Poletti, L. v Commissioner of Taxation

[1994] FCA 553

ss3 S?

JUDGMENT No. .,.-.,J _.._......

COURT OF AUS- 1

M W SOUTH WA1.M DISTRICT REGISTRY	1	No. NG515 of 1994
m	DIVISION	1

BF.TWEEN;	LOUISE POLF.2TI Applicant
AM2	NER OF TAXATION

Respondent

Beazley J

Sydney	2 3 AUG 1994
12 August 1994

RE FOR

This is an application brought by Louise Poletti appealing from a departure

prohibition order issued by the Delegate of the Commissioner of Taxation on 10 August 1994 prohibiting her from departing Australia for a foreign country. The

application has been brought on urgently, having commenced before me sometime
after 230 this afternoon, and the decision has to be made this evening as the

(1)	The applicant had a return ticket for travel to England on 14 August 1994, for return on 14 September 1994.
(2)	The purposes of her trip were to enable her to deal with certain criminal
matters with which she was involved in England and had been involved since
1988 and also to attend to some other business matters.
(3)	The Commissioner had issued a tax assessment for $1.5 million which remained
unsatisfied.
(4)	An objection had been lodged to that assessment.
(5 )	The applicant had been engaged in conduct relating to her financial affairs
which the Commissioner might reasonably have assessed as being suspicious.
(6)	Section 218 notices had been sewed on various financial institutions in respect of funds of a business conducted by the applicant.

applicant had otherwise made arrangements to leave Australia on 14 August 1994 for

a period of about one month. At the time of making the order, the Commissioner

had at least the following information in his possession:

The Commissioner's power to make the order which he made derives from the provisions of section 16 of the Taxation Adminktration Act 1953. That section

"(l) Where: 

(a)	A person k subject to a tar liabilw; and
(b)	to do so for the purpose of ensuring that the person does not depart

the Commkioner believes on reasonable grounds that it k desirable

from Australia for a foreign counlly without:

(i)	wholly &charging the tax liability; or
(ii)	making mngements sahjiactory to the Commkswner for

the tar liability to be wholly discharged;

the Commkioner may, by order in accordance with the prescribed form, prohibit the departure of the person from Australia for a foreign couniry'!

Section 16(2) makes provision for the duration of the order, namely, that such order remains in force unless and until revoked under sectlon 14T of the act, or, until set aaide by a court. There are other provisions of section 14s which are presently not rclcvant

A right to appeal from the making of such an order is given by the provisions of section 14V of the Act. That section provides:

A pmon a@ed by the making of a departure prohibition onler may

"(I ) appeal to the Federal CO# of Australia or the Supreme Court of a state

or tenitory against the making of the departure prohibition order.

(2)

This section has effect:

(a)	subject to chapter III of the corwtitution; and
(b)	notwithstanding anything contained in section 9 of the Adminirtmtive & C ~ W M (Judicial Review) Act 1977'.

Section 14V must be considered along with the provisions of section 14X which

provides:

"A wurt hearing an appeal under section 14V against the making of a departure

pnhibition onier may in irs &cretion:

(a) make an order setting aside the departure prohibition order; or

(6)      &miss the appeaCt.

The purpose to which section 14.5 is directed has been considered on a number of . .

occasions by the courts. In *e v The C r - of Taxa t i ~ n [l9911 32 FCR

206, his Honour, Pincus J, considered some of those authorities including Palco v l"&

. .

(1987) 19 ATR 443 and &&ten v The . .

(1989) 85 ALR 226. His Honour referred to a passage from

. .

as follows:

"Section 14T gives the clue that rhe matters which sparked the making of a section

14s onier are that the recovembiliiy of tax will be affected by the depamue of the

- -tapayer from Ausmaliu. Accordingly, once the Commksbner is s a w that the

tax is completely imcovemble and it cannot be the case that collection of the tax
will be affected by the taxpayer going outside Australia and the mison d'em for

making the onier has gone so that the order has been revoked. . .ne
Commissioner is to believe on reasonable grounds that it is desirable to stop a

puson leaving Australia because it is necessary to collect the tar that is owed to

the government and that dischmging the tax liabil*	will be affected by the person
gobg ovenem'!

Hi6 Honour continued:

"Zt may be pointed out that anyone who goes overseas may make the discharging of his tax liability more difiult from the commissioner's point of view because of

p b h about sewice".

Pincua J noted that that did not apply in &&S case. His Honour then referred to

the following further passage of Einfeld J's in =S case as follows:

"In other WO&, it is only the possibility or likelihood that the taxpayer's depamue from Australia would adversely affect the revenue that there should be under this act a resbiction on the right of an individual in a free society to travel without

bu~ucmrie impediment. The power to hue a DPO may not be esercised

penally or for other puposes".

His Honour seems to have accepted that that was the appropriate test to be applied.

However, that test does not deal with a fundamental problem which arises in this case, namely what is the nature of the power which I am exercising on this appeal.

Senior counsel for the applicant submitted that the appeal is by way of a hearing de
nwo.	He drew the analogy with the case of an appeal to the District Court from the

Local Court. I do not agree that this is the nature of the appeal for which section

14V provides. If it was, the court would be in danger of trespassing upon the area

reserved solely for the decision maker. Nor is there anything else within section 14V
which would lead to a conclusion that that is the nature of the appeal.

There are two other possibilities. The fint is that the appeal is in the nature of judicial review. This is the view which was propounded by Enfeld J in =S

case and counsel for the respondent submitted that this was the correct approach.

