Pratten and Commissioner of Taxation (Taxation)

Case •

[2024] AATA 439

•

12 March 2024

Pratten and Commissioner of Taxation (Taxation) [2024] AATA 439 (12 March 2024)

Division:                  TAXATION AND COMMERCIAL DIVISION

File Number(s):      2011/4963, 2011/4964, 2011/4965,2011/4966, 2011/4967, 2011/4968, 2011/4969, 2011/4970

Re:Timothy Charles Pratten

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Senior Member G Lazanas

Date:12 March 2024

Place:Sydney

The application for the issue of a summons directed to the respondent is refused.

...........................[Sgd].............................................

Senior Member G Lazanas

CATCHWORDS

PRACTICE AND PROCEDURE – where applicant has applied for the issue of a summons to the respondent to produce documents – where documents not in the respondent’s possession or control – whether the Tribunal can compel the respondent to procure documents from another government agency in order to produce documents under summons – where applicant previously applied for relevantly identical summons to be issued to respondent and to the other government agency – application for issue of summons to the respondent refused

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth) ss 37, 38AA, 40A, 43

Income Tax Assessment Act 1936 (Cth) s 264

Taxation Administration Act 1953 (Cth) ss 14ZQ, 14ZZF, Schedule 1, s 353-10

CASES

ACN 154 520 199 Pty Ltd and Commissioner of Taxation (Taxation) [2018] AATA 2404
Andrew Garrett Wine Resorts v National Australia Bank (No. 6) [2005] SASC 292
Binetter v Deputy Commissioner of Taxation (2012) 90 ATR 327
Binetter v Commissioner of Taxation [2016] FCAFC 163
Binetter v Deputy Commissioner of Taxation (No. 3) [2012] FCA 704
Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No. 4) [2010] FCA 398
Chapman v Luminis Pty Ltd [2001] FCA 1580
Comcare v Maganga [2008] FCA 285
Commissioner of Taxation v Australia & New Zealand Banking Group Ltd (1979) 143 CLR 499
Cosco Holdings Pty Ltd v Federal Commissioner of Taxation (1997) 37 ATR 432
Daihatsu Australia Pty Ltd v Deputy Commissioner of Taxation (2000) 46 ATR Deputy Commissioner of Taxation v Australian Securities and Investments Commission (2010) 81 ATR 456
Deputy Commissioner of Taxation v Rennie Products (Aust) Pty Ltd (in liq) [2018] FCAFC 38
129
Eldridge v Commissioner of Taxation [1990] FCA 369
Fletcher v Commissioner of Taxation [1988] 19 FCR 442
General Merchandise & Apparel Group Pty Ltd v Chief Executive Officer of Customs [2009] AATA 988
Harvey v New South Wales [2005] NSWSC 1389
Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124
Mann v Commissioner of Police [2020] NSWSC 369
NSW Commissioner of Police v Tuxford [2002] NSWCA 139
Plastec Australia Pty Ltd CAN 093 513 467 v Plumbing Solutions and Services Pty Ltd CAN 128 873 629 (No. 2) [2010] FCA 670
Phillips and Inspector-General in Bankruptcy [2011] AATA 25

R v Pratten (No. 18) [2015] NSWCA 902

Radge and Commissioner of Taxation [2007] AATA 1317
Re Christie and Federal Commissioner of Taxation [2008] AATA 320
Re EME Productions No. 1 Pty Ltd and Screen Australia [2010] AATA 839
Re KLGL and QCYY and Australian Prudential Regulation Authority [2008] AATA 452
Re Universal Press Pty Limited v Provest Limited [1989] FCA 259
Re VLKG and Commissioner of Taxation [2011] AATA 915
Saunders v Commissioner of Taxation (Cth) (1988) 15 ALD 353
Seven Networks (Operations) Limited v Fairfax Media Publications Pty Limited [2023] FCAFC 185
Trade Practices Commission v Kimberley Homes Pty Limited [1989] FCA 262
Wong v Sklavos [2014] FCAFC 120

Yao v Secretary, Department of Education, Employment and Workplace Relations [2010] FCA 241

REASONS FOR DECISION

Senior Member G Lazanas

12 March 2024

INTRODUCTION

  1. This decision relates to an interlocutory hearing regarding Mr Pratten’s application for the issue of a summons to the Commissioner of Taxation to produce certain documents. Oddly, Mr Pratten acknowledged that none of the documents which he wants the Commissioner to produce are actually in the Commissioner’s possession or control. However, Mr Pratten nevertheless insisted that the Tribunal should issue the summons so as to compel the Commissioner to retrieve the documents from the Australian Federal Police (AFP) which, according to Mr Pratten, has the documents, and to produce them to the Tribunal. As of 2015, the AFP also did not have possession or control of the documents, but Mr Pratten maintained that the Commissioner should investigate and confirm whether the AFP now has the documents. The question for the Tribunal is whether the summons to the Commissioner should be issued having regard to this unusual factual matrix.

  2. The Commissioner opposed the issue of the summons for a number of reasons. The Commissioner submitted that even if he had the documents, the summons should not be issued because Mr Pratten has not demonstrated that the documents are relevant and required for a legitimate forensic purpose. The Commissioner also pointed to the fact that Mr Pratten had previously asked the Tribunal to issue largely identical summonses to the Commissioner and to the AFP in 2012, and the summonses were set aside after the limited production of certain documents at that time. Accordingly, the issue of the summons on the same basis to the Commissioner would be an abuse of process. The Commissioner also argued that the more appropriate course, if he had the documents, would be for him to lodge them with the Tribunal under s 37(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act).

