. Fieldhouse - time for compliance
Counsel for Mr. Fieldhouse argued that, as the notice directed to him under S. 264 allowed him only fourteen days from the date of service to comply with its requirements, it demanded compliance within an unreasonable time and hence was

not a valid notice.
The test of the reasonableness of a period of notice is an objective one to be determined in the light of the surrounding circumstances: commissioner of Taxation v Ganke [l9751 1 NSWLR 252 per Nagle J. at 258; McVey v Commissioner of Pay-Roll Tax (Vic) (1985) 85 ATC 4131 per Kaye J. at 4,137. It is for the Court to determine whether the time allowed is reasonable when the matter is tested before it.
At first sight fourteen days appears to be a very short period of time to gather together all the information sought in the notice. However, when the circumstances are examined the position becomes clearer. The notice is dated 19 May 1986. From as early as 26 November 1985 Mr. Fieldhouse was aware that the Deputy Commissioner was seeking information from him concerning the income or assessment of certain companies. Correspondence was exchanged between the Deputy Commissioner and Mr. Fieldhouse. Mr. Fieldhouse sought and obtained an extension of time to respond to an earlier request for information. He sought reasons under s . 13 of the Administrative Decisions (Judicial Review) Act 1977 out of time and reasons were furnished to him before the notice the subject of this proceeding was issued.
Hr. Fieldhouse called no evidence on the question of
reasonableness at the hearing before the learned trial Judge.
Plainly Mr. Fieldhouse had considerable notice of many of the

matters which the S. 264 notice formally brought to his attention. I am not persuaded that the time allowed for compliance with the notice was unreasonable.
Legal Professional Privilege

Baker v Campbell (1983) 153 CLR 52 is authority for the proposition that legal professional privilege is not confined to judicial and quasi-judicial proceedings and that, in the absence of some legislative provision restricting its application, the doctrine applies to all forms of compulsory disclosure of evidence. Section 264 requires the compulsory disclosure of information, documents or evidence and there is no basis for interpreting the section as negating the application of legal professional privilege. Indeed, it was not contended by the Commissioner in this case that S. 264 overrode legal professional privilege.

The reasoning of the majority of the High Court in Baker v Campbell leads to the conclusion that S. 264, upon its proper interpretation, does not abrogate legal professional privilege. A similar conclusion was reached by this Court both at first instance and on appeal to a Full Court of this Court with respect to S. 263 in Citibank Limited v Federal Commissioner of Taxation (1988) 88 ATC 4714 per Lockhart J. at 4732-3; on appeal to the Full Court in Federal Commissioner of Taxation v Citibank Limited (1989) 89 ATC 4268 per Bowen C.J. and Fisher J. at 4274-7, per French J. at 4291-3. The real difficulty arises with respect to the working out in practice of Baker v Campbell beyond judicial

and quasi-judicial proceedings. As I pointed out in Arno v

Forsyth (1986) 9 FCR 576 at 587:
-,:l )

"Once the law recognises that the doctrine of legal professional privilege extends to extra judicial search and seizure the question immediately arises as to when and how questions of privilege are to be raised. Sometimes the privilege question will be raised at the stage of execution of a search warrant rather than at the time of its issue."

Arno v Forsyth concerned search warrants under s. 10 of the Crimes Act (1914) (Cth); but similar questions arise with respect to notices under S. 263 of the Act which authorises the Commissioner or offlcers authorised by him to enter buildings and make extracts from or copies of books, documents or papers. Notices under S. 264 are, however, one step removed from search warrants and S. 263 notices because, once the notices are issued by the Commissioner and served upon the recipient, the requirement is that the recipient furnish the Commissioner with such information as he may require or attend and give evidence before him or produce books, documents and other papers in his custody or under his control relating to a particular person's income or assessment. Obviously a reasonable tlme, to be determined in the light of the circumstances of each case, must be afforded the recipient to comply with the notice. Generally the recipient will have time to consider the matter and consult with his legal advisers, but there will be cases when the recipient will be either ignorant of the law or not have

sufficient foresight or means to obtain legal advice and ascertain his rights and duties. I do not propose to develop
in any detail the problems that confront citizens when served
with notices under S. 264. The problems were discussed in
some detail by me in Arno v Forsyth, supra, though in the
context of search warrants, but there are elements in common
with notices under S. 264. The citizen is plainly at risk,
whether through ignorance or otherwise, of being denied a
fundamental right to assert a claim for legal professional
privilege. There is I think much to commend the view that
when issuing notices under S. 264 it would be appropriate for
the Commissioner to insert a paragraph or two in the notice

drawing the attention of the recipient to his rights with i
respect to legal professional privilege so that at least he :..
is alerted to them and can take whatever steps he wishes to ;.I
obtain legal advlce.

I adverted to this question with respect to search warrants in Horowitz v Condie, unreported, judgment 5 May
1989, and referred there to a section of the search warrant

in evidence in that case titled "The Procedure" which extended for some pages and defined the procedure to be followed by officers executing the search warrant representing "The Agreed Guidelines Between the Commissioner of the Australian Federal Police and the Law Council of Australia" which were designed to aid Australian Federal Police officers in the execution of search warrants at the offices of lawyers and were intended to give the lawyers the opportunity to claim legal professional privilege on behalf

Australian Federal Police following the judgment of the Full

discussions between the Law Council of Australia and the of their clients. This appears to have been the result of

Court of this Court in Arno v Forsyth. I doubt if such a full description of a person's rights with respect to legal professional privilege is necessary in the case of a para. 264(1)(b) notice which by its very nature affords a reasonable time for a person to consider his position before complying with its requirements. Nevertheless, some pithy statement of the right to claim legal professional privilege in the body of the S. 264 notice would be useful and timely.

The question whether legal professional privilege applies to documents in the case of a search warrant will generally be determined when it is sought to execute the warrant; but it may be appropriate in some cases to determine this question when the warrant is issued: see Arno v Forsyth. In the case of a notice under S. 264 this question will be considered generally, when the obligation of the recipient arises to either furnish the information required or to attend and give evidence before the Commissioner or his officers or to produce the books, documents and other papers. The claim can then be asserted and tested in the courts, if necessary, or the recipient may move the courts earlier, as happened in this case.

If it were not for the express reference in certain of the notices under challenge in this case to documents to which on their face legal professional privilege would prima facie attach there could, I think, on the facts of this case be only limited room for argument that any of the notices

were bad on their face albeit that it might emerge in due

course that some of the documents of which production was

required attracted the protection of legal professional privilege. The notice to Perron Investments does not in terms require the production of documents which on their face would be the subject of a claim for legal professional privilege, although I notice that on p. 6 the particulars which are required to be provided include the names and addresses of the solicitors of a company "Cholomondely Equitable Estates (Singapore) Pty. Limited" ( "Cholomondely")

(para. 2.vii.d). Also, there is a reference in para. 2 . x . to the requirement to "advise" in relation to certain dealings if the directors and representatives of Cholomondely were acting either directly or indirectly upon the instructions of the legal advisers for Perron Investments or certain other persons. Those particular matters do not seem to me to require the disclosure of material to which legal professional privilege would normally attach.

The notice to Century Finance requires, however, that there be provided coples of ''all documentation, including notes of meetings and telephone conversations between Century Finance, RLAV and the representatives of the two companies (including accountants and solicitors), that evidence the negotiations for the loan". Paragraph 3.i.f.fe (p 76) requires that there be provided full details of a particular settlement that took place including copies of "all correspondence in relation to this matter between Century Finance, person(s)/company(s) related to or associated with

Century Finance and solicitor Carnegie Fieldhouse".

Paragraph 3.1ii.b requires that there be provided information as to
"whether legal or other professional opinion has been sought as to the income tax consequences of these arrangements between RLAV, PTT, Century Finance, Keyser & Chumley, and, if so: (ba) advise the name(s) of the person(s) from whom a legal opinion was obtained; and (bb) provide copies of that/those opinion(s);" (78)

This notice thus requires information and material which would prima facie be subject to a claim for legal professional privilege.
The notice to Prestige Hotors requires in para. 5:
"Advise whether any professional, legal or financial advice was obtained by the representatives of PTT in relation to the amendments to the trust deed as outlined in 1, 2 and 4 above and, if so, provide:
i. the name(s) of the person( S) from whom advice

was sought;
ii. the nature of the advice or opinion;
iii. a copy of all correspondence or other
documentation in which that advice or opinion is
expressed." (92)

This notice also requires information and documents which would prima facie be subject to a claim for legal professional privilege.

Mr. Fieldhouse is the solicitor for certain of the him (53) does not in terms require the production of any

interested parties in the matters in dispute. The notice to
material or information which on its face would prima facie
be subject to a claim for legal professional privilege.

Claims of legal professional privilege may, of course, be made by any of the three companies or other persons or companies entitled to make such claims with respect to documents within the scope of the S. 264 notices. The claims may be made either before or at the time the information is required by the Commissioner or his duly authorised officers.

It is a difficult question when legal professional privilege should be determined with respect to documents the subject of search warrants. I considered this in Arno v Forsyth and there expressed the view that these questions may be determined in some cases when the warrant is executed or when it is issued, depending on the circumstances of case (588-590). So far as S. 2 6 4 notices are concerned, although, as I mentioned earlier, it would be desirable that the Commissioner include a statement of the recipient's rights with respect to claiming professional privilege, the time for determination of such a claim will generally be when the time arrives to answer the notice or earlier if proceedings are instituted for that purpose. This question is bound up with the further questionwhether legal professional privilege goes to the validity of a S. 264 notice itself or to the duty of its recipient to produce particular documents to the Commissioner. As at present advised I am of the opinion that

the latter view is correct. I took a different view in Arno

v Forsyth with respect to search warrants under S. 10 of the Crimes Act, but my view was based on the language of S. 10 of the Crimes Act 1914 (Cth), the application thereto of Baker v Campbell and the nature of the process of search and seizure.
A S. 2 6 4 notice is more akin to a subpoena duces tecum than
to a search warrant.