The second alternative is that the appeal involves the wurt determining objectively

whether the Commissioner held the requisite belief on reasonable grounds. I am

inclined to the view that this is the correct approach. The authorities in respect of

section 10 of the Crimes Act support this view by way of analogy, although the

urgency of this matter gives no time to consider the matter in full.

If I might then return to the provisions of section 16. There is no contest in this

ca8c that the person, that is the applicant, was subject to a tax liability. The fact of

her having lodged an objection to that liability does not alter the satisfaction of
subparagraph (a) of section 14S(1), nor is there a dispute that the Commissioner held
a belief that it was desirable to make the order for the purposes of ensuring that the

person did not depart from Australia for a foreign country without discharging the

liability or otherwise making appropriate arrangements.

The question, therefore, is whether the belief which was held was a belief held on

reasonable grounds. If one adopts the approach predicated by Einfeld J in

case and submitted by the respondent as being correct, the question thus

becomes whether this belief was so unreasonable that no reasonable person could

have reached it. If the correct approach to this appeal is that a determination has to

be made as to whether there were objective grounds for the holding of that belief, the

question becomes whether, judged objectively, there were reasonable grounds for the

belief.

Dealing with the former of these two approaches, one cannot go past the statement of

. .

the relevant principle expounded by Mason J as he then was in

(1986) 162 CLR 24, at 41, where his

Honour states:

"It follows that in the absence of any statutory indication of the weight to be given

. - W .various condemtions it is generallyfor the deckwn-maker, not the court, to

determine the appropriate weight to be given to the matters which are required to

be taken into account in d i n g the statutory power"!

His Honour then refers to a number of cases and continues:

"X say 'kenerally" because both prin+le and authority indicate that in some

cbammames the court may set aside an adminismtive decision which has failed
W give adequate weight to a relevant factor of great importance or has given

acesrivr weight to a relevant factor of no great importance. The preferred ground
on which this is done, however, k not the failure to take into account relevant

considerations or the taking into account of irrelevant considemtions, but that the

dccirion is manifestly unreasonable.	7hk ground of review was considered by
Loni Greene MR	in &&gsburv Cornoration in which his Lordship said it would

only be made out if it was shown that the deckwn was so unreasonable that no

reasonable person could have come to &"

His Honour noted that this was the ground now expressed in the provisions of the

ADJR Act and noted that the test has been embraced in both Australia and England and, I would interpolate, is commonly known as "Wednesbwy unreasonableness".

It seems to me that, on the material before me, the Commissioner took into account

an irrelevant consideration as in paragraph 3 of the affidavit of Geoffrey David Arnott

who was the decision-maker in the matter. Mr Arnott states:

"Z formed the opinion and hold to the opinwn that ir is necessary for the applicant
W remain in Australia at this time to enable an orderly dkposal of the assets
available to the applicant within and without the jurirdiction".

Mr Arnott also stated in that affidavit that he was of the opinion that the revenue was at risk and he thus caused the departure prohibition order to issue. He further stated that he formed the opinion that it was necessary for the applicant to remain in

Australia to assist in the completion of inquiries by the respondent staff in relat~on	to
the availability of assets, either within Australia or abroad, which might be used to discharge her tax liability. It seems to me that the latter of those matters, that is his opinion that it was necessary for the applicant to stay within the jurisdiction to assist

in the completion of inquiries was a relevant matter which goes to the central purpose

of the section to which I have referred earlier but I do not see that an opinion that it

wan necessary for the applicant to remain in Australia at this time to enable an

orderly diapoaal of the assets does relate to that purpose. Notwithstanding that I

consider that to be an irrelevant consideration, I cannot be satisfied that that factor of

itlclf was sufficient to make the decision manifestly unreasonable in the sense which

that phrase is to be understood.

If I approach the matter on the second basis, namely whether objectively there were

wona able grounds for the Commissioner to hold his belief under section 14s the
matter is more problematical. First, counsel for the respondent says that the

Comminsioner has not exposed his reasoning process and that in that circumstance

there was no basis for coming to an adverse decision against him. However, some of

the decisionmaking process has been revealed although I cannot know on the

evidence before me whether the whole of the decisionmaking process has been

revealed.

There is also a question here whether it is sufficient for there to be only one

reasonable ground or if there are grounds which are unreasonable that in any way

infects the overall reasonableness of the decision. The concept of reasonableness has

been considered in relation to the provisions of the Freedom of Information

legislation and in particular in relation to section 43 of that act and also section 58.

In section 58 the phrase "reasonable grounds" exists. In J&gmment of Industrial

v B M (1991) 33 FCR 122, Davies J said in relation to that phrase, at

125-1E

"I need not elaborate on what is the import of the term "reasonable grounds".ln E

v Demmment of Communrtv Sewes & &a& 1988 &4AR 335 at 337-9,

. ..--

Deputy Rwident Todd said "To be reasonable, it is requkire only that they be not fanciful, imaghuy or connived but, rather, that they be reasonable, that is to say based on reason, namely agreeable to reason, not tmrioMl abswd or ridbdous'"!

A like approach was taken to the meaning of reasonableness in section 43 in

Steel Pm

m (1986) 10 FCR 180, in the joint judgment of Bowen CJ and Beaumont J at

page. 190. If I adopt that approach here, it cannot be said that the decision of the

Commissioner was irrational, absurd or ridiculous. Even if I look at the matter at a

lower level, I cannot be satisfied there were no reasonable grounds nor, in fact, that

even if some grounds might be unreasonable that was sufficient to infect the whole

decision. In the circumstances, I reject the application. I order the applicant to pay

the respondent's costs.

I certify that this and the preceding 7 pages are a true copy of the Reasons for

Judgment herein of her Honour Justice Beazley.

Date:  12 August 1994