  3. For the reasons set out below, I have decided that it is not appropriate for the summons to be issued to the Commissioner as it is not for a legitimate forensic purpose. Significantly, Mr Pratten’s argument that the Tribunal should issue the summons under the AAT Act, and for the Commissioner to issue a notice to produce pursuant to the Taxation Administration Act 1953 (Cth) (TA Act) in order to retrieve the documents from the AFP, is misconceived. Although the Tribunal stands in the shoes of the Commissioner for the purpose of reviewing objection decisions and conducting merits review de novo, the Tribunal does not have powers requiring a summons recipient to retrieve documents from third parties, including through the use of compulsory information gathering powers.

  4. It is necessary to first set out the relevant history of the proceedings to understand the contextual background to Mr Pratten’s recent application for the issue of a summons to the Commissioner, including the history of the previous summonses issued in 2012. This is followed by an outline of the relevant statutory provisions and principles regarding both the Tribunal’s power to issue a summons and the lodgement of documents by the decision-maker with the Tribunal. I then consider Mr Pratten’s contentions as to his application for the issue of the summons and the Commissioner’s objections to the summons.

THE PROCEDURAL BACKGROUND

  1. On 27 November 2011, Mr Pratten applied to the Tribunal for review of objection decisions made by the Commissioner on 27 September 2011. The objection decisions concerned the disallowance of objections lodged by Mr Pratten on 20 September 2010 against default assessments of income tax issued by the Commissioner with respect to the financial years spanning 2002 to 2009 inclusive, and penalty assessments for the same years.

  2. The Commissioner had determined that Mr Pratten had engaged in fraud or evasion by wilfully failing to declare all his income in the relevant financial years. The Commissioner considered that the undeclared income included offshore deposits into Mr Pratten’s bank accounts as well as funds received from offshore and paid to third parties in respect of personal expenses incurred by him. Mr Pratten stated that were it not for the Commissioner’s opinion that he had engaged in fraud or evasion, the Commissioner would have been precluded from amending his tax returns for the relevant financial years as the assessments would otherwise fall outside the period of review.  

  3. On 27 August 2013, the Tribunal “adjourned” Mr Pratten’s proceedings for a later date due to concurrent criminal proceedings in the Supreme Court of New South Wales in which Mr Pratten faced tax fraud charges linked to the abovementioned assessments. The Tribunal proceedings were re-activated in 2022 following the conclusion of Mr Pratten’s criminal proceedings.

THE COMMISSIONER’S SECTION 264 NOTICE TO THE AFP

  1. During the course of the Commissioner’s audit of Mr Pratten’s tax affairs, on 23 June 2009, the Commissioner issued the AFP with a notice pursuant to former s 264 of the Income Tax Assessment Act 1936 (Cth) (1936 Act) (s 264 was repealed and is equivalent to the new s 353-10 in Schedule 1 to the TA Act). The s 264 notice required the AFP to produce documents with respect to Mr Pratten for the period 1 July 2000 to 30 June 2008. The s 264 notice stated the following reasons for proposing the issue of the notice requiring documentation:

    The Australian Federal Police (AFP) and the Australian Taxation Office (Tax Office) are working together as part of Operation Starlifter. The AFP conducted search warrants in relation to Timothy Charles Pratten, seizing documents.
    The Tax Office is in the process of completing an audit for Timothy Charles Pratten, The documentation held by the AFP would assist in the completion of the audit.

  2. The documents sought by the Commissioner were, as follows:

    ·All documents seized under warrants executed by the Australian Federal Police relating to Timothy Charles Pratten, and

    ·All other documents relating to Timothy Charles Pratten in the possession of the Australian Federal Police.

  3. Based on various AFP ‘Case Notes’ regarding the s 264 notice, the AFP handed over to the Commissioner on different dates in July 2009, August 2009 and April 2010, various materials relating to Mr Pratten that had been seized at locations throughout New South Wales.

THE PREVIOUS TRIBUNAL SUMMONSES ISSUED IN 2012

  1. As stated above, these Tribunal proceedings were put on hold in August 2013. However, beforehand, on 3 August 2012, at the request of Mr Pratten, the Tribunal issued a summons to the ATO (ATO 2012 summons) which directed it to produce the following documents:

    1.    All notes, files, records, emails, letters, notices, communications and memoranda of any form (not otherwise already provided in the “T Documents” sent and received between officers of the Respondent and officers of the Australian Federal Police “AFP” between 1 January 2008 and 31 December 2010 in relation to the audit of the Applicant, by the Respondent, including in relation to requests by the AFP and/or the Respondent in arranging for officers of the Respondent to assist the AFP in the execution of ‘warrants’ dated and executed on the Applicant by the AFP on or around 3rd December 2008 and including in relation to the “264 Notice” dated 23rd June 2009 issued by the Respondent on the AFP.