These proceedings challenge the validlty of the decisions of the Deputy Commissioners to issue the various notices. The challenge is made under the Judiclal Review Act. If a claim for legal professional privilege is made an appropriate Court will decide whether or not the claim is sustainable. That Court will then have before it the documents, the fact of the making of the claim for privilege and the necessary evidence.

In my opinion the notices are not bad in so far as they require the production of documents that may be the subject of a claim for legal professional privilege.

The appeals by the three companies should be allowed and the notices issued under S. 264 set aside. The Deputy Commissioner must pay the costs of the companies of their appeals. The appeal of Mr. Fieldhouse should be dismissed.
The Deputy Commissioner's cross-appeal in the Fieldhouse
matter seeks a declaration that the S. 264 notice issued to

Mr. Fieldhouse is valid. The ground of the cross-appeal is that the primary Judge "erred in failing to grant appropriate

relief which had been sought by the cross-appellant". The application and pleadings do not disclose any such relief as having been sought by the Deputy Commissioner, so the cross-appeal appears to be based on a misconception. I must say, however, that the original file in the Fieldhouse matter is incomplete, though not, it seems, in any relevant respect. The primary Judge did not fail to declare the notice to Mr. Fieldhouse to be valid. Although that notice is valid there is no foundation for the cross-appeal which should therefore be dismissed. Mr. Fieldhouse must pay the costs of the Deputy Commissioner of his appeal and the Deputy Commissioner must pay the costs, if any, of the cross-appeal.

I certify that this and the preceding
twenty-six (26) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate
Date: 27 September 1989

IN THE FEDERAL COURT OF AUSTRALIA )
) No. G 89 of 1989
NEW SOUTH WALES DISTRICT REGISTRY

i G 161 of 1989
) G 162 of 1989
GENERAL DIVISION

) G 163 of 1989

I

!

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: CARNEGIE RICHHOND HALLETT .

FIELDHOUSE
PERRON INVESTMENTS PTY LIWITED
CENTURY FINANCE PTY LIMITED

PRESTIGE MOTORS PTY LIMITED

Appellants
Respondents

THE DEPUTY COI4HISSIONER OF
TAXATION FOR THE COMMONWEALTH

OF AUSTRALIA, SYDNEY

Cross Appellant
CARNEGIE RICHROND HALLETT
FIELDHOUSE
Cross Respondent

CORAM: LOCKHART, BURCHETT & HILL JJ.
DATED: 27 SEPTEMBER 1989

REASONS FOR JUDGMENT

BURCHETT J.
The completeness of the statements of the facts and the contentions of the parties contained in each of the other judgments enables me to come directly to the matters on which I wish to say something for myself.
I agree that, in the circumstances of these appeals, the notlces are not invalidated by their £allure to make express the fact that the obligations lmposed by them did not extend to documents the subject of a proper claim of legal professional privilege. I wish only to add to the reasons glven by my brethren for this conclusion the following commments.
The consideration of the question should commence with the scope of the power in s.264. The power is conferred to provide the Commissioner of Taxation with a means of gainlng access to the wide range of information and documents referred to in the section. It is not conferred as a means of extracting from the unwary and the ignorant information or documents not within the proper scope of the sectlon, which the Commissioner of Taxation has no lawful right to obtaln or to see. Where a notice, having regard to all the circumstances, is likely to be understood as demanding under threat of statutory penalty more than the Commissioner's entitlement, it may, in my opinion, be excessive, and therefore beyond the power conferred by the section as the High Court has interpreted it: O'Reilly v. The

Commissioners of the State Bank of Victoria (1983) 153 CLR 1 at 48; and see also The Cornmissloner of Taxation of the Commonwealth

of Australia v. The Australia and New Zealand Banklng Group Limited (1979) 143 CLR 499 at 537-538. An example mlght be a notice in terms comparable to those employed in the present case, directed to a recipient without legal qualifications and not shown to have ready access to appropriate legal advice. In such a case, a court should not shrlnk from inslstlng that so

i

I intrusive a power musi not be exercised excessively. perhaps a
I similar principle underlies the proposition that the Commissloner

i

has a duty to exercise his wlde discretlons fairly: see Edelsten v. Wilcox (1988) 83 ALR 99 at 112-113, and the cases there cited. At any rate, it would not sit well with the insistence of the Full Court, in Federal Commissioner of Taxation v. Citibank .

Limited (1989) 89 ATC 4268, on the Cornmissloner's obligation to afford a recipient an adequate opportunity of making a claim of privilege, to accept as valid a purported notice of that kind under the circumstances I have suggested.
In the Citibank case, after referring to what Deane J.
said in Baker v. Campbell (1983) 153 CLR 52 at 118-120, Bowen
C.J. and Fisher J. at 4277 said of the officer of the
1 Commissioner whose actions were in question:

I "It was not sufficient for him to give

I

consideration only to the question whether a claim made for privilege was justified. He was obliged to ensure that Citibank and in
! particular its staff had in the circumstances

1

an adequate opportunity to make claims of privilege."
1

I

I At 4278 their Honours referred to the incapacity of a particular employee to assert the there respondent's rights to claim privilege. At 4293, French J. said:

"The rights or powers conferred by sec. 263 are therefore limited to the extent that they will not authorise access to or copying of books, documents or papers which attract the common law privilege. Where no practical or realistic opportunity is provided for the assertion and testing of claims of legal professional privilege, then the purported exercise of the right of access travels
beyond that limit and is beyond power. What arrangements will answer the minimum requirement for a practical and realistic opportunity to assert claims of privilege wlll depend upon the clrcumstances of the particular case."
I think it would be inconsistent to fail to apply, in a case
under s.264 of the kind outlined, the considerations expressed in these passages, which are dealing with a precipitate claim of access under s.263 to documents on the premises of a bank. Granted the factual differences, the likelihood that a proper claim could not in practice be asserted is quite similar. And the limitation which French J. stated, upon the power conferred by s.263, a section - as it is now settled (see Citibank at 4272)
- that must be construed in the same light, should equally apply
to the power conferred by s.264.
But in none of these appeals is there any reason to doubt the awareness, on the part of each of the appellants, of the right to claim any applicable legal professional privilege, or to doubt each appellant's ability to obtain any necessary professional advice. Therefore, I agree the appellants fail so far as that question is concerned.

I agree, for the reasons given by Hill J., that the submission challenging the validity of a not~ce addressed to a company requiring the supply of lnformatlon must be rejected. I also agree with the reasons of ~ l l l J. for rejecting those submissions of the appellants which attack the b70rdlng of the various notices on grounds other than the requirement of the production or furnishing of copies of documents. So far as the notice to the appellant Fieldhouse is concerned, in the very special circumstances of the case, and particularly having regard to his failure to give evidence that the time for compliance presented him in fact with any difficulties, I agree that the court ought not to fznd in the extremely short time limited for compliance a fatal defect in the notice itself. Finally, as regards the appeal of Mr Fieldhouse, I agree with the reasons of Hill J. for rejecting the contention that the notice addressed to that appellant was too vague.
The remaining questions relate to the requirement in each notice to the public officer of a corporate appellant that copies of documents be provided. I agree with the reasoning and conclusions of Lockhart J. on this aspect of the appeals. So far as concerns the respondentsr contention that the invalid requirement can be severed, leaving effective notices, I desire to make some additional comments.
Of the three notices in question, one contains fifteen
express requirements for the provision of copies of documents, a
second contains nineteen such requirements, and the third

multiple documents, and many to an indefinite, and possibly very contains twenty-two. Most of these requirements relate to

large, number of documents. As Lockhart J. has pnlnted out there are instances (though they are few) where the deletion of one of these requirements would render another pact of a notice unintelligible. Generally, the requirements for coples occur throughout the notices, forming an integral part of the information sought in respect of virtually every topic covered. The content of what would be sufficient answers in respect of these topics would of necessity be profoundly affected by whether or not the invalid demands were complied with.

