PJYY and Commissioner of Taxation (Taxation)
[2022] AATA 4933
•4 November 2022
PJYY and Commissioner of Taxation (Taxation) [2022] AATA 4933 (4 November 2022)
ReviewNumber: 2021/1324, 2021/1325, 2021/1326, 2021/1327, 2021/1328, 2021/1329, 2021/1330, 2021/1331, 2021/1332, 2021/1333
Division:Taxation and Commercial Division
File Number(s): 2021/1324-1333
Re:PJYY
APPLICANT
AndCommissioner of Taxation
RESPONDENT
Decision
Tribunal:Deputy President Bernard J McCabe
Date:4 November 2022
Place:Sydney
The Tribunal directs:
1.The applicant shall, not later than close of business on 10 November 2022, confirm in writing whether it wishes to withdraw the summons.
2.If the applicant does not withdraw the summons, the applicant shall provide to the summonsed party by close of business on 18 November 2022:
a.the applicant’s name; and
b.subject to direction 4, unredacted copies of its statement of facts, issues and contentions, the request for a summons and the reasons for the objection decision to the summonsed party.
3.If, consistent with these reasons, the applicant believes there are good reasons why:
a.the applicant’s name should not be provided to the summonsed party;
b.the documents should be redacted in any respect;
c.the summonsed party should be provided with a summary of the issues and allegations of fact in lieu of the redacted documents referred to in direction 2;
then the applicant shall make an application to that effect by close of business on 17 November 2022 in which event the applicant shall be excused from complying with direction 2 until further order.
4.The applicant may redact any information from documents provided to the summonsed party that is required to be kept confidential by operation of law, including tax file numbers.
..........................[SGD]..........................................
Deputy President Bernard J McCabe
Catchwords
Catchwords - PRACTICE AND PROCEEDURE - procedural fairness - whether a non-party to dispute should be granted access to documents in proceeding - where proceeding held in private - where non-party wishes to object to summons on grounds of relevance
Legislation
Administrative Appeal Tribunal Act 1975
Taxation Administration Act 1953
Cases
Confidential and Commissioner of Taxation [2013] AATA 112
Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504
Investrix Pty Ltd v Commissioner of Taxation [2015] FCA 1427; (2015) AAR 59
Jaffarie v Director-General of Security (2014) 226 FCR 505; [2014] FCAFC 102
Kioa v West (1985) 159 CLR 550
Portal Software v Bodsworth [2005] NSWSC 1115
Re Perpetual Trustee Co (Canberra) Ltd v Commissioner for ACT Revenue (1993) 29 ALD 817
Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145
Trade Practices Commission v Arnotts Limited (1989) 88 ALR 90 at 103; [1989] FCA 248
Wilson Transformer Company Pty Ltd v Anti-Dumping Review Panel [2022] FCAFC 4REASONS FOR DECISION
Deputy President Bernard J McCabe
4 November 2022
These reasons address the grounds on which a stranger to review proceedings may object to a summons they have received from a party. They also consider the information that a stranger might expect to receive when making their objection.
Background
At the applicant’s request, the Tribunal issued a summons under s 40A(1)(b) of the Administrative Appeals Tribunal Act 1975 (the AAT Act) to a stranger to these proceedings. I shall refer to the stranger as ‘Mr Smith’. The summons identified a range of documents which the applicant suspects are in the possession of Mr Smith. Mr Smith has made an application in which he asks the Tribunal to set aside the summons.
A complication potentially arises out of the fact the proceedings are being heard in private at the applicant’s request pursuant to s 14ZZE of the Taxation Administration Act 1953 (the Administration Act). Whereas most cases in the Tribunal are conducted in public, taxpayers engaged in a review under Part IVC of the Administration Act are entitled to certain procedural privileges. In particular, if the applicant requests a private hearing:
(a)the public is excluded from any hearing, including any interlocutory hearing or other case event;
(b)the proceedings are listed and referred to under a pseudonym (in this case, ‘PJYY’); and
(c)when a decision (including any interlocutory decision) is published, the Tribunal “must ensure, as far as practicable, that its reasons for the decision are framed so as not to be likely to enable the identification of the person who applied for the review”: see s 14ZZJ of the Administration Act.