    2.    All notes, files, records, emails, letters, notices communications and memoranda of any form (not otherwise already provided in the “T Documents”) sent and received between officers of the Respondent, but, not communicated beyond the Respondent between 1 January 2008 and 31 December 2010 in relation to the audit of the Applicant, by the Respondent, including in relation to requests by the AFP and/or the Respondent in arranging for officers of the Respondent to assist the AFP in the execution of ‘warrants’ dated and executed on the Applicant by the AFP on or around 3rd December 2008 and including in relation to the “264 Notice” dated 23rd June 2009 issued by the Respondent on the AFP.

    3.    All notes, files, records, and memoranda of any form (not otherwise already provided in the “T Documents”) made by an officer and/or officers of the Respondent but, not otherwise communicated beyond the Respondent.

  2. Also, on 3 August 2012, the Tribunal issued, again at the request of Mr Pratten, a summons directed to the AFP (AFP 2012 summons) seeking production of the following documents:

    1.All notes, files, records, emails, letters notices, communications and memoranda of any form sent and received between officers of the Australian Federal Police “AFP” and the Respondent between 1 January 2008 and 31 December 2010 in relation to the audit of the Applicant by the Respondent, including in relation to requests by the AFP and/or the Respondent in arranging for officers of the Respondent to assist the AFP in the execution of ‘warrants’ dated and executed on the Applicant by the AFP on or around 3rd December 2008 and including in relation to the “264 Notice” dated 23rd June 2009 issued by the Respondent on the AFP.

    2.All notes, files, records, emails, letters, notices, communications and memoranda of any form sent and received between officers of the AFP but, not communicated beyond the AFP between 1 January 2008 and 31 December 2010 in relation to the audit of the Applicant, by the Respondent, including in relation to requests by the AFP and/or the Respondent in arranging for officers of the Respondent to assist the AFP in the execution of ‘warrants’ dated and executed on the Applicant by the AFP on or around 3rd December 2008 and including in relation to the “264 Notice” dated 23rd June 2009 issued by the Respondent on the AFP.

    3.All notes, files, records, and memoranda of any form made by an officer and/or officers of the AFP but, not otherwise communicated beyond the AFP.

  3. On 16 August 2012, the Tribunal made directions about the production of some documents sought by both summonses. In relation to the AFP 2012 summons, the Tribunal directed the AFP to produce “the schedule of documents produced by the AFP, the receipt for such documents, and any document recording what was produced pursuant to the notice issued by the ATO under section 264 of the Income Tax Assessment Act 1936 (Cth); [and] the balance of the documents summonsed from the AFP to be stood over pending the directions hearing on 28 August 2012.”

  4. In respect of the ATO 2012 summons, the Tribunal directed “[b]y 24 August 2012, the ATO to identify for Mr Pratten the documents collected by the ATO for the purpose of its assessment including documents provided to the ATO by the AFP in response to the section 264 notice [and] the balance of the documents summonsed from the ATO to be stood over pending the directions hearing on 28 August 2012.”

  5. On 28 August 2012, the Commissioner wrote to Mr Pratten and advised that the ATO held 36 boxes comprising the ATO audit file relating to Mr Pratten. The letter referenced the contents of the boxes which included materials obtained from the AFP following the execution of search warrants for premises at North Sydney, Sydney CBD and Darling Point. Enclosed with the letter was a copy of the most up-to-date Master Index of material held by the ATO (ATO’s Master Index). The ATO’s Master Index was 42 pages in length. Significantly, the Commissioner concluded in the letter, as follows:

    We have not located any documents that we consider should be added to the s 37 documents (T docs), on the basis that all the material that the Commissioner considered ‘necessary’ to the review has already been provided and filed with the Tribunal.

  6. On a date prior to 30 August 2012, the AFP produced documents in accordance with the AFP 2012 summons (AFP documents). On 30 August 2012, the Tribunal made orders granting general access to the documents produced under summons by the AFP and setting aside the balance of the summons to the AFP. The Tribunal also ordered that the summons that had been issued to the ATO on 3 August 2012 be set aside. No written reasons were provided by the Tribunal as to the setting aside of the summonses.

NSW SUPREME COURT PROCEEDINGS

  1. As stated above, Mr Pratten was involved in criminal proceedings. The Crown had charged him with 7 counts of dishonestly obtaining a financial advantage from the Commonwealth by deception involving the knowing lodgement of tax returns for 7 years disclosing a deliberately understated amount of income.

  2. Relevantly, in R v Pratten (No. 18) [2015] NSWSC 902, the Court had to deal with documents sought by Mr Pratten in two subpoenas, including the production of documents that had been seized in Vanuatu by the Vanuatu Police Force and the AFP. At [2], Rothman J noted that the documents sought “are not in the possession of the Commonwealth”.  His Honour helpfully recounted at [4]-[14] the involvement of the AFP, as well as the fact there were proceedings then pending before the Supreme Court of Vanuatu challenging the seizure of the documents and seeking to restrain the Vanuatu Police Force from providing the documents to the AFP. His Honour stated at [36] that the only related relevant documents in the possession of the AFP (described as a “working log”), were the subject of a successful claim of public interest immunity by the AFP and the subpoena insofar as it described those documents, was set aside.