I do not doubt that, in an appropriate case, the court can sever an invalid portion of a notice under s.264. But I do not think the analogy of a search warrant is precisely applicable here, just as it is not precisely applicable in respect of the issue of legal professional privilege. In Parker v. Churchill (1985) 9 FCR 316, at 321-322, I discussed the basis of the doctrine that a search warrant can be severed. On appeal (9 FCR at 350), this doctrine was accepted by the Full Court. The line of authorities dealing with the severance of search warrants starts with the proposition that an order of a lustice (which a search warrant normally is - the power to issue it is not entrusted to the police) can be good in part, though defective in part. A notice under s.264 is not like a warrant. It is not an order of a justice and it does not authorize an official to do a number of things, but is a notice to a taxpayer or other person, issued by the Commissioner hlmself, to furnish information under what may be severe penalties in respect either of failure or of

error. Compliance ought not to involve the recipient in abstruse

questions of construction demanding the extraction (and performance) of some valld obligation frnm a macrlx of

invalidity. I do not think, according to its true mean>-nq, 5.264

authorizes the issue of a demand contalnlng a complex interweaving of requirements very many of whlch are beyond power. Such a demand is not what the sectlon contemplates. It is qulte different from a valid notice with an added ineffective paragraph

I -
I

7 .

i

I

capable of simple deletion. That, if the search warrant analogy 1s to be pursued, is all that was involved, in substance, in
I
! Parker v. Churchill, as is made plain by Bowen C.J. and Lockhart
J., on the appeal, in their loint judgment at 336

I agree with the orders proposed by Lockhart J

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Burchett.
Dated: 27 September 1989
IN THE FEDERAL COURT OF AUSTRALIA )

) No. G 89 of 1989

NEW SOUTH WALES DISTRICT REGISTRY ) NO. G161 of 1989
No. G162 of 1989
GENERAL DIVISION NO. G163 of 1989
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: CARNEGIE RICHMOND HALLETT FIELDHOUSE
PERRON INVESTMENTS PTY LIMITED
CENTURY FINANCE PTY LIMITED
PRESTIGE MOTORS PTY LIMITED
Appellants

AND : THE DEPUTY COMMISSIONER OF TAXATION
FOR THE COHMONWEALTH OF AUSTRALIA,
SYDNEY
THE DEPUTY COMMISSIONER OF TAXATION
FOR THE COMMONWEALTH OF AUSTRALIA,
PERTH
Respondents
THE DEPUTY COMMISSIONER OF TAXATION
FOR THE COMMONWEALTH OF AUSTRALIA,
SYDNEY
Cross Appellant
CARNEGIE RICHMOND HALLETT FIELDHOUSE
Cross Respondent

CORAM: Lockhart, Burchett and Hill JJ.
PLACE: Sydney
DATED: 27 September 1989

REASONS FOR JUDGMENT

HILL J.
The appellants who were each the recipient of notices served upon them by (in the case of the corporate appellant) the Deputy Commissioner of Taxation, Perth and (in the case of the individual appellant) the Deputy Commissioner of Taxation, Sydney appeal from the judgment of a Judge of this Court upholding the validity of the decision to issue the notices and of the notices themselves.
The proceedings were instituted by the appellants under the Administrative Decisions (Judicial Review) Act 1977. The applications for orders of review, which claimed declarations that each notice was invalid and not authorised by s.264 or any other provision of the Income Tax Assessment Act 1936 ("the Act") were supported by points of claim filed in the proceedings although it would appear that not all of those points were ultimately pressed at the hearlng.
Each of the notices was a lengthy document and sought details concerning, what the questioner apparently saw as, a tax avoidance scheme of some complexity. Although each of the corporate notices differed and submissions were made as to the language of each, it is, in my opinion, sufficient to set out by way of example one only of such notices and to discuss the submissions made by reference to that notice. Where specific submissions were made in respect of other notices I will

notices. Accordingly, I set out as an appendix to this judgment indicate, so far as is relevant, the specific provisions of those
the notice addressed to Prestige Motors Pty Limited.

Having regard to the limited matters argued in respect of the notice to Mr Fieldhouse it is unnecessary to refer in detail to the provisions of the notice served upon him.

In summary before his Honour and before us it was submitted in the case of each notice to the corporate appellant that each was bad because:

k Each notice was issued under s.264(1) ( a ) and went beyond

the power conferred by that section to require the a :
furnishing of information.

*

To the extent that the respondents sought to support the notices in part under s.264(l)(b), if properly construed the notices required the recipient to bring into existence copies of documents and supply these to the Deputy Commissioner of Taxation and were beyond power under s.264(l)(b).

i .,

L . : 1 .'
h Each notice sought conclusions, opinions of law or

i '
,-,
required assumptions of fact to be made or was ambiguous

! ' _ S
and was for any of those reasons beyond power.
.. .
1

!

* Each notice sought the furnishing of information or , ,
I .

c .
material which was "prima facie privileged" that is to

3 .
I

say in respect of which, prima facie, a claim for privilege could be made and was accordingly beyond

power.

X

Each notice should have been addressed to a named individual rather than the proper officer of the corporate recipient as only an individual, and not a corporation, could supply information.
Before his Honour it was submitted in writing that the
decision-maker failed to take into account a relevant matter or
matters, or took into account an irrelevant matter or matters, or

I

!

acted so unreasonably that no person properly instructed could have so exercised the power, but these matters were not pressed before us and indeed, from the written submissions which were made to his Honour it would not seem that these matters were seriously argued before him.
So far as the notice addressed to Mr Fieldhouse was concerned, it was submitted that:

X it was invalid because the time for compliance
stipulated in it was unreasonably short;
h it was invalid because it required production of
documents that were, prima facie, privileged; and
* it was so vague that a third party served with it would
be unable to comply with it.
Before considering the appellants' submissions it is convenient to make some general comments on s.264, its relation to s.263 and the role of s.264 in the Act.

By virtue of s.8 of the Act Parliament has entrusted to the Commissioner of Taxation the administration of the Act. Among the obligations imposed upon him as a result are the assessment of the taxable income of each "taxpayer" and the tax payable on such income as well as the collection of such tax. To enable the Commissioner to perform these obligations Parliament has in ss.263 and 264 of the Act conferred upon the Commissioner (and through him upon those to whom the powers are delegated or who are authorised by him to exercise them) very broad investigatory powers, powers which of their very nature must impinge upon the liberty of the subject.
By s.263 the Commissioner or person authorised by the Commissioner is to have full and free access, inter alia, both to all places and to all documents. He may, but only for a purpose contemplated by the Act, enter offices or houses or indeed, any building or place, and inspect books, documents and papers. The citizen is obliged to render reasonable assistance in the search which the section authorises. Should the Commissioner or officer authorised by him so desire, he may in the course of taking access to books, documents and papers, make copies of them. ~t is, however, to be doubted whether acting under s.263 the Commissioner could require a citizen to make copies of documents and supply them to him, particularly having regard to the specific authority given by the section to the Commissioner to take copies himself.
As Barwick CJ observed in Southwestern Indemnities Ltd
v. Bank of New South Wales (1973) 129 CLR 512 after referring to

buildings" contained in 5.263: the universal expressions such as "at all times" and "to all "the sole limitation or qualification is that the access should be sought for "the purposes of the Act."" (p.520)
However, as Mason, Murphy, Brennan and Deane JJ said in O'Reilly v. Commissioners of the State Bank of Victoria (No.1) (1982-83) 153 CLR 1 at p.48:
"Like all statutory powers, that power must be used bona fide for the purposes for which it was conferred and that involves that its exercise be not excessive in the circumstances of the case."

The decision of thls Court in Federal Commissioner of Taxation v. Citibank Ltd (1989) 89 ATC 4268 provides an example of a case where it was held that the Commissioner had exceeded power in exercising the right of access under s.263 by denying to Citibank the capacity to make an adequate claim of privilege on behalf of its clients.
Section 264 authorises the Commissioner to require persons within the jurisdiction to furnish information, give evidence or produce books, documents or papers. Before the powers under the section may be exercised the Commissioner must serve a notice indicating to the addressee what is required of him. In this way the section differs from s.263 where the right of access may be initiated without a specific authority in writing: Federal Commission of Taxation v. Citibank Ltd post.

While both s.263 and s.264 must be read together, cf. Mason, Murphy, Brennan and Deane JJ at p.47 ff., it does not

O'Reilly per Gibbs CJ, Wilson and Dawson JJ at pp.42-3, and per

follow from this that the powers exercised under the one section must be exercised before the powers may be exercised under the other. So in Citibank an argument that the Commissioner should first ask questions under s.264 before exercising the powers of access under s.263 failed. An argument that the Cornmissloner should first exerclse the right of access before exercising powers under 5.264 would similarly be misconceived.

Section 264 empowers the Commissioner to do three things. First, he may under s.264(l)(a) require the addressee to furnish him with "information" in the sense of "knowledge". ~t would seem as a matter of language that if that is all the Commissioner desires to do he need not identify in the notice the person in connection with whose income or assessment the request for information is made: Federal Commissioner of Taxation v. Australia & New Zealand Banking Group Ltd (1974) 143 CLR 499 at ,

p.535 per Mason J. The comment of Gibbs J in Geosam Investments Pty Ltd & Ors v. Australia & New Zealand Banking Group Ltd (1979) 25 ALR 445 at p.446 that the Commissioner would not be able to obtain under s.264(1) (a) full information as to the contents of a document which he could not have had produced under para.(b) was probably directed at an argument that both under s.264(l)(a) and s.264(l)(b) the information or document must be one required for the purposes of the Act rather than as suggesting a limitation upon s.264(l)(a) inconsistent with the view of Mason J.
Second, the Commissioner may under s.264(l)(b) require a
person to attend and give evidence before him or an officer

authorised by him. If the Commissioner desires to exercise this

power he must specify in the notice the person whose income or assessment is being enquired into: Smorgon v. Australia & New Zealand Banking Group Ltd (1976) 134 CLR 475 at p.486. A corporation cannot be required to attend and give evidence and a notice addressed to a corporation requiring its attendance for the purpose of giving evidence would be bad: Smorgon at pp.481-6 per Stephen J.

Third, the Commissioner may under s.264(l)(b) require a person to produce to him all books, documents and other papers in the custody or control of such person. This requirement is independent of the power of the Commissioner to require a person to attend and give evidence: Smorgon at pp.485-6 per Stephen J; Federal Commissioner of Taxation v. ANZ Banking Group Ltd at p.524 per Gibbs ACJ, at p.535 per 14ason J and at p.546 per murphy J. However the books, documents and papers must be such as relate to the income or assessment of a person named in the notice, assessment being the whole process of ascertainment of the taxable income and tax payable thereon: Federal Commissioner of Taxation v. ANZ Banking Group Ltd at pp.523-4 per Glbbs ACJ; at p.535 per Mason J; at p.541 per Jacobs J.