Because the applicant has requested a private hearing, the summons directed to Mr Smith did not identify the applicant by name. The summons used the pseudonym attached to the file. Mr Smith’s representatives have subsequently indicated they suspect they know who the applicant might be, but the Tribunal has not confirmed or denied those suspicions.
Mr Smith doubts the documents sought under the summons have apparent relevance to these proceedings, and he says the summons is oppressive. He also fears the summons may be issued for an improper purpose. To make good on these arguments at an interlocutory hearing, Mr Smith says he first needs information from the applicant, including:
·The applicant’s name, so he can ascertain whether the applicant is (a) Mr Smith’s ex-wife who is involved in other legal controversies with Mr Smith, or (b) some other person who might have a collateral objective; and
·Information about the reviewable objection decision, the application for review and statements of facts, issues and contentions so Mr Smith might form a view about the apparent relevance of the documents.
The applicant does not want to reveal their identity but has agreed to provide redacted copies of:
·the applicant’s summons request;
·the statements of facts, issues and contentions lodged by both parties; and
·the objection decision.
The redacted documents were exhibited in an affidavit filed by the applicant’s solicitor. The redactions do not just extend to obviously confidential material, like tax file numbers. The documents feature scattered passages of text interspersed amongst extensive redactions. Some passages include both unredacted text and redactions. Mr Smith argued it is difficult to make sense of the documents in their current form. To the extent one could form an impression of what is in contest between the parties from the partially unredacted passages, he says that impression might be misleading in the absence of the redacted material.
The applicant acknowledged Mr Smith had a right to object to the summons. The applicant accepts the rules of procedural fairness require that Mr Smith be put in a position where he knows enough about the applicant’s case to make meaningful submissions in support of legitimate grounds of objection. The applicant says the unredacted material that has been provided is sufficient for that purpose. As I understand it, the applicant invites me to satisfy myself the unredacted passages accurately communicate the substance of the matters before the Tribunal in a way that is sufficient to satisfy the procedural fairness obligations owed to Mr Smith.
The question before the Tribunal at this interlocutory hearing
There is no dispute between the parties about the general principles which govern the issue of a summons under s 40A(1)(b) of the AAT Act. In summary, they are the same principles which govern the issue of a subpoena in court proceedings: see, for example, Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504. Those principles apply whether the Tribunal is considering a request to issue a summons, or if it is considering whether to set aside a summons that has already been issued.[1] In each case, the Tribunal is concerned to ensure the summons has a legitimate forensic purpose – most obviously because the material sought in the summons has an “apparent relevance to the issues in the principal proceedings” – and will ask whether it is “seriously and unfairly burdensome or prejudicial”: Trade Practices Commission v Arnotts Limited (1989) 88 ALR 90 at 103; [1989] FCA 248 at [44] per Beaumont J.
[1] While the AAT Act does not include an express power to revoke a summons once it has been issued, the power to revoke is arguably implicit in s 33 of the AAT Act if not s 40A by reason of s 33(3) of the Acts Interpretation Act 1901.
The concept of a legitimate forensic purpose was considered in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145. In that case, Bell P observed at [80]:
It will generally be sufficient and prima facie evidence of a legitimate forensic purpose if the documents sought to be produced on subpoena have an apparent relevance to the issues in the case and or bear upon the cross examination of witnesses expected to be called in the proceedings.
I note Brereton JA in the Blacktown City Council case cautioned (at [89]) against focusing too narrowly on whether the issuing party established:
…that the documents sought will materially assist its case, as distinct from that it is “likely” (or “on the cards”) that they will add, in some way or another, to the relevant evidence in the case, and that the essential question is whether the documents called for are apparently relevant, or capable of providing a legitimate basis for cross-examination, in which case there is a legitimate forensic purpose for the issue of the subpoena. In my view, at least in civil proceedings and in the absence of any question of public interest immunity, no more is required to support the issue of a subpoena for production than that there is a reasonable basis for supposing that the material called for will likely add, in the end, in some way or another, to the relevant evidence in the case. This reflects the notions that the documents relate to, throw light on, or are sufficiently relevant to the dispute; that they “appear relevant in the sense that they relate to the subject matter of the proceedings”; or that they could possibly throw light on the issues in the case. Moreover, documents will add “in some way” to the relevant evidence in the case if they are capable of assisting in cross-examination, or go to credit, and notwithstanding that they are inadmissible according to the rules of evidence.