THE STATUTORY PROVISIONS AND PRINCIPLES RELATING TO THE TRIBUNAL’S POWER TO ISSUE SUMMONS AND TO REQUIRE THE PRODUCTION OF OTHER DOCUMENTS

  1. Subsections 40A(1) and (2) of the AAT Act state, as follows:

    40A  Power to summon person to give evidence or produce documents

    (1)  For the purposes of a proceeding before the Tribunal, the President, an authorised member or an officer of the Tribunal may summon a person to do either or both of the following, on the day, and at the time and place, specified in the summons:

    (a) appear before the Tribunal to give evidence;

    (b) produce any document or other thing specified in the summons.

    (2)  The President or an authorised member may refuse a request to summon a person.

  2. It is clear that the word ‘may’ in s 40A(1) imports a discretion and that a summons “will not be issued simply upon a request being made”: Yao v Secretary, Department of Education, Employment and Workplace Relations [2010] FCA 241 at [3] (Flick J). It is for the Tribunal to decide who should be summoned to give evidence and produce documents, not the parties: see General Merchandise & Apparel Group Pty Ltd v Chief Executive Officer of Customs [2009] AATA 988 at [222] (Deputy President Forgie).

  3. The principles developed by courts in relation to subpoenas provide a “sound guide to the manner in which summonses are issued and refused” by the Tribunal: see Phillips and Inspector-General in Bankruptcy [2011] AATA 25 at [6] (Deputy President Forgie).

  4. A party who seeks production of documents under a subpoena “bears the onus of demonstrating the legitimate forensic purpose” for which the documents are sought: see Wong v Sklavos [2014] FCAFC 120 at [12] (Jacobson, White and Gleeson JJ). See also Seven Network (Operations) Limited v Fairfax Media Publications Pty Limited [2023] FCAFC 185 at [37] (Wheelahan, Anderson and Jackman JJ) (Seven Network).

  5. The following statement by Admanson J in Mann v Commissioner of Police [2020] NSWSC 369 at [25] is apt in the present case:

    Once the ambit of a subpoena is put in issue, the issuing party is obliged to identify a legitimate forensic purpose for which the documents are sought. It is not sufficient that the documents falling within the ambit of the subpoena could, or might be, relevant, it must actually be ‘on the cards’. Subpoenas are not to be used for the purposes of “fishing expeditions”.

  6. Also apposite to the present case is the principle that bare and unsupported assertions that “something may be found which is helpful to the party seeking access to the documents will not be sufficient to establish the existence of a legitimate forensic purpose”: Harvey v New South Wales [2005] NSWSC 1389 at [11] (Johnson J).

  7. It is acknowledged that it is not enough for a party who seeks production of documents under a subpoena to raise some “speculative possibility” that the documents sought would assist in the resolution of a dispute: Andrew Garrett Wine Resorts v National Australia Bank (No 6) [2005] SASC 292, [37] (Gray J). However, as explained in Seven Network, [38(e)], it is sufficient to show that:

    …[T]he documents sought are apparently relevant in the sense that it can be seen that the documents sought to be produced by way of subpoena will materially assist on an identified issue or that there is a reasonable basis beyond speculation that it is likely that the documents subpoenaed will so assist.

  1. A subpoena to produce documents will also be oppressive “if the documents called for are not “sufficiently relevant” to the issues in the proceeding”: Plastec Australia Pty Ltd ACN 093 513 467 v Plumbing Solutions and Services Pty Ltd ACN 128 873 629 (No. 2) [2010] FCA 670, [36] (Greenwood J), or if the demand is “too wide or uncertain.”: Chapman v Luminis Pty Ltd [2001] FCA 1580, [44] (Nicholson J). A subpoena to produce documents must also be “framed in terms of sufficient precision and certainty, to enable the recipient to know what he or she must produce…”: NSW Commissioner of Police v Tuxford [2002] NSWCA 139 at [12] (per Brownie AJA with whom Spigelman CJ and Ipp AJA agreed).

  2. Separately, a subpoena to produce documents will be set aside to prevent an abuse of process: Campaign Master (UK) Ltd v Forty Two International Pty Ltd (No 4) [2010] FCA 398 at [37] (Yates J). See also Trade Practices Commission v Kimberley Homes Pty Limited [1989] FCA 262 where Hill J held that “… a subpoena will always be set aside if it is shown to be an abuse of the court's process. The court has a real interest that its process be not abused…”.

  3. The discussion about the Tribunal’s summons power necessarily also entails a discussion about ss 37(1)(b), 37(2) and 38AA of the AAT Act as a taxpayer’s request for the issue of a summons to the Commissioner raises the issue of whether the Commissioner as the decision-maker should have lodged the documents with the Tribunal.

  4. Subsection 37(1) of the AAT Act relevantly provides, as follows:

    37. Lodging of material documents with Tribunal

    …

    Decision-maker must lodge material documents

    (1)  Subject to this section, a person who has made a decision that is the subject of an application for review … by the Tribunal must, within 28 days after receiving notice of the application (or within such further period as the Tribunal allows) lodge with the Tribunal a copy of:

    …

    (b) … every other document that is in the person’s possession or under the person’s control and is relevant to the review of the decision by the Tribunal.

  5. Section 37(1)(b) is modified by s 14ZZF of the TA Act where the primary decision is a “reviewable objection decision” within the meaning of s 14ZQ. Section 14ZZF(1)(a)(v) provides that instead of being required to lodge copies of documents as set out in s 37(1)(b), the Commissioner is required to lodge:

    every other document that is in the Commissioner’s possession or under the Commissioner’s control and is considered by the Commissioner to be necessary to the review of the objection decision concerned.