Each of the three powers while capable of exercise independently could, should the Commissioner so desire, be
exercised together so that one notice would suffice. Should that
happen, it would be unnecessary that the notice specify under
which subsection the notice is given. The contents of the notice
itself will indicate which one or more of the powers referred to

! in s.264 the Commissioner desires to exercise.
I

I A notice properly given under s.264 operates to override
l

I

any contractual obligation of the recipient to preserve confidentiality: Smorgon at p.487; Federal Commissioner of
I
Taxation v. ANZ Banking Group Ltd per Gibbs ACJ at pp.521-2, but
I it does not, it would seem, abrogate a claim for legal
i professional privilege: cf. Baker v. Campbell (1983) 153 CLR
Section 264(1) imposes no specific obligation upon a
recipient of a notice given under the section to comply with it.
However the sanctions for non compliance with a notice are to be
found in ss.dC, 8D, 8K, 8N and 8P of the Taxation Administration

- Act 1953 which impose penalties for: refusing or failing when

required to furnish information, produce books, papers, records or documents or to attend, to the extent that the person is capable of doing so (s.8C); refusing or failing to answer questions or produce books (s.8D); making false or misleading statements (s.8K); recklessly making false or misleading statements (s.8N); and knowingly making statements that are false or misleading (s.8P). The penalties for breach of these provisions can be quite severe and include the possibility of imprisonment as well as substantial monetary fines. The penalties are tiered so that the penalty for a second offence is more severe than that for a first offence and the penalty for a third and subsequent offence is even more severe than that for a second offence.

No doubt in part because of the severe sanctions that may become applicable in the case of a failure to comply with a

notice under the section, but in part also because a request to
supply information, attend and give evidence or produce books and
documents etc. is a considerable intrusion upon the privacy of
the individual to whom a notice is addressed, there is a
requirement that a notice identify with sufficient clarity any
documents which are required to be produced: Federal
Commissioner of Taxation v. ANZ Banking Group Ltd per Gibbs ACJ
at p.525. Where information is required by the section to be
furnished, the request for information should be so framed as to
be sufficiently clear to convey to the addressee what information
is sought and a notice which was unintelligible would obviously
be bad. However, it does not follow from this that the question
of the validity of a notice should be approached carpingly by
engaging in a narrow analysis of each word in an attempt to find
some latent ambiguity in it. Rather the approach to be adopted
is to ask in respect of any particular request whether a
reasonable man in the position of the addressee of the notice can
fairly comply with it and not be thereby exposed to the
possibility of penalty for non compliance having regard to the

I t I,
manner in which the notice is formulated.
1. The Notices issued to the Corporate Appellants
It will be seen from the notice annexed to this judgment that that notice did not on its face disclose whether the source of the power to give the notice lay in s.264(l)(a) or s.264(l)(b); rather the notice referred to s.264 as a whole. The same is true of all notices the subject of the present appeals. That is not a matter ,:"or criticism for there is no

requirement that a notice refer to one or other of the two
paragraphs of the subsection.

I

A perusal of the notice makes it clear that the notice seeks information (s.264(l)(a)); it also seeks "copies" of documents of various classes which are described. To the extent that the notice in so doing seeks production of existing documents or existing copies of documents the notice could be justified to that extent under s.264(l)(b). Whether the notice

!

I should be so construed is one of the more difficult aspects of
!
the present appeal. However, the mere fact that the notice seeks
I to exercise powers under both s.264(l)(a) and s.264(l)(b) would
I not have the consequence of invalidating the notice.
I

Hence the fact that the notice went beyond the requirement of information and required production of documents did not operate to invalidate the notice in a case such as the present where the requirement for a valid notlce requiring production of documents (particularly the stipulation in the notice of the person to whose income and affairs the document must relate) was complied wlth. Although the Commissioner did not in walsh v. Commissloner of Taxation (1981) 81 ATC 4693 press the requirement to produce a document (in that case an opinion of counsel) where that request was contained in a notice that otherwise required the provision of information, the Commissioner's failure to press the production presumably arose because the notice did not stipulate the person to whose income and affairs the opinlon related and so would not have been authorised by s.264(l)(b).

The more difficult question is whether the notices required the recipient to bring into existence copies of documents. I have already indicated that s.263 of the Act does not appear to authorise the Commissioner to require others to copy documents although it does authorise him to make copies of documents himself as part of and in exercise of his right of access. No reference at all is made in s.264 to copies and I think that it is clear that the legislature did not intend in s.264 to empower the Commissioner to require the making of
i I

I

copies. Had the legislature so intended, it presumably would have dealt at the very least with the payment of an appropriate fee or reimbursement of the costs of copying conformably with the
i
I general requirement of the Australian Constitution that
I
1 Commonwealth legislation for the acquisition of property be on
I
! just terms (s.5l(xxxi)).

The opening words of the notice refer to the furnishing and production of what is described as "information". Under the very first question in the notice which seeks an "explanation" of a particular matter, the recipient of the notice is requested to "provide copies of all minutes of directors meetings, correspondence and all other documentation that evidences" certain matters. A similar request to provide copies appears in para.(2). In clause 2(xi) of the notice the request is to "provide a copy of" various books including the trust's bank statements, cash books, cheque butts and journal entries" of a particular kind during a particular period. In clause 4 the word "provide" is used in the context of provide reasons as well as in the context of providing copies.

l

I There is a latent ambiguity in most words and the words "provide" and "copy" are no exception. The word "provide' may,
I
i
I
i depending upon its context, mean no more than "furnish" or
!
i "supply" (see The Macquarie Dictionary (2nd revised edition) but it may connote "preparation" as well as "furnishing". The word
I "copy" will generally mean "reproduction" (see The Macquarie
I
I
I Dictionary) but in a particular context is often used to mean no
! more than "version" or "example" as in the question, "Do you have
a copy of Shakespeare's plays?"
The author of the notice may well not have read the word "copy" in contradistinction to the word "the original". ~t can hardly be imagined that the Commissioner could properly regard the production of the original of any document as involving a failure to comply with the notice. Rather, it may well be that the notice intended to require the addressee to produce either the original or a copy of the specified document at the option of the addressee. However the notice is so unclear that a reasonable person in the position of the appellants receiving such a notice might well regard the notice as requiring him to copy the relevant document and thereafter to provide to the Commissioner that copy and so be misled as to what he was required to do.
Given the serious penalties which a failure to comply with a notice may ultimately trigger it seems to me that an ambiguity in a notice which an addressee is unable to resolve for himself must, where that ambiguity could mislead him, operate to invalidate, to that extent, the notice.

I say "to that extent" because there seems no reason why a provision in a notice which provision is invalid should necessarily operate to invalidate the notice as a whole. Indeed, the appellants did not submit otherwise. It is, of course, different where the part of the notice which is bad is inseverable from the rest of the notice (cf. Dyson v. AG (1912) 1 - Ch 158 and Royal Bank of Canada v. IRC (1972) 1 All ER 225 at p.239). In the latter case Megarry J in referring to a request for particulars by the revenue said:

"If the Commissioners seek particulars of more than they are entltled to, I do not in principle see why their requirement should not be bad merely as to the excess. It may well be that if the excess is so entwined with the valid as to be separable from it only with difficulty, then the whole of the requirement will be bad: the sublect ought not to be required to perform delicate feats of surgery on what is in substance a single requirement.''
However it was clearly implicit in what was sald by Farwell LJ in Dyson at p.172 that if the valid portion of a notice were severable from that which is invalid the whole notice was not bad and the possibility of severance was accepted by this Court in Pyneboard Pty Ltd v. Trade Practices Commission (1982) 57 FLR 368 at p.376.
There is an analogy in the law relating to search warrants in which context it has been held by the Full Court of this Court in Parker v. Churchill (1986) 65 ALR 107 that the invalid parts of a search warrant granted under s.10 of the Commonwealth Crimes Act could be severed from the remainder.

The question whether there can be severance of the notices in the present case is a difficult but important one. It
is true that there are a large number of paragraphs in each notice requiring the addressee to provide copies and it is also true that if the consequence of invalidity of each of these paragraphs is to involve the excision of them from the notice the remainder of the notice would be unintelligible. However it does not seem to me that this is what severance really means. The consequence of treating each requirement to provide copies as

!

invalid is merely that the addressee has no obligation to comply with that particular requirement. Otherwise it remains in the notice. There is no mechanical scissors and paste exercise to be performed.
In most instances the requirement to provide coples is, in any event, discrete. For example, in paragraph 2 of the notice attached to this judgment there is no cross reference to paragraphs 2(v) and Z(viii)(b) so if these particular paragraphs were merely excised there is no paragraph dependent upon them. Different considerations apply to paragraphs l(iv) and l(v) where after the demand that copies of certain documentation be provided the notice continues:
(V) "If no written documentation exists then explain the reason it was not considered necessary to evidence such decisions in writing."

I doubt if there would be difficulty in answering l(v) in the event that l(iv) were totally excised from the notice but once it is realised that invalidity requires no more than

difficulty at all in understanding paragraph l(v) because treating the invalid requirement as ineffective, there remains no
paragraph l(iv) remains in the document. The same comment is
equally applicable to clause Z(x)(ab).

