QQRK and Commissioner of Taxation (Taxation)
[2022] AATA 3399
•26 September 2022
QQRK and Commissioner of Taxation (Taxation) [2022] AATA 3399 (26 September 2022)
Division:Taxation and Commercial Division
File Number(s): 2019/5899 - 2019/5904
2019/5911 - 2019/5916
Re: QQRK and WHKY
APPLICANT
AndCommissioner of Taxation
RESPONDENT
Decision
Tribunal:Deputy President Bernard J McCabe
Date: 26 September 2022
Place:Sydney
1.The summons issued to the New South Wales Crime Commission is set aside. Any material provided to the Tribunal is to be returned to the Crime Commission forthwith.
2.The application to set aside the summons to the Commissioner of the New South Wales Police Force is refused.
Deputy President Bernard J McCabe
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Catchwords
PRACTICE AND PROCEDURE – Taxation – Administrative Appeals Tribunal – summons to produce documents – secrecy – override state provisions – invoking public interest exemption – summons set aside – testing financial affairs – material assisting in putting the applicant to proof on transactions – summons approved.
Legislation
Administrative Appeals Tribunal 1975
Crime Commission Act 2012 (NSW)
Criminal Assets Recovery Act 1990 (NSW)
Family Law Act 1975Taxation Administration Act 1953
Cases
Comcare v Maganga [2008] FCA 285
DVFW and Comcare [2019] AATA 2376
Federal Commissioner of Taxation v Tang (2006) 96 SASR 55
P v P (1994) 181 CLR 583
Re Bird and Military Rehabilitation and Compensation Commission [2006] AATA 109
Re Khorramdel and Secretary, Department of Social Services [2013] AATA 848
Re Rayson and Repatriation Commission [2008] AATA 1063Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145
Click here to enter text.
REASONS FOR DECISION
Deputy President Bernard J McCabe
26 September 2022
The Commissioner of Taxation asked the Tribunal to issue two summons’ in these proceedings. The first was directed to the New South Wales Crime Commission (the NSWCC). The NSWCC has provided (or will shortly provide) documents in response to the summons. The Commissioner wants to inspect those documents when they are provided. The second summons was directed to the Commissioner of the New South Wales Police Force (the Police). The Police have not yet responded and may yet object to complying with the terms of the summons. The applicants say both summons’ should be set aside in any event. I agree that the first summons should be set aside, for reasons I will explain.
I will begin by briefly describing the background to the proceedings. I will thereafter deal with each summons in turn as they raise different issues.
The background
The applicants in these proceedings are brothers. The objection decision under review in this case relates to the applicants’ taxable income in each of the years ended 30 June 2011 through 30 June 2016. The Commissioner does not accept the applicants properly accounted for all their taxable income during the years in question. I note the reasons for the objection decision appear to focus on the way the applicants account for particular transactions although the applicants are being put to proof more generally.
The applicants have already filed evidence which is presumably directed to discharging the burden imposed on them pursuant to s 14ZZK(b) of the Taxation Administration Act 1953 (the Administration Act). The Commissioner has been directed to file his evidence within the next week in the expectation a hearing listed in November will proceed as scheduled. While the Commissioner has not advanced a positive case, he has put the applicants to proof and wants to test their evidence. To that end, he says the NSWCC and the Police have information that will shed light on the issues I must determine at the hearing because both agencies have conducted criminal investigations into the applicants. The Commissioner says he may yet want to include information obtained from the agencies in the material he submits to the Tribunal in accordance with the directions.
The summons’ were issued under s 40A of the Administrative Appeals Tribunal 1975 (the AAT Act) at the request of the Commissioner. I should say a word about that process as it is not necessarily well-understood. The Tribunal is not obliged to issue a summons when requested to do so. The power in s 40A to issue a summons is discretionary. When a request is filed with the registry in proceedings in the Taxation & Commercial Division, the request is passed to the division’s practice registrar who is an authorised officer under the AAT Act. If there is a difficulty on the face of the request, the party making the request will be invited to consider amending the request. The practice registrar cannot reject a request. That can only be done by a member: s 40A(2). Where the request appears regular on its face, the summons will typically be issued by an authorised officer without reference to a member in the expectation that the other party or the recipient of the summons will bring any technical or procedural issues to the member’s attention – by making an interlocutory application to set aside the summons, or otherwise objecting at the return of summons hearing. In this case, the applicants alerted me to issues with earlier iterations of the summons during case management hearings. At least one of those was withdrawn and reissued with refinements as a consequence. The applicants say problems remain with each summons.