    (emphasis added)

  6. It is accepted that the effect of s 14ZZF(1)(a)(v) is to substitute a subjective test of what is necessary to the review for an objective test of what is relevant: Re Christie and Federal Commissioner of Taxation [2008] AATA 320 at [9]. It follows, the Commissioner is not required to produce every document relating to a taxpayer in the Commissioner’s possession, only those necessary to the ‘taxable facts’ of each assessment: Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124 (Kennedy) at [21]. There are good reasons for this, including the fact of not burdening the Tribunal with documents that are unnecessary to the review of the decision in issue in the proceedings.

  7. Subsection 37(2) of the AAT Act provides:

    Tribunal may require other documents to be lodged

    (2) Where the Tribunal is of the opinion that particular other documents or that other documents included in a particular class of documents may be relevant to the review of the decision by the Tribunal, the Tribunal may cause to be given to the person a notice in writing stating that the Tribunal is of that opinion and requiring the person to lodge with the Tribunal, within a time specified in the notice, the specified number of copies of each of those other documents that is in his or her possession or under his or her control, and a person to whom such a notice is given shall comply with the notice.

  8. Section 37(2) is also modified by s 14ZZF(1)(b)(ii) of the TA Act in the following way:

    (b) the power of the Tribunal under subsection (2) of that section to cause a notice to be served containing a statement and imposing a requirement on a person were instead:

    …

    (ii) a power, by such a notice, to make such a statement and impose a requirement that the person lodge with the Tribunal, within the time specified in the notice, a copy of each of those other documents that is in the person’s possession or under the person’s control;

  9. It follows that the modification of s 37(2) of the AAT Act by s 14ZZF(1)(b)(ii) of the TA Act is not the same as the modification of s 37(1). Importantly, s 37(2) of the AAT Act provides “a safeguard against a decision-maker who does not lodge under s 37(1) everything that it should”: Re VLKG and Commissioner of Taxation [2011] AATA 915 at [6] (Senior Member Frost).

  10. The Tribunal’s power to issue a notice to a decision-maker under s 37(2) is only enlivened where the Tribunal forms the opinion that the particular documents or the documents included in a particular class of documents may be relevant to the review of the decision by the Tribunal. That is, the power to cause a notice to be served on the Commissioner under s 37(2) is premised on the existence of a jurisdictional fact expressed in the form of an opinion reached by the Tribunal. That opinion must be supported by a rational process of evaluation, based on reason and reasonable inference, not speculation, as was explained by Senior Member Taylor in Re KLGL and QCYY and Australian Prudential Regulation Authority [2008] AATA 452 at [46].

  11. It is significant to note that s 37(2) is not a general discovery provision, nor does it authorise a “fishing expedition”: Kennedy at [27] (French, Tamberlin and Mansfield JJ), citing Cosco Holdings Pty Ltd v Federal Commissioner of Taxation (1997) 37 ATR 432 (Cosco Holdings). French, Tamberlin and Mansfield JJ explained in Kennedy at [28] that an applicant:

    must show how a particular document or category of documents may be relevant to specific issues of fact relating to the excessiveness of the assessments issued … The intent of s 14ZZF of the TAA was clearly to narrow the class of documents which the Commissioner must produce to the Tribunal, and in the absence of a demonstration … of the relevance of any additional documents it is not appropriate to widen the class of documents which the Commissioner has already provided …

  12. Furthermore, the words “may be relevant” in s 37(2) are to be interpreted to mean whether a document “could reasonably be expected to throw light on some of the issues in the principal proceedings” (see Cosco Holdings, 440). The test is not satisfied where a document only bears some correlation with the subject matter of, or evidence or issues in, the review proceedings: Re EME Productions No 1 Pty Ltd and Screen Australia [2010] AATA 839 at [17]. On the other hand, the test of “may be relevant” should not be interpreted to mean “is relevant”. In other words, the Tribunal must engage in a limited forensic exercise to determine whether a document “may be relevant” to the issues in the proceedings before making a direction under s 37(2). It cannot simply accept bare and unsupported assertions about the relevance of documents.

  13. Section 38AA of the AAT Act also imposes an ongoing obligation on the Commissioner to lodge documents that come into his possession that are relevant to the review. (The Tribunal observed that, on 20 July 2023, the Commissioner lodged Supplementary T-Documents under s 38AA of the AAT Act). I am also mindful of the fact, as would be the Commissioner, that if it later emerges, for example, that the Commissioner omitted to produce a necessary document during the process leading up to and at the hearing before the Tribunal, and that document was obviously relevant to the issues before the Tribunal, that omission may, in certain circumstances, be properly characterised as a denial of procedural fairness: Binetter v Commissioner of Taxation [2016] FCAFC 163 at [44] (per Siopis J).

  14. Finally, it is important to note that the Tribunal’s wide-ranging procedural powers, including those under ss 40A and 37(2), must be viewed within the prism of its primary function, which is to engage in de novo merits review within the confines of a taxpayer’s objection in taxation review proceedings. For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall then make a decision in writing of the kind set out in s 43(1) of the AAT Act: see Eldridge v Commissioner of Taxation [1990] FCA 369, [41] – [43] (Foster J). With reference to taxation review proceedings, the Tribunal reviews objection decisions and its role is to make, on the basis of the material before it, the “correct or preferable decision”: Fletcher v Commissioner of Taxation (1988) 19 FCR 442, 453 (Lockhart, Wilcox and Burchett J).