The argument that each of the corporate notices is bad amounts to no more than saying that once there is an invalid requirement in the notice, invalld either because it requires the addressee to make copies or because it is capable of being so interpreted then the whole notice must as a matter of law be bad because the addressee must turn his mind to the question which part of the notice is invalid and which part of the notice is good. Such an argument pays mere lip service to the possibility of severance while denying it under the guise of some notion such as practicality.
It follows, there being, in my opinion, no difficulty in
S.

so doing, that the requirements in the notices for the supply of copies are invalid and should be severed from the remainder of the noticds.
: , I

The next series of submissions seized upon the particular wording of the particular notices and sought to attack that wording on a number of bases.
First, it was submitted that certain questions sought conclusions of fact rather than primary facts, the proposition being advanced that the Commissioner under s.Z64(l)(a) can seek information only as to specific primary facts. Second, it was

which involved either a question of law or the addressee of the submitted that some questions sought information as to matters

notice making assumptions of law. By way of illustration reference was made to question 3 of the Prestige Motors notice with its reference to "recouped" and to "arrangement". It was said that the meaning of the word "arrangement" for example in a particular context in the Act, e.g. s.260, s.82KH, or the meaning of the word "recoupment" in the context of s.100A of the Act necessarily involved the drawing of conclusions, the acceptance of hypotheses and the request of Information as to matters of law. These submissions cannot, in my opinion, be accepted.

It may be conceded that the Commissioner could not address a notice to a recipient seeking his view on an abstract question of law as such, although the reason for so saying is that such a request would be irrelevant for any purpose of the Act, rather than that the request would not be a request for information. However, I have carefully considered each notice and am of the view that where questions are asked using words that might appear in particular contexts in the Act (e.g. s.260) the questions merely use ordinary English words and would be so understood by the addressee.

Next it was submitted that certain questions were bad as requiring the addressee to assume a fact or proceed upon the basis of hypothesis. Examples given included questions 2ix and 2x(b) of the Prestige Holdings notice. It was said that to be forced to make assumptions was to be put into a position of potential embarrassment. An analogy was sought to be drawn from

misguided as it misconceives the function of notices under s.264. the rules of cross-examination. Again the submission is

The reason why a question which requires a witness to make an assumption, which assumption has not first been put to the witness, will usually be relected in cross-examination is that to allow the question to be put in the heat of cross-examination would be unfair to the wltness. A request for information under s.264(l)(a) does not require immediate answer and the addressee of the notice is at liberty when providing information to
indicate, if it be the case, that the assumption is false with
the consequence that the question is not relevant to any enquiry.

Next it was said that many of the questions in the notice were ambiguous and did not convey in clear and plain terms to the recipient what information was required. An example given was clause 2(v) of the Prestige Motors notice which referred to documentation etc. which evidence "the negotiations for and the issues of those units". It was said that the documents called for could either be such as themselves bore witness to the negotiations or which manifested the negotiations. Given the ambiguity it was said the recipients should not be required to choose between the alternatives, particularly having regard to the substantial penalties for non compliance with the section.

However the suggested ambiguity in this and other questions is in my opinion more apparent than real. Given the context of the question a reasonable person in the position of the addressee of the notice would in my view be left in no doubt as to the information or documentation which he is required to

documentation which affords proof of the relevant negotiations is furnish. So far as the particular question 2(v) is concerned required.

I would, with respect, adopt in reply to the present group of submissions what was said by Northrop, Deane and Fisher JJ in this Court in Pyneboard Pty Ltd v. Trade Practices Commission (1982) 57 FLR 368 at p.375:
"The requirement that a notice under s.155(1) convey, with reasonable clarlty, to the reclplent what information he is required to furnish or what documents he is required to produce is not to be applied in a precious or hypercritical fashion (see Melbourne Home of Ford Pty Ltd v. Trade Practices Commission No.3) (1980) 47 FLR 163). Artlflclal dissection, in the cause of determined obfuscation, can introduce an argumentative element of uncertainty into words whlch, when read reasonably in context, are adequate to convey a plain and clear meaning. Provided a notice makes it reasonably clear, in the circumstances in which it is given and on a fair reading of its terms, what information or documents are required, the requirements of s.155(1) as to clarity will be satisfied. In this regard, the mere fact that parslng and analysis in the artificial atmosphere of the courtroom can lead to the identification of a number of latent ambiguities will not invalidate what, as a matter of common sense, is reasonably

clear. "

More substantial were the appellantsr submissions that the notices were invalid to the extent that they sought production of documents which prima facie were the subject of a claim for legal professional privilege e.g. opinions of counsel on various matters. It was not sought to be argued that the Commissioner had no power to require production of such opinions on the ground that they could not be relevant to the income or assessment of the persons nominated in the notice although there

argument. could, at least in some circumstances, be scope for such an

The Commissioner does not seek to argue that legal professional privilege is abrogated by s.264 and having regard to the decisions of the High Court in O'Reilly (supra) and Baker v. Campbell (supra) the Commissioner's concession in this regard was, in my opinion, rightly made.

The argument for the appellants can be put quite slmply. It is said that a notice purporting to be given under 5.264 of the Act which requires production of documents or the furnishing of information which the section does not authorise to be produced or furnished, is, to that extent, bad. Thus a notice under s.264(1) (b) would be valid only if "it clearly confines the documents to be produced to the class of documents of which the Commissioner is authorised to require production". Cf. per Mason J in Federal Commissioner of Taxation v. ANZ Banking Group Ltd supra at p.537. So much may be conceded. Next it is said that s.264(1) does not authorise the Commissioner to require production of documents which are prima facie the subject of privilege. The conclusion thus sought to be drawn is that, to the extent that the notices seek production of documents which are prima facie the subject of legal professional privilege, (or information about such documents), the notices are bad.
The critical question is whether the second premise in
the argument is correct. That in turn depends, at least in part,
upon the question whether a document is privileged from the

outset, or whether a document will only be the subject of legal professional privilege if a claim for privilege is made and
sustained.

The matter is not the subject of direct authority and this is perhaps not surprising since until the decision of the High Court in Baker v. Campbell there was great doubt as to whether the doctrine of legal professional privilege had any application at all to non judicial proceedings, it being lhought by many that the privilege was a rule of evidence.

(b) In place of the orders made by Einfeld J there be substituted:-
(i) declaration that each of the notices the subject of the appeals is invalid to the

extent that it requires production of copies;
(ii) an order that the respondent pay to the appellant one quarter of the costs of the appellant in the application before Einfeld J and of the appeal.

I

AS to appeal No.G89 -

, 2.
j
i

i (a) Appeal dismissed.
! (b) Appellant to pay the respondent's costs of the

I application.
!
1

I certify that this and the
preceding forty four (44)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Mr. Justice Hill.

Associate &tLw~-
Dated: 27 September l989

Counsel and Solicitors D H Bloom QC and R F Edmonds
for Appellant: instructed by C R Fieldhouse
counsel and Solicitors A R Emmett QC and M J Beazley
for Respondent: instructed by Australian
Government Solicitor
Dates of hearing: 8 and 9 June 1989
Date Judgment Delivered: 27 September 1989.

c ,

API'ENDIX

I

i \ a A U S T R A L I A N T A X A T I O N O F F I C E
!

Telephone 326 332'

1 ST GCORGE'S TERRACE Telex 92411

PERTH WR 6000

I

(GPO BOX R15) In Reply
Please Quote:
SPCX MOTTCRAM

l 'L 0G4- mJs
!
I

I Mr Allan Briant I . * _ O k
Publlc Officer, Prestige Motors Pty Ltd

, - As Trustee for Prestige Toyota Unit Trust rrut 8 - . L L

C/- Price Waterhouse .P

"A" . -

13th Floor, 200 S t George's Terrace

:I' PERTH WR 6000 This and the following seven pages is the
. , 2
annexure marked with the letter "A" referred
to in the Affldavlt of Carnegie Richmond
Hallett Fleldhouse sworn before me thls
7th day of May 1986:

NOTICE To FURNISH INFoRMRTIoN RND PRODUCE % l c ~ t o r
INCOME TAX RSSESSMENT dCT 1936 - SECTION 2 6 4
Pursuant to the powers and functions conferred upon me as
Deputy Commissioner o f Taxation under the provisions of the
Taxation Rdministration Act 1953, 1, SYDNEY CLARKE LEVY, do by
this notice require you to furnlsh me with and produce on or
before the 5TH day of DECEMBER 1985 at my office, 1 S t
Ceorge's Terrace, Perth, the following information relating to
the income or assessment o f Prestlge Motors Pty Ltd as trustee
for the Prestige Toyota Unit Trust for the yearc ended 30 June
1979 to the 30 June 1985 inclusive:

1.  Explain the circumstances in which it was decided to amend the Deed of Trust pursuant to the deed dated 1 March 1979, including:
i, when it was decided to amend the deed;
ii.   the name(s) of the person(s) who made the decision to amend the deed;
iii.   the reason(s) the declslon was made to amend the deed;

iu. provide copies of all mlnutes of directors
meetings, correspondence and all other
documentation that evidence 1. to 111. aboue.