The summons directed to the NSWCC
This summons was issued by the Tribunal at the request of the Commissioner on 9 August 2022. The summons effectively replaces an earlier summons that was withdrawn. The Commissioner clarified the documents he sought in the current version.
The summons now refers to the following documents:
1. Parts of transcripts of any examination conducted by the New South Wales Crime Commission under the Criminal Assets Recovery Act 1990 (NSW) of [the first taxpayer] which refer to his income, assets and liabilities in the years ended 30 June 2011 to 30 June 2016.
2. Parts of transcripts of any examination conducted by the New South Wales Crime Commission under the Criminal Assets Recovery Act 1990 (NSW) of [the second taxpayer] which refer to his income, assets and liabilities in the years ended 30 June 2011 to 30 June 2016.
3. Any affidavits served in proceedings commenced under the Criminal Assets Recovery Act 1990 (NSW) by [the first taxpayer] or the New South Wales Crime Commission which sets out the income, assets and liabilities of [the first taxpayer] in the years ended 30 June 2011 to 30 June 2016.
4. Any affidavits served in proceedings commenced under the Criminal Assets Recovery Act 1990 (NSW) by [the second taxpayer] or the New South Wales Crime Commission which sets out the income, assets and liabilities of [the second taxpayer] in the years ended 30 June 2011 to 30 June 2016.
5. Final orders in the legal proceedings between the New South Wales Crime Commission and [the first taxpayer] and the orders finalising any legal proceedings between the New South Wales Crime Commission and [the second taxpayer].
6. Any affidavits filed or served or other documents in any proceedings brought by the New South Wales Crime Commission under the Criminal Assets Recovery Act 1990 (NSW) against either [the first or the second taxpayer] explaining cash deposits made in the years ended 30 June 2011 to 30 June 2016 by [the first taxpayer and/or the second taxpayer].
…
Nothing in this summons should be construed to capture documents which would cause the Commission to contravene section 80 of the Crime Commission Act 2012 (NSW).
The applicants doubt whether the documents are required for a legitimate forensic purpose. But there may be a more fundamental problem. It lies in the provisions of the Crime Commission Act 2012 (NSW) and the Criminal Assets Recovery Act 1990 (NSW).
The principal functions of the NSWCC are set out in s 10 of the Crime Commission Act. It is worth setting out verbatim the functions referred to in s 10(1):
(a)to investigate matters relating to a relevant criminal activity or serious crime concern referred to the Commission by the Management Committee for investigation,
(a1) to investigate matters relating to the criminal activities of criminal groups referred to the Commission by the Management Committee for investigation,
(b)to assemble evidence that would be admissible in the prosecution of a person for a relevant offence arising out of any such matters and to furnish any such evidence to the Director of Public Prosecutions,
(c)to furnish evidence obtained in the course of its investigations (being evidence that would be admissible in the prosecution of a person for an indictable offence against the law of the Commonwealth or another State or Territory) to the Attorney General or to the appropriate authority in the jurisdiction concerned,
(d)to reinvestigate matters relating to any criminal activity that were the subject of a police inquiry (being an inquiry referred for reinvestigation to the Commission by the Management Committee) and to furnish its findings to the Committee together with any recommendation as to action the Commission considers should be taken in relation to those findings,
(e)to furnish in accordance with this Act reports relating to organised and other crime, which include, where appropriate, recommendations for changes in the laws of the State,
(f)to provide investigatory, technological and analytical services to such persons or bodies as the Commission thinks fit,
(g)with the approval of the Management Committee, to work in co-operation with such persons or authorities of the Commonwealth, the State or another State or Territory (including any task force and any member of a task force) as the Commission considers appropriate.
Section 10(1) makes clear the NSWCC’s work extends to the investigation of complex and organised crime. The section also contemplates the NSWCC might, in appropriate cases, share information with other agencies that it has gleaned from its investigations. Section 13 elaborates on that power, although the ‘intelligence sharing’ functions were not the subject of submissions in these proceedings. In any event, the NSWCC’s power to share or disclose information is subject to specific limits and processes which are dealt with in the Crime Commission Act, and in the Criminal Assets Recovery Act.
The NSWCC undertakes functions under the Criminal Assets Recovery Act. Section s 11 of the Crime Commission Act says