[Citations omitted]
I need not dwell on the legitimacy of the forensic purpose or the other aspects of the criteria for scrutinising a summons at this juncture because the interlocutory hearing focused on a narrower question: on what grounds can a summonsed individual (as opposed to the other substantive party or parties) object to the summons? As the interlocutory process unfolded, a related question also presented itself for determination: which documents and what information should be provided to the summonsed individual as a matter of fairness?
This all arises because the Tribunal’s forensic information-gathering tools - like the summons - are typically wielded by the parties in the context of proceedings that unfold in a court-like way. The Tribunal only screens a request to issue a summons through an administrative process in its registry. Where a summons request is problematic, a registrar may liaise with the party making the request to seek clarification. The registry will not generally refer a summons request to a member unless the registrar concludes the summons is irregular in some respect. A summons request that is not irregular on its face will normally be issued by the registry in the expectation another party to the proceedings will object in the ordinary way. The parties are typically best placed to take the full range of objections contemplated by Beaumont J in Arnotts, because they know what is in dispute. They are assumed to bear some onus in this regard: see Blacktown City Council at [73] per Bell P, citing Brereton J (as he then was) in Portal Software v Bodsworth [2005] NSWSC 1115 at [28]-[29]. The parties in Tribunal proceedings must also be conscious of their statutory obligation to assist the Tribunal. A decision-maker might need to be more active in objectively scrutinising the appropriateness of a summons: see s 33 of the AAT Act.
While parties usually take the lead in scrutinising summonses, it is common for summonsed individuals to push back in the face of a summons that they claim is oppressive or unclear. The objection from Mr Smith is both more focused and more wide-ranging. He is making a full-throated challenge to the applicant’s forensic purpose in issuing the summons while also claiming the summons is unfairly burdensome and prejudicial, just as he might if he were a party to the review. In doing so, his counsel, Ms Rich, relies on observations made in the Tribunal’s decision in Confidential and Commissioner of Taxation [2013] AATA 112 at [564]-[568]. Ms Rich says those observations, at least implicitly, suggest Mr Smith should get all the documents he seeks before the objection to summons can proceed. In fairness, the Tribunal’s comprehensive discussion of the summons power and process in that case occurred in the unusual context of an application by one party (the applicant) requesting the issue of a summons to another (the Commissioner). There is at least a question as to whether the observations in the reasoning are equally applicable to a challenge brought by a non-party in proceedings with a private hearing.
The position of the summonsed individual
While the parties to a review have an interest in the efficient conduct of the proceedings as a whole, the summonsed individual ordinarily has a narrower concern. He or she wants to know why their privacy and liberty is being disturbed through a compulsory process in the cause of another. That is fair enough. Complying with a summons may be inconvenient or even onerous. It may be especially expensive for a non-party given they have no control over the litigation. (Mr Smith illustrates the problem: he has engaged solicitors and retained counsel to test the summons.) The summonsed individual might also be concerned about the invasion of privacy, or be worried they will be disadvantaged in some other respect. Of course, a summonsed individual might also have collateral objectives in making an objection. At first glance, those concerns are encompassed in the second question Beaumont J asked in Arnotts, namely whether the summons would be “seriously and unfairly burdensome or prejudicial”.
A summonsed (non-party) individual that makes an application to object to or set aside a summons becomes (at least for that purpose) a party to a proceeding in the Tribunal. That conclusion flows from the definition of ‘proceeding’ in s 3 of the AAT Act which includes, relevantly, an application for review but also:
(f) any other application to the Tribunal under this Act or any other Act; and…
(h) an incidental application to the Tribunal made in the course of, or in connection with, an application or proposed application, or a matter, referred to in a preceding paragraph.