U.

if no written documentation exlsts then explalrl the reason it was not considered necessary to evidence Such declslons in wrlting;

ul. a copy of the amended and executed trust deed dated

1 Harch 1979 0409 l:1 j ;
A U S T R A L I A N T A X A T I O N O F F I C E

-2-

2 . ~ r p l a l n t h e c i r c u r n s t a n c e s i n w h i c h 1t w a s d e c l d e d t o i s s u e

1,066,850 "6" c l a s s u n i t s i n t h e P r e s t i g e T o y o t a U n l t

T r u s t ("PTTt1) t o Ronald Lyon ( R u s t r a l l a ) U l c t o r l a P t y C t d

( " R L R U " ) , i n c l u d i n g :

i . t h e r e a s o n l t was d e c i d e d t o l s s u e t h e s e additional
u n i t s i n t h e t r u s t ;

ii. t h e r e a s o n i t was d e c i d e d t o i s s u e t h e u n l t s t o
R L R U ;

iii. t h e name(s ) o f t h e p e r s o n ( s ) who n e g o t i a t e d t h e

I s s u e o f t h e u n l t s on b e h a l f o f PTT;

I U t h e name(s ) o f t h e p e r s o n ( s ) who n e g o t i a t e d t h e

p u r c h a s e o f t h e u n i t s o n b e h a l f o f R L B U ,

U . p r o u i d e c o p l e s o f a l l d o c u m e n t a t i o n i n c l u d i n g ,

c o r r e s p o n d e n c e a n d m i n u t e s o f m e e t i n g s w h i c h

e v i d e n c e t h e negotiations f o r a n d t h e i s s u e o f

t h o s e u n x t s ; a n d , i f no s u c h d o c u m e n t a t l o n e x i s t s ,

e x p l a i n why i t was n o t c o n s i d e r e d n e c e s s a r y t o

e u i d e n c e s u c h n e g o t i a t i o n s i n w r i t i n g ;

u i . t h e p u r p o s e ( s ) f o r w h i c h t h e f u n d s f r o m t h e i s s u e

o f t h e u n i t s w e r e r e q u l r e d ;

u i l . t h e p u r p o s e ( s ) f o r w h i c h t h e f u n d s f r o m t h e i s s u e

o f t h e u n i t s w e r e u s e d ;

u i i i , w h e t h e r t h e u n i t s were o f f e r e d f o r i s s u e t o a n y

p a r t y o t h e r t h a n R L R U a n d , i f s o . p r o u i d e :

a . t h e name and a d d r e s s o f t h i s p a r t y ;

b . c o p i e s o f a l l d o c u m e n t s t h a t e u i d e n c e t h i s
o f f e r ;

i x . t h e r e a s o n s t h e u n l t s w e r e i s s u e d a t p a r , g i u e n

t h a t t h e n e u o w n e r s o f t h e s e u n i t s w o u l d become

e n t i t l e d t o s u b s t a n t i a l distributions OF xncome i n

a n y o n e y e a r , w h l c h , g o i n g o n p a s t p e r f o r m a n c e of

t h e same b u s l n e s s , was l i k e l y t o r e t u r n t h e o w n e r s

t h e c o s t o f t h e p u r c h a s e o f t h e u n i t s w l t h i n a

s h o r t p e r l o d o f t l m e ;

X . w h e t h e r a n y c a l c u l h t i o n s w e r e made p r i o r t o l s s u l n g

t h e u n l t s t o RLRU; a s t o t h e e x p e c t e d distributions

t h a t w e r e t o b e made i n r e l a t i o n t o t h e s e u n l t s

a n d , i f s o , p r o u i d e :

a c o p l e s o f .

a a . t h e d o c u m e n t a t l o n t h a t e v l d e n c e t h e s e
calculations;

A U S T R A L I A N T A X A T I O N O F F I C E

d -3-

!

a b . a l l o t h e r documentation i n c l u d i n g

c o r r e s p o n d e n c e a n d m l n u t e s o f m e e t l n g s i n

w h l c h t h e s e calculations are discussed; a n d

b . if no s u c h c a l c u l a t i o n s w e r e made e x p l a l n t h e

r e a s o n i t was n o t t h o u g h t n e c e s s a r y t o c o n s i d e r

t h e m a t t e r o f how much i n c o m e w o u l d b e

d i s t r i b u t e d t o t h e new u n i t h o l d e r s i n r e t u r n

f o r t h e i r i n v e s t m e n t o f o n l y $ 1 , 8 6 6 , 8 5 0 ;

X I . p r o v i d e a copy o f :

a . t h e t r u s t ' s bank s t a t e m e n t s , c a s h b o o k s , c h e q u e

b u t t s a n d j o u r n a l e n t r i e s w h l c h e v i d e n c e :

L S P

a a . t h e r e c e l p t by PTT o f t h e f u n d s f r o m RLAV

f o r t h e p u r c h a s e o f t h e u n i t s ;

a b . t h e s u b s e q u e n t d i s b u r s e m e n t o f t h e s e f u n d s .

b . t h e k r u s t ' s bank s t a t e m s . c a s h b o o k s , c h e q u e

b u t t s a n d j o u r n a l e n t r l e s t h a t e u i d e n c e t h e

distributions o f i n c o m e t h a t w e r e made t o R L R V

d u r i n g t h e p e r i o d 1 March 1979 t o 30 J u n e 1 9 8 3 ;

3 . I n a d d i t i o n t o t h e m a t t e r s i n q u e s t i o n 2 , a d v i s e w h e t h e r :

i . a n y o f t h e i n c o m e d l s t r l b u t e d f r o m t h e P r e s t l g e

T o y o t a U n i t T r u s t t p _ B L g U d u r i n g t h e p e r i o d 1 March

1979 t o 3 0 J u n e 1983 h a s b e e n a p p l i e d f o r t h e

b e n e f i t o f , r e c o u p e d , r e l m b u r s e d , o r p a l d , e l t h e r

i n F L u s t r a l i a o r o v e r s e a s . t o P r e s t l a ~ M a o r s o r t h e

P e r r o n G r o u p o f Companles o r a W n o r company

r e l a t e d t o o r associated w i t h P r e s t i g e M o t o r s o r

t h e P e r r o n G r o u p o f C o m p a n l e s ;

li. t h e i s s u e o f t h e 1 , 8 6 6 , 8 5 0 ' 0 ' c l a s s u n l t s i n t h e

P r e s t i g e T o y o t a U n l t T r u s t t o R L A U i n 1979 was made

a s p a r t o f , o r i n a s s o c l a t i o n w i t h , a n a g r e e m e n t ,

, a r r a n g e m e n t , u n d e r s t a n d i n g . p r o m i s e o r undertaking
t h a t :

a . p a r t o r a l l of a n y Income s u b s e q u e n t l y

distributed f r o m t h e t r u s t t o R L R V w o u l d e i t h e r

i n A u s t r a l i a o r o v e r s e a s b e a p p l i e d f o r t h e

b e n e f i t o f . r e c o u p e d , r e i m b u r s e d , o r p a l d t o

P r e s t i g e M o t o r s . o r t h e P e r r o n G r o u p o f

C o m p a n l e s . o r a p e r s o n o r coinparty r e l a t e d t o or-

a s s o c i a t e d w l t h P r e s t i g e M o t o r s o r t h e P e r r o n

Group o f C o m p a n i e s ,

b . on o r a b o u t 1 March 1979 , e f f e c t i v e c o n t r o l

o v e r R L A V would be t r a n s f e r r e d t o P r e s t l g e

M o t o r s , o r t h e P e r r o n Group o f C o m p a n i e s , o r a

p e r s o n o r company r e l a t e d t o o r associated w i t h

p r e s t l g e M o t o r s o r t h e P e r r o n G r o u p o f
companies.

c . p r e s t l g e M o t o r s o r t h e P e r r o n G r o u p o f

c o m p a n i e s o r a p e r s o n o r company r e l a t e d t o o r

a s s o c i a t e d w i t h P r e s t i g e M o t o r s o r t h e P e r r o n

Group o f Companies w o u l d h a v e t h e r i g h t t o

a c q u i r e e l t h e r t h e s h a r e s i n R L R U , o r t h e

a s s e t s o f R L A V , o r b o t h ; a n d

a . c o p i e s o f a l l c o r r e s p o n d e n c e a n d o t h e r

d o c u m e n t a t i o n w h i c h e v i d e n c e s t h e a g r e e m e n t s ,

a r r a n g e m e n t s , u n d e r s t a n d i n g s , p r o m i s e s o r

u n d e r t a k i n g s r e f e r r e d t o i n q u e s t i o n 3 . i i .
a b o v e ;

b . a n e x p l a n a t i o n of t h e manner i n w h i c h p a r t o r

a l l o f t h e t r u s t i n c o m e t h a t w a s d i s t r i b u t e d t o

R L A U d u r i n g t h e p e r i o d 1 March 1979 t o 30 J u n e

1983 h a s b e e n a p p l i e d f o r t h e b e n e f i t o f ,

r e c o u p e d , r e i m b u r s e d a n d / o r p a i d t o ( i f a t a l l )

P r e s t i g e M o t o r s o r t h e P e r r o n G r o u p o f

Companles o r a p e r s o n o r company r e l a t e d ' t o o r

a s s o c i a t e d w i t h P r e s t i g e M o t o r s o r t h e P e r r o n

Group o f Companles ;

c . a l l a c c o u n t i n g a n d b a n k i n g r e c o r d s a n d o t h e r

, d o c u m e n t s w h i c h e v i d e n c e t h e m a n n e r i n w h i c h

p a r t o r a l l of t h e t r u s t i n c o m e d i s t r i b u t e d t o

R L l V d u r i n g t h e p e r i o d 1 March 1979 t o 30 J u n e

1983 h a s b e e n a p p l i e d f o r t h e b e n e f i t o f ,

r e c o u p e d , r e i m b u r s e d , o r p a i d ( i f a t a l l ) t o

P r e s t i g e M o t o r s o r t h e P e r r o n G r o u p o f

Companies o r a p e r s o n o r company r e l a t e d t o o r

a s s o c i a t e d w i t h P r e s t i g e M o t o r s o r t h e P e r r o n

Group o f C o m p a n i e s .