THE DRAFT SUMMONSES REQUESTED BY MR PRATTEN

  1. On 21 December 2023, Mr Pratten requested the Tribunal issue two summonses. One was directed to Mr David Morris, a lawyer employed by the Australian Government Solicitor (which is acting for the Commissioner), seeking production of documents (draft AGS summons). The other one was directed to Mr Steven Barns, an officer of the Australian Taxation Office (ATO), requiring him to give evidence at the hearing (draft Barns summons).

  2. On 19 January 2024, Mr Pratten lodged with the Tribunal an amended draft AGS summons. The only amendment made was to substitute the Commissioner for Mr Morris as the intended recipient of the summons (draft Commissioner summons). On 29 February 2024, Mr Pratten wrote to the Tribunal advising that he wished to withdraw his application for the issue of the draft Barns summons and “section 4” of the draft Commissioner summons (“section 4” was a reference to the fourth paragraph of the draft Commissioner summons). Subsequently, at the interlocutory hearing, Mr Pratten additionally withdrew the third paragraph of the draft Commissioner summons.

  3. Consequently, only paragraphs 1 and 2 of the draft Commissioner summons were pressed by Mr Pratten at the interlocutory hearing. Those paragraphs are in the following terms:

    1. All documents, notes, files, records, or items (or duplicates thereof) furnished to the Respondent by the Australian Federal Police (AFP) pursuant to a Notice issued under Section 264 of the Income Tax Assessment Act 1936, dated 23 June 2009, derived directly or indirectly from the joint execution of a search warrant by the AFP and Vanuatu Police Force at the premises of PKF Accounting (Vanuatu) in Port Vila, Vanuatu, on or about 28 April 2008. This material has not been provided to the Applicant in accordance with the Respondent’s obligations under Section 37 of the Administrative Appeals Tribunal Act 1975.

    2.    The "diaries” of the Applicant’s, which were handed to Federal Agent Thomas Walker (of the AFP) by Candice Barcham, the Applicant’s former personal assistant, on 7 September 2009, and subsequently delivered to the Respondent as part of the Respondent's and AFP's joint investigation, encompassing the audit, of the Applicant and related entities. These “diaries” have not been provided to the Applicant in accordance with the Respondent’s obligations under Section 37 of the AdministrativeAppeals Tribunal Act 1975.

Mr Pratten’s contentions regarding the draft Commissioner summons

  1. In relation to the documents sought by paragraph 1 of the draft Commissioner summons, which were broadly referred to as the Vanuatu documents, Mr Pratten stated that “[t]here is no question that documents, and such documents, were seized by the AFP in the course of, or following the joint execution of a search warrant with the Vanuatu Police Force at the premises of PKF Accounting (Vanuatu) in Port Vila, Vanuatu, on or about 28 April 2008. Nor is there any question that the AFP, at the time the relevant 264 Notice was issued, had such documents in its possession or under its control, which pertained to the Applicant and/or his associated entities, and was legally compelled to provide such documents to the ATO”.

  2. Mr Pratten argued that the documents sought by paragraph 1 align precisely with those that were requested by the Commissioner in the s 264 notice issued to the AFP dated 23 June 2009 (see [8] – [9] above) and, therefore, they must be forensically relevant to his enquiries. Mr Pratten relied on Deputy Commissioner of Taxation v Rennie Produce (Aust) Pty Ltd (in liq) [2018] FCAFC 38 at [19] - [22], as to the Commissioner’s role in administering the tax laws and exercising his powers to undertake broad enquiries and obtain information under s 353-10 of Schedule 1 to the TA Act.

  3. Mr Pratten stated that these documents were not provided to him by the Commissioner pursuant to s 37 of the AAT Act, as he presumed the Commissioner had subjectively determined that the documents were not considered to be relevant under s 37(1)(b) of the AAT Act (as modified). Mr Pratten submitted that the documents encompass “crucial forensic evidence directly pertinent to these proceedings [including] loan documents that substantiate, or that could inferentially corroborate, the existence of loans, along with associated records related to loans…. Additionally, these documents contain information about transactions and business dealings involving [Mr Pratten], his associated entities, and other entities accused of complicity in the grave and serious allegations of fraud or evasion, which underpin each of the amended assessments subject of review. Moreover, the documents may hold potentially exculpatory evidence to refute the Respondent’s allegations of fraud or evasion, as a discrete issue.”

  4. Mr Pratten submitted that the summons is not oppressive in its ambit as the documents sought align precisely with those requested by the Commissioner from the AFP in the
    s 264 notice. He added that it would be absurd to suggest that the act of providing the summonsed documents would be an oppressive burden as they should be readily available or accessible, having already been subject to the Commissioner’s s 264 notice. He added that the documents should have already been provided to him in compliance with the Commissioner’s obligations under ss 37 and 38AA of the AAT Act.