Mr Smith’s application to set aside the summons falls within one or both of those residual categories of ‘proceeding’. His application therefore engages the right to be heard under s 39 of the AAT Act in relation to the decision on the application which is the subject of that proceeding. Section 39(1) provides:
(1) Subject to sections 35, 36 and 36B, the Tribunal shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case and, in particular, to inspect any documents to which the Tribunal proposes to have regard in reaching a decision in the proceeding and to make submissions in relation to those documents.
So far, so good – at least from Mr Smith’s point of view. He clearly has the right to bring an objection to the summons and be heard. But as he does so, is he entitled to address forensic purpose as if he were a party, or is he restricted to a challenge based on burden and prejudice, the second limb of the enquiry suggested by Beaumont J in Arnotts? Or is a different approach altogether appropriate?
His Honour’s reasoning in Arnotts repays careful reading. Far from advocating an inflexible two-limbed test, his Honour pragmatically considered the matter from the perspective of the party issuing the subpoena and from the perspective of the recipient: at [44]. The resolution of the objection to the subpoena required Beaumont J to balance the party’s interest in getting the documents (and perhaps the potential value of the material to the proceedings more generally) against the burden or prejudice the summonsed individual might face in complying with the demand.
The question I must ask when evaluating the objection comes down to this: does the Tribunal have sufficient reason to compel Mr Smith, a non-party, to go to the effort of producing the identified documents? In making that decision, I must consider:
·the apparent relevance of the documents in the (generous) sense discussed in authorities like Blacktown City Council;
·the burden that will be imposed on Mr Smith in producing the documents - which will be impacted by the number of documents sought, their format and size, their location, any unusual burdens associated with a search, and the cost of retrieval and delivery, amongst other things; and
·any other unfairness or disadvantage Mr Smith might plausibly experience in complying with the summons.
What documents and information can Mr Smith expect to assist him in making submissions?
If Mr Smith wishes to press his objection to the summons, s 39 of the AAT Act says he is entitled to see documents that I will consult in making that determination. That is not to say he is entitled to untrammelled access to every document relating to or detailing every aspect of the applicant’s wider case. Giving a non-party wide-ranging access to documents lodged in connection with the review would be inconsistent with the Tribunal’s statutory objective in s 2A of the AAT Act, and more wide-ranging access is not contemplated by the language in s 39 or the general law understanding of the rules of procedural fairness. As Brennan J explained in Kioa v West (1985) 159 CLR 550; [1985] HCA 81 at [38]:
The person whose interests are likely to be affected does not have to be given an opportunity to comment on every adverse piece of information, irrespective of its credibility, relevance or significance. Administrative decision-making is not to be clogged by enquiries into allegations to which the repository of the power would not give credence, or which are not relevant to his decision or which are of little significance to the decision which is to be made.
The obligation to give Mr Smith a reasonable opportunity to make submissions extends to giving him documents that he needs in that connection – specifically, documents the Tribunal proposes to consider for the purposes of answering the question I have posed above. There may well be other issues, and other documents – and even portions of core documents like the objection decision and the statements of facts, issues and contentions – that do not concern him and which do not figure in the Tribunal’s decision on the summons or on matters to which the summons is directed. Those documents could be withheld or redacted if appropriate.
Ms McNeil, counsel for the Commissioner, said there was nothing wrong with using redacted versions of the statement of facts, issues and contentions and other core documents as the baseline for assessing the apparent relevance of documents sought in the summons. In making that submission, I gather the Commissioner embraced a central tenet of the applicant’s argument: the applicant accepts the onus of pointing to apparent relevance. If the applicant elected to rely only on the unredacted portions of core documents for that purpose, the applicant accepts the risk it would be unable to discharge its responsibility. In that event, the Tribunal would set aside the summons.
It is still necessary to consider the matter from the perspective of the summonsed individual. Providing that individual with redacted material and testing apparent relevance with reference to that material raises practical difficulties. Does that approach afford the summonsed individual a reasonable opportunity to make submissions in relation to the Tribunal’s decision on the interlocutory application? Mr Smith should not be left in the position where he wonders what is meant by a particular paragraph in a document he is provided because of surrounding redactions. It would certainly be preferable if he was provide with material that did not require an assurance from the Tribunal as to its accuracy or adequacy.
The proposal for managed disclosure to Mr Smith also takes no account of his apparent desire to identify the applicant in light of concerns about collateral purpose. Mr Smith apparently assumes the applicant is his ex-wife, and he is worried that complying with the summons might somehow prejudice him in other matters. It does not matter whether he is right about the applicant’s identity, and I am presently unable to evaluate any prejudice he describes. I accept he is legitimately concerned to ensure he is not disadvantaged at the hands of somebody whose identity and motivations have not been communicated to him. The nature of the prejudice he might suffer would depend on the identity of the applicant, so there is no point saying he can make submissions about potential prejudice on a hypothetical basis.
The applicant deals with all this by arguing the obligation to afford procedural fairness is affected by the private hearing provisions in the Administration Act. It is undoubtedly true that the precise content of obligations imposed by the principles of natural justice depend on the circumstances. As Brennan J explained in Kioa v West at [15]:
The principles of natural justice have a flexible quality which, chameleon-like, evokes a different response from the repository of a statutory power according to the circumstances in which the repository is to exercise the power.
The applicant relied on the High Court’s decision in Kioa v West and the Full Federal Court’s decisions in Wilson Transformer Company Pty Ltd v Anti-Dumping Review Panel [2022] FCAFC 4 and Jaffarie v Director-General of Security (2014) 226 FCR 505; [2014] FCAFC 102. In Jaffarie, the Flick and Perram JJ explained (at [110]):
The content of the rules of natural justice or procedural fairness, where those rules apply, is infinitely variable and must necessarily take into account the statutory context in question. And, in the present context, “whether the obligation to afford natural justice has been discharged is not to be evaluated minutely or in a manner divorced from its context“: Habib v Director-General of Security [2009] FCAFC 48 at [77]; [2009] FCAFC 48; (2009) 175 FCR 411 at 430 per Black CJ, Ryan and Lander JJ.
The applicant in Jafferie had sought access to confidential documents prepared in connection with an adverse security assessment. The Director-General had provided the assessment to a decision-maker who was considering whether to cancel Mr Jafferie’s visa. Mr Jafferie was provided with ‘open’ versions of some documents. The Director-General invoked the public interest immunity privilege in relation to the confidential documents when they were requested by Mr Jafferie in the judicial review proceedings. Mr Jafferie said that was unfair. After referring to the undoubted public interest in security which militated against the disclosure of confidential documents, Flick and Perram JJ observed (at [111]-[112]):
111. The touchstone of present relevance is whether enough information had been disclosed to Mr Jaffarie in the “Unclassified Reasons” to enable him to make meaningful submissions. …
112. In resolving that question [ie, whether the material provided in a redacted or summary document was sufficient to afford procedural fairness] a balance necessarily must be struck between protecting that information which must remain undisclosed by reason of the claim for public interest immunity and the legitimate and important rights of ensuring procedural fairness to Mr Jaffarie…
Section 39 of the AAT Act expressly qualifies the statutory obligation to afford procedural fairness by referring to ss 35, 36 and 36B. Section 35 contains the Tribunal’s own power to make directions for non-publication and non-disclosure – including non-disclosure of documents to a party in appropriate circumstances. Section 36 permits the Attorney-General to provide a ‘public interest certificate’ which impacts on what the Tribunal can disclose, while s 36A authorises the Attorney-General to intervene in Tribunal proceedings to excuse a person from answering a question. The AAT Act also includes provisions dealing with reviews in its Security Division that limit the access of applicants to information and portions of the hearing: see ss 35AA, 39A and 39B.
The applicant in this case acknowledges the private hearing process in tax matters does not go so far as the arrangements in the Tribunal’s Security Division. Sections 14ZZE and 14ZZJ of the Administration Act modify the Tribunal’s default processes which include public hearings. The reference to the openness or privacy of hearings is important. A careful reading of s 35 of the AAT Act establishes that non-parties do not have unrestricted access to documents filed in proceedings which conclude with a public hearing. Under the default approach, the decision and reasons are published with the names of the parties attached, and the exhibits tendered at the hearing become accessible. But documents that were not exhibited are not automatically available to the public. Material returned in response to a summons that was not subsequently used is typically sent back to the summonsed individual, or it is deleted. A non-party seeking access to the Tribunal’s file must ask for permission. There are parts of the file that even the presiding member does not access in the ordinary course.[2]
[2] The Tribunal member would not ordinarily access ‘without prejudice’ documents provided by the parties in the course of alternative dispute resolution processes, or notes taken by the Tribunal’s conference registrars recording what the parties said at an alternative dispute resolution event.
The modifications required by ss 14ZZE and 14ZZJ of the Administration Act apply to the Tribunal’s processes. Their impact on the parties is incidental. Those provisions do not otherwise create a statutory right to confidentiality. I do not accept the obligation to provide procedural fairness to Mr Smith must be shaped and restricted so the applicant can retain the benefits of a private hearing while accessing documents the applicant wants for the purposes of the proceedings. The applicant has chosen to involve Mr Smith, not the Tribunal. Of course, the Tribunal would consider making orders under s 35 of the AAT Act to prevent Mr Smith from making further disclosures that effectively deny the applicant a private hearing. Those provisions in the Administration Act entitle the applicant to a private hearing and anonymised reasons, but no more: see generally Investrix Pty Ltd v Commissioner of Taxation [2015] FCA 1427; (2015) AAR 59 at [17] per Robertson J.
To be clear, I am not saying redactions should not be made in documents provided to a non-party in receipt of a summons, or that identities cannot be suppressed. There are obviously reasons why it might be appropriate to do so in the circumstances of a particular case. There may also be good reasons why a party wants to limit the disclosure of material that is relevant to the wider review proceedings but which is functionally unrelated to the material sought in the summons. All that can be weighed in the balance. I can accept the fact the applicant has requested a private hearing might be relevant when considering how to discharge the obligation under s 39 of the AAT Act, but it is not clear that consideration should inevitably be given extensive weight - especially when any legitimate confidentiality concerns and the privacy of the final hearing can probably be managed effectively using orders under s 35.
Conclusion
I am not satisfied on the material which has been brought to my attention that it would be procedurally fair to Mr Smith to require that he make submissions on his objection to the summons without apprising him of the identity of the applicant. I reach that view even though the proceedings are being conducted in private. If the applicant wishes to press the summons, the applicant should identify themselves to Mr Smith in a timely way, and he can make of that what he will. If the applicant says there are good reasons why their identity should not be disclosed, those reasons should be explained to the Tribunal.
I accept Mr Smith needs access to information about the proceedings so he can make a meaningful contribution to the decision I must make on the summons. It is unclear whether the redacted documents he has been provided communicate the information he legitimately requires. The easiest solution would be for the applicant to provide unredacted copies of the documents in question. If the applicant wants to ask for orders under s 35 of the AAT Act in relation to those documents, I will consider that application. Alternatively, the applicant should revisit the redactions, or even consider (perhaps in consultation with the Commissioner) a document that accurately and clearly summarises the issues which can be provided to Mr Smith, as the Court permitted in Wilson and Jaffarie. If the applicant elects to do any of that, it will be necessary for the applicant to explain to the Tribunal why that is appropriate and preferable to the obvious alternative of just providing the unredacted documents.
I certify that the preceding 34 (thirty-four) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe
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Associate
Dated: 4 November 2022
Date(s) of hearing: Counsel for the Applicant: Mr N Seow Solicitors for the Applicant: Ms A Dimitriou Counsel for the Respondent: Ms F McNeil Solicitors for the Respondent: Mr M Chan Counsel for the Third Party: Ms L Rich Solicitors for the Third Party: Mr J Birrell
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