4 . The c i r c u m s t a n c e s i n w h i c h was d e c i d e d t o f u r t h e r amend

t h e t r u s t d e e d o n t h e 2 S e p t e m b e r 1 9 8 1 , i n c l u d i n g :

i . i n r e l a t i o n t o t h e d e c i s i o n t o amend t h e t r u s t d e e d

t o r e c l a s s i f y t h e "B" c l a s s u n i t s i s s u e d t o R L R V a s

"C" c l a s s r e d e e m a b l e u n i t s , p r o v i d e :

a . t h e r e a s o n i t was s o d e c i d e d t o amend t h e d e e d .

b t h e r e a s o n i t was d e c l d e d t o amend t h e income

e n t l t l e m e n C o f t h e f o r m e r "8" c l a s s u n l t s ,

C t h e r e a s o n why R L A U a g r e e d t o t h e r e d u c t i o n i n

~ t s d l s t r l b u t l o n e n t i t l e m e n t f r o m t h e t r u s t ,
A U S T H A L I A N T A X A T I O N O F F I C E

d . how RLRU was l n d u c e d t o a g r e e t o t h e alteration

t o t h e r i g h t s and entitlements a t t a c h e d t o i t s

u n i t s i n t h e t r u s t ;

, an e x p l a n a t i o n o f w h e t h e r t h e t r u s t e e o r any

a s s o c i a t e o f t h e t r u s t e e , o r any o t h e r member

o r a s s o c l a t e o f t h e P e r r o n g r o u p was r e q u i r e d

t o g i v e a g u a r a n t e e as t o t h e distribution o f

t h e income t o t h e owners o f t h e s e new "C" c l a s s

u n i t s and, i f so. p r o v i d e :

ea. d copy o f t h l s g u d r a n t e e ;

eb. t h e r e a s o n why such a g u a r a n t e e was
r e q u i r e d ;

f . c o p i e s o f a l l co r respondence and o t h e r

d o c u m e n t a t i o n i n w h i c h t h i s amendment t o t h e

t r u s t deed was d i s c u s s e d and approved;

g . t h e name o f t h e p e r s o n who n e g o t i a t e d t h e

amendment t o t h e deed o n b e h a l f o f RLdV,

h. ' t h e name o f t h e p e r s o n who n e g o t i a t e d t h e

amendment t o t h e deed o n b e h a l f o f t h e t r u s t e e ;

i. w h e t h e r RLRV's agreement t o t h e amendment t o

t h e deed was dependant upon t h e e x e c u t i o n o f

any o t h e r documents o r agreements and, i f so,

p r o v i d e c o p i e s o f t h e s e agreements and d e t a i l s

o f t h e c i r c u m s t a n c e s i n w h i c h t h e s e agreements

were execu ted ;

11. i n r e l a t i o n t o t h e d e c i s i o n t o amend t h e t r u s t deed

t o g r a n t t h e power t o t h e t r u s t e e t o i s s u e

6,400,000 "D" c l a s s u n i t s p r o u i d e :

a . t h e r e a s o n i t was d e c i d e d t o so antend t h e deed;

b why i t was d e c i d e d t o o u t l i n e i n d e t a i l t h e

income e n t i t l e m e n t u f t h e s e u n i t s ;

c t h e r e a s o n why i t was d e c l d e d t o I s s u e t h e s e

u n l t s t o t h e N a t ~ o n a l M u t u a l L i f e A b s o c l a t l o n

of L u s t r a l a s l a L t d ( "NML") ;

d . w h e t h e r t h e s e u n l t s were c r e a t e d specifically

f o r I s s u e t o NML and, if so, p r o v i d e t h e r e a s o n

t h a t i t was d e c l d e d t o c r e a t e t h e s e units;

c . w h e t h e r t h e u n i t s were o f f e r e d f o r l s s u e t o any

o t h e r p a r t l e s and. I F so, p r o v l d e :

A U S T R A L I A N T A X A T I O N O F F I C E I

r ..
I

-6- !

ea. t he name($) and add ress (es ) o f t h e s e
p a r t l e s ,

eb c o p l e s o f a l l d o c u m e n t a t i o n i n w h i c h t h e

o f f e r s have been ev idenced ;

f . p u r p o s e ( s ) f o r w h i c h t h e f u n d s f rom t h e i s s u e

o f t h e u n l t s were r e q u i r e d ;

g . p u r p o s e ( s ) f o r w h i c h t h e f u n d s f r o m t h e i s s u e

o f t h e u n i t s were used;

h . t h e name o f t h e p e r s o n who n e g o t i a t e d t h e i s s u e

of t h e u n i t s t o NML on b e h a l f o f t h e t r u s t e e ;

1. t h e name of t h e p e r s o n who n e g o t i a t e d t h e

purchase o f t h e s e u n i t s by NML;

j. w h e t h e r t h e t r u s t e e o r a n a s s o c i a t e o f t h e

t r u s t e e , o r any o t h e r member o r a s s o c l a t e o f

t h e P e r r o n g r o u p was r e q u l r e d t o g i v e a

g u a r a n t e e as t o t h e distribution o f t h e income

t o t h e owners o f t h e s e new ''D" c l a s s u n i t s and,

i f so, p r o u l d e :

j a . a copy o f t h i s g u a r a n t e e ;

j b . t h e r e a s o n why s u c h a g u d r a n t e e was
r e q u l r e d ;

I

k w h e t h e r as a c o n d i t i o n o f NML a g r e e i n g t o ! . -

pu rchase t h e u n l t s NML was g r a n t e d a mor tgage ;:

o u e r p r o p e r t y b e l o n g i n g t o t h e P e r r o n g roup, . .
' :~

and, i f so, p r o v i d e : !:.

ka . c o p i e s o f t h e e x e c u t e d mor tgages ;

kb . t h e r e a s o n why t h e P e r r o n g r o u p was

p r e p a r e d t o g r a n t t h e s e mor tgages when a l l

t h a t NML was d o i n g was p u r c h a s i n g u n l t s i n

a u n i t t r u s t . a t r a n s a c t i o n n o t n o r m a l l y

secu red i n t h i s way;

1. c o p i e s o f a l l c o r r e s p o n d e n c e and o t h e r

d o c u m e n t a t i o n be tween t h e r e p r e s e n t a t i v e s o f

NML and t h e r e p r e s e n t a t i v e s o f PTT i n w h l c h :

l a . t h e negotiation f o r t h e I s s u e o f t h e u n i t s

was d i scussed ;

l b . t h e n e g o t i a t i o n f o r t h e g r a n t i n g o f a

gua ran was d l s c u s s e d ;

l c . t h e n e g o t l a t l o n f o r t h e g r a n t i n g o f t h e

mor tgages was d l s c u s s e d ,

m c o p i ~ s o f cash books . bank s t d t e r n e r ~ t s , chequr

b u t t s and ~ o u r n d l c n t r l e s w h l c h e u l d e n c e .

A U S T R A L I A N T A X A T I O N O F F I C E

ma t h e r e c e l p t and d i s b u r s e m e n t o f t h e

$ 6 . 4 m i l l l o n r e c e l u e d by t h e t r u s t e e f r o m

NML f o r t h e pu rchase o f t h e u n i t s .

mb. t h e payment o f t h e income d l s t r l b u t l o n s t o

NML f r o m PTT f o r t h e p e r i o d 1 J u l y 1 9 0 1 t o

3 0 June 1 9 0 5 ,

~ d u l s e whe the r any p r o f e s s i o n a l l e g a l o r f i n a n c i a l a d u l c e

was o b t a i n e d by t h e r e p r e s e n t a t i v e s o f PTT I n r e l a t i o n t o

t h e amendments t o t h e t r u s t deed as o u t l i n e d i n 1. 2 and 4

above and, i f so, p r o u i d e :

1. t h e name(s) o f t h e p e r s o n ( s ) f r o m whom a d u l c e was
sough t ,

i i . t h e n a t u r e o f t h e a d u l c e o r o p i n i o n s ;

-

ill. a copy of a l l co r respondence o r o t h e r d o c u m e n t a t i o n

i n w h i c h t h a t a d u i c e o r o p l n i o n i s expressed;

L>.

P r o v i d e c o p i e s of: 1 : ' .

1. t h e r e g i s t e r o f t h e u n i t h o l d e r s o f t h e t r u s t ;

li. a l l n o t i c e s I s s u e d by t h e t r u s t e e o f f e r l n g t h e

u n i t s i n t h e t r u s t ;

iii. a l l n o t i c e s o r co r respondence e v i d e n c i n g t h e

accep tance o f t h e s e u n l t s ;

i u . a l l m l n u t e s o f t h e d i t e c t o r s me'et lngs o f t h e

t r u s t e e company f o r t h e p e r l o d 1 J u l y 1978 t o 3 0

June 1 9 8 5 ,

U . t h e m i n u t e s o f a l l extraordinary g e n e r a l m e e t i n g s

o f t h e u n i t h o l d e r s o f t h e t r u s t h e l d d u r i n g t h l s
p e r i o d ;

u i . t h e m l n u t e s o f t h e a n n u a l g e n e r a l mee t l ngs of t h e

t r u s t d u r i n g t h l s p e r l o d .