  5. With respect to paragraph 2 of the draft Commissioner summons, Mr Pratten contended that Ms Candice Barcham, a personal assistant employed by Rural General Insurance Broking Pty Ltd (RGIB), handed certain diaries to the AFP which would likely contain relevant information to assist him in his taxation review proceedings. This was based on the witness statement given by Ms Barcham to the AFP on 7 September 2009 where she stated that, while employed by RGIB she maintained a diary in which she recorded “her duties and other relevant details”. The diary was in the form of five or six “spirax” notebooks which she utilised over the course of her employment at RGIB. Two of these diaries, according to Ms Barcham, were provided by her to the AFP on 7 September 2009 (the two diaries).

The Commissioner’s objections regarding the draft Commissioner summons

  1. The Commissioner pointed out that the judgment in R v Pratten (No 18) [2015] NSWSC 902, [2] (Rothman J) makes it clear that the Vanuatu documents “were not in the possession of the Commonwealth”. Additionally, the AFP was successful in its claim of public interest immunity in respect of the “working log” document (see [18] above). Moreover, the Commissioner submitted that Mr Pratten knew that the Commissioner does not have possession of the Vanuatu documents, as he acknowledged as much in his Statement of Facts and Contentions dated 19 December 2023 (SFC). The Vanuatu documents are also not referred to in the ATO’s Master Index of documents which was previously handed over to Mr Pratten (see [15] above).

  2. The Commissioner submitted that a subpoena and, similarly, a summons, which seeks production of documents the issuing party knows are not in the possession of the recipient is one that entirely lacks a legitimate forensic purpose and is an abuse of process.

  3. The Commissioner also submitted that the recipient of a subpoena is under no obligation to seek out documents not in his or her own possession and control, in reliance on the cases referred to in Re Universal Press Pty Limited v Provest Limited [1989] FCA 259, [17]-[19] (Hill J). The Commissioner added that even if the Commissioner had possession of the Vanuatu documents (which he does not, as Mr Pratten acknowledged at the interlocutory hearing), no summons should be issued by the Tribunal in a form containing paragraph 1 for the following additional reasons.

  4. First, s 37(2) (as modified by s 14ZZF(1)(b)(ii)) contains a mechanism by which a party may request the production of particular documents or particular categories of documents. In the circumstances, it is not appropriate for Mr Pratten to use the draft Commissioner summons in substitution for that mechanism: see ACN 154 520 199 Pty Ltd and Commissioner of Taxation (Taxation) [2018] AATA 2404, [16] (Deputy President McCabe and Senior Member Lazanas). See also Radge and Commissioner of Taxation [2007] AATA 1317 [78] (Deputy President Forgie). Secondly, even if the first paragraph of the draft Commissioner summons were to be treated as an application under s 37(2) of the AAT Act, it should be refused for the same reasons, namely, not being for a legitimate forensic purpose.

  5. Thirdly, Mr Pratten maintained in his SFC that the Vanuatu documents consist of a “large volume of material”. However, Mr Pratten did not identify the legitimate forensic purpose as to why the entirety of the documents referred to in paragraph 1 is being sought, and how any specific documents sought would materially assist on any identified issue. The Tribunal must consider in the context of the disclosure regime provided for in the AAT Act whether “there is a real possibility that [documents produced in response to any summons] may assist in the resolution of the issues in the proceeding[s]”:Comcare v Maganga [2008] FCA 285 at [37]. For example, the Commissioner pointed to paragraph 490 of Mr Pratten’s SFC as an illustration of how his various assertions about relevance were simply speculative and the “fishing” nature of paragraph 1:

    The Applicant contends that there exists a reasonable expectation that such seized material could encompass material relevant for these proceedings, and that it cannot be categorically ruled out that such material could include documents beneficial to the Applicant’s case, such as loan documents and/or other documentation evincing loans including, possibly, those loan-related records referred to in Mr Agius’s affidavit of 26 March 2013 …, or other potentially exculpatory evidence to counter the Respondent’s accusations of fraud or evasion….

  6. Fourthly, the breadth of paragraph 1 is unconstrained and therefore, oppressive, in that Mr Pratten seeks the entirety of the Vanuatu documents, irrespective of whether they concern his tax affairs or not. The Commissioner argued that paragraph 1 is, for that reason alone, too wide. Moreover, paragraph 1 calls for documents “derived directly or indirectly” from the joint execution of a search warrant by others. In circumstances where the Commissioner did not execute the search warrant, the Commissioner questioned how he is supposed to know whether any particular document was derived, for example, “indirectly” from that search warrant. Fifthly, Mr Pratten had already caused the Tribunal, in this proceeding, to issue a summons in 2012 which in substance included, the same category of documents as those sought by paragraph 1. The ATO 2012 summons was previously set aside (see [16] above) and a second substantively identical summons would be an abuse of process.

  7. The Commissioner submitted that, like the Vanuatu documents, Mr Pratten knew the Commissioner did not have possession of the two diaries referred to in paragraph 2 of the draft Commissioner summons. The ATO’s Master Index (see [15] above) also did not refer to the two diaries.

  1. The Commissioner submitted that, like paragraph 1, paragraph 2 of the draft Commissioner summons lacked a legitimate forensic purpose and was being used as a substitute for the mechanism in s 37(2) (as modified by s 14ZZF(1)(b)(ii)), and in so doing, Mr Pratten was seeking to circumvent the limits of the disclosure obligations imposed on the Commissioner by s 37(1) of the AAT Act, as modified by s 14ZZF(1)(a)(v) of the TA Act.

SHOULD THE TRIBUNAL ISSUE THE DRAFT COMMISSIONER SUMMONS?

  1. I have decided to refuse to issue the draft Commissioner summons containing paragraphs 1 and 2 as set out at [42] above. In circumstances where it is already known by Mr Pratten, the issuing party applying for the summons, that the summons recipient (the Commissioner) does not have possession or control of the proposed summonsed documents, it is not a legitimate forensic purpose to issue the summons and it would be an abuse of process to grant the request. This is especially the case where a previous summons in these proceedings (the 2012 ATO summons – see [11] above) sought relevantly identical documents, and that summons was previously also set aside by the Tribunal.

  2. Even if there were any uncertainty as to whether or not the Commissioner had possession or control of the proposed summonsed documents (which there wasn’t), I would have refused Mr Pratten’s request on the basis that the draft Commissioner summons is wide-ranging and speculative. This is despite the fact that it was based on substantially the same terms of a s 264 notice issued by the Commissioner to the AFP on 23 June 2009 (see [8] – [9] above). This is because the Commissioner’s powers under a s 264 notice were “limited” by the scope and purposes of the Income Tax Assessment Act 1936 (Cth), namely, for the making of assessments: Commissioner of Taxation v Australia & New Zealand Banking Group Ltd (1979) 143 CLR 499 at 525 (Gibbs ACJ), 534 (Mason J) 544 (MurphyJ). Allegations that s 264 notices were vague, unfair and misleading have been roundly dismissed: Daihatsu Australia Pty Ltd v Deputy Commissioner of Taxation (2000) 46 ATR 129 and Binetter v Deputy Commissioner of Taxation (2012) 90 ATR 327. The issue of a summons for the production of documents in substantially the same form of an earlier s 264 notice issued by the Commissioner to a third party is not in and of itself sufficient to persuade the Tribunal that the summonsed documents may be relevant to the Tribunal proceedings, particularly having regard to the Tribunal’s role - see [39] above. This is especially the case when Mr Pratten did not specifically reference the relevance of any document listed in the ATO’s Master Index nor fully explain how any such document would assist the Tribunal with respect to any identified issue in the taxation review proceedings.

  3. Moreover, even if the draft Commissioner summons were to be treated as an application by Mr Pratten under s 37(2) of the AAT - on the assumption that the Commissioner had failed to comply with his obligations imposed under s 37(1(b) of the AAT Act - I would not accede to such a request as it is so broad as to include the production of the entirety of the documents with no discernible connection whatsoever to the issues in dispute. Mr Pratten did not demonstrate how the documents may be relevant and how they would assist him in discharging the onus of proving the amounts of his taxable income in the each of the relevant income years, and that a lesser or no penalty should have been imposed for the purposes of s 14ZZK(b)(i) of the TA Act. Mr Pratten has to demonstrate that there was no fraud or evasion such that the Commissioner was able to make the default assessments: Binetter v Commissioner of Taxation [2016] FCAFC 163; [93] (Perram and Davies JJ). See also Deputy Commissioner of Taxation v Australian Securities and Investments Commission (2010) 81 ATR 456, 464 [15] (Jagot J).

  4. Additionally, to the extent that Mr Pratten’s application for the issue of the draft Commissioner summons was considered by him as a means by which to compel the Commissioner to retrieve the Vanuatu documents and the two diaries from the AFP (on the assumption that the AFP presently has these documents), Mr Pratten’s application is not only unorthodox but entirely misconceived. A recipient of a summons is plainly only required to produce documents that are in his or her possession or control. Separately, I note for completeness, there was no suggestion by either party that if the Commissioner were to now use his s 353-10 powers, that may arguably be for an improper purpose as the Tribunal proceedings have commenced; cf, for example, Saunders v Commissioner of Taxation (Cth) (1988) 15 ALD 353 and Binetter v Deputy Commissioner of Taxation (No 3) [2012] FCA 704 at [105]-[111]. On the contrary, Mr Pratten urged the Tribunal to issue the summons with the plan for the Commissioner to issue a s 353-10 notice to the AFP to collect further materials to place before the Tribunal.

CONCLUSION

  1. For the reasons given, Mr Pratten has not established that the issue of the draft Commissioner summons is for a legitimate forensic purpose. Consequently, I have decided to refuse to issue the summons.

I certify that the preceding 60 (sixty) paragraphs are a true copy of the reasons for the decision herein of Senior Member G Lazanas

................................[Sgd]........................................

Associate

Dated: 12 March 2024

Date(s) of hearing:

1 March 2024

Applicant:

In person

Counsel for the Respondent:

Mr B Kasep

Solicitors for the Respondent:

Ms J Chan, Australian Government Solicitor

Most Recent Citation
Cases Citing This Decision

1

Pratten and Commissioner of Taxation (Practice and Procedure) [2025] ARTA 161
Cases Cited

30

Statutory Material Cited

0

R v Pratten (No 18) [2015] NSWSC 902
Yao v Secretary, Department of Education, Employment and Workplace Relations [2010] FCA 241
Re General Merchandise and Apparel Group Pty Ltd and CEO, Customs [2009] AATA 988