I n r e l a t i o n t o t h e t r a d l n g a l l o w a n c e c l a l m e d i n t h e

r e t u r n s o f income f o r P T T f o r each o f t h e y e a r s ended t h e

30 June 1 9 7 9 t o 30 June 1 9 8 5 i n c l u s l u e , p r o u i d e :

1. a d e t a i l e d description o f t h e a l l o w a n c e and how i t

i s i n c u r r e d i n g a i n l n g t h e a s s e s s a b l e Income o f t h e
t r u s t ;

11. CoPles o f docun~en ta ry eu ldence , ~ n c l u d l n g bank

SlaLemc-nts, cheque b u t t s , cash books and j o u r n a l

e n t r i e s t h a t eu ldence t h e paynlent o f t h e a l l o w a n c e
I n each y e a r

8. I n r e l a t i o n t o t h e ' i n c o m e r e t u r n e d from t h e t r u s t ' s

1 ~ n v e s t r n e n t and F i n a n c e a c t i v i t i e s i n e a c h o f t h e y e a r s o f

lncome ended t h e 30 J u n e 1979 t o 3 0 J u n e 1985 i n c l u s i u e ,
p r o v l d e :

-

i. a d e t a i l e d d e s c r i p t i o n o f what t h e I n v e s t m e n t and

F lnance a c t i v i t i e s o f t h e t r u s t i n v o l v e :

ii. c o p l e s o f documentary e u l d e n c e . including bank

s t a t e m e n t s , cheque b u t t s , c a s h books and j o u r n a l

e n t r i e s which e v i d e n c e t h e r e c e i p t o f t h e income

and t h e payment o f t h e e x p e n s e s , i n r e l a t l o n t o

t h e s e a c t i v i t i e s .

O R T E D a t P e r t h t h i s 24 t h day of October 1 9 0 5 .
4'

S.C. L E V Y
DEPUTY COMMISSIONER OF TAXATION RND

D E L E G A T E TO THE COMMISSIONER O r TAXATION.

AND :	THE DEPUTY COMMISSIONER OF TAXATION FOR THE COHMONWEALTH OF AUSTRALIA, SYDNEY THE DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA, PERTH
Respondents
THE DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA, SYDNEY
Cross Appellant CARNEGIE RICHMOND HALLETT FIELDHOUSE Cross Respondent

I	ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
I

IN THE FEDERAL COURT OF AUSTRALIA	)
) No. G 89 of 1989
NEW SOUTH WALES DISTRICT REGISTRY )	G161 of 1989

are bad, either by requiring, expressly or by implication,	the production to the Deputy Commissioner of documents which
are prima facie privileged or by failing to make clear on the face of the notices themselves that the recipients are not required to produce privileged material. The third question is whether the notices are invalid for ambiguity or want of clarity in the description of the documents or classes of documents, production of which is required. Other questions were argued which I shall mention later.
A separate proceeding was brought in this Court's original jurisdiction by each appellant against the Deputy Commissioner of Taxation to review his decision to Issue a notice to each appellant under sub-S. 264(1)(b). The proceedings were brought under the Administrative Decisions (Judicial Review) Act 1977 (the "Judicial Review Act"). The learned primary Judge dismissed each application for review with costs. The appellants appealed to the Full Court from his Honour's judgment. The Deputy Commissioner cross-appealed from the alleged failure of his Honour to declare the notice issued to Mr. Fieldhouse to be valid.

(a)	to furnish him with such information as he may require; and
(b)	to attend and give evidence before h ~ m or before any officer authorized by him in that behalf concerning his or any other person's income or assessment, and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto.

Commissioners of the State Bank of Victoria (1983) 153 CLR 1 at	48; and see also The Cornmissloner of Taxation of the Commonwealth
of Australia v. The Australia and New Zealand Banklng Group Limited (1979) 143 CLR 499 at 537-538. An example mlght be a notice in terms comparable to those employed in the present case, directed to a recipient without legal qualifications and not shown to have ready access to appropriate legal advice. In such a case, a court should not shrlnk from inslstlng that so

I	intrusive a power musi not be exercised excessively. perhaps a
I	similar principle underlies the proposition that the Commissloner
i	has a duty to exercise his wlde discretlons fairly: see Edelsten v. Wilcox (1988) 83 ALR 99 at 112-113, and the cases there cited. At any rate, it would not sit well with the insistence of the Full Court, in Federal Commissioner of Taxation v. Citibank .
Limited (1989) 89 ATC 4268, on the Cornmissloner's obligation to afford a recipient an adequate opportunity of making a claim of privilege, to accept as valid a purported notice of that kind under the circumstances I have suggested.
In the Citibank case, after referring to what Deane J. said in Baker v. Campbell (1983) 153 CLR 52 at 118-120, Bowen C.J. and Fisher J. at 4277 said of the officer of the
1	Commissioner whose actions were in question:
I	"It was not sufficient for him to give
I	consideration only to the question whether a claim made for privilege was justified. He was obliged to ensure that Citibank and in
!	particular its staff had in the circumstances
1	an adequate opportunity to make claims of privilege."
1
I
I	At 4278 their Honours referred to the incapacity of a particular employee to assert the there respondent's rights to claim privilege. At 4293, French J. said:

I	capable of simple deletion. That, if the search warrant analogy 1s to be pursued, is all that was involved, in substance, in
I
!	Parker v. Churchill, as is made plain by Bowen C.J. and Lockhart J., on the appeal, in their loint judgment at 336

NEW SOUTH WALES DISTRICT REGISTRY )	NO. G161 of 1989
No. G162 of 1989
GENERAL DIVISION	NO. G163 of 1989

BETWEEN:	CARNEGIE RICHMOND HALLETT FIELDHOUSE PERRON INVESTMENTS PTY LIMITED CENTURY FINANCE PTY LIMITED PRESTIGE MOTORS PTY LIMITED
Appellants

notices. Accordingly, I set out as an appendix to this judgment	indicate, so far as is relevant, the specific provisions of those
the notice addressed to Prestige Motors Pty Limited.
Having regard to the limited matters argued in respect of the notice to Mr Fieldhouse it is unnecessary to refer in detail to the provisions of the notice served upon him.
In summary before his Honour and before us it was submitted in the case of each notice to the corporate appellant that each was bad because:

the power conferred by that section to require the	a :
furnishing of information.

X	it was invalid because the time for compliance stipulated in it was unreasonably short;
h	it was invalid because it required production of
documents that were, prima facie, privileged; and
*	it was so vague that a third party served with it would
be unable to comply with it.

difficulty at all in understanding paragraph l(v) because	treating the invalid requirement as ineffective, there remains no
paragraph l(iv) remains in the document. The same comment is equally applicable to clause Z(x)(ab).
The argument that each of the corporate notices is bad amounts to no more than saying that once there is an invalid requirement in the notice, invalld either because it requires the addressee to make copies or because it is capable of being so interpreted then the whole notice must as a matter of law be bad because the addressee must turn his mind to the question which part of the notice is invalid and which part of the notice is good. Such an argument pays mere lip service to the possibility of severance while denying it under the guise of some notion such as practicality.

,	2.
j
i
i	(a) Appeal dismissed.
!	(b) Appellant to pay the respondent's costs of the
I	application.
!
1

Counsel and Solicitors	D H Bloom QC and R F Edmonds
for Appellant:	instructed by C R Fieldhouse
counsel and Solicitors	A R Emmett QC and M J Beazley
for Respondent:	instructed by Australian Government Solicitor
Dates of hearing:	8 and 9 June 1989
Date Judgment Delivered:	27 September 1989.

I	Mr Allan Briant	**I . _***	*O k*
Publlc Officer, Prestige Motors Pty Ltd

:I'	PERTH WR 6000	This and the following seven pages is the
. ,	2
annexure marked with the letter "A" referred
to in the Affldavlt of Carnegie Richmond
Hallett Fleldhouse sworn before me thls 7th day of May 1986:

i .	t h e r e a s o n l t was	d e c i d e d	t o l s s u e t h e s e additional
u n i t s i n t h e t r u s t ;
ii.	t h e r e a s o n i t was	d e c i d e d	t o i s s u e t h e u n l t s t o
R L R U ;

b .	c o p i e s	o f	a l l d o c u m e n t s	t h a t e u i d e n c e	t h i s
o f f e r ;

t h e same	b u s l n e s s ,	was	l i k e l y t o r e t u r n	t h e o w n e r s
t h e	c o s t o f	t h e p u r c h a s e	o f	t h e u n i t s w l t h i n a

[1989] FCA 586

27 Sep 1989

a s	p a r t o f ,	o r i n a s s o c l a t i o n w i t h ,	a n a g r e e m e n t ,
, a r r a n g e m e n t ,	u n d e r s t a n d i n g .	p r o m i s e	o r undertaking
t h a t :

i n A u s t r a l i a	o r o v e r s e a s	b e	a p p l i e d	f o r t h e
b e n e f i t o f .	r e c o u p e d ,	r e i m b u r s e d ,	o r p a l d	t o

P r e s t i g e M o t o r s .	o r	t h e	P e r r o n	G r o u p	o f
C o m p a n l e s .	o r a	p e r s o n	o r	coinparty	r e l a t e d t o or-
a s s o c i a t e d w l t h	P r e s t i g e	M o t o r s	o r	t h e	P e r r o n

p r e s t l g e	M o t o r s	o r	t h e	P e r r o n	G r o u p	o f
companies.

a c q u i r e e l t h e r t h e	s h a r e s i n *R L R U ,*	o r t h e
a s s e t s o f *R L A V ,*	o r b o t h ;	a n d

u n d e r t a k i n g s	r e f e r r e d	t o i n q u e s t i o n 3 . i i .
a b o v e ;

r e c o u p e d ,	r e i m b u r s e d	a n d / o r	p a i d	t o ( i f	a t a l l )
P r e s t i g e M o t o r s	o r	t h e	P e r r o n	G r o u p	o f

*R L l V* d u r i n g t h e p e r i o d	1 March	1979	t o 30 J u n e
1983	h a s	b e e n	a p p l i e d f o r t h e b e n e f i t o f ,

t h e income t o t h e owners	o f t h e s e new "C"	c l a s s
u n i t s and,	i f so.	p r o v i d e :

f o r I s s u e t o NML and,	if	so,	p r o v i d e	t h e	r e a s o n
t h a t	i t was	d e c l d e d	t o c r e a t e	t h e s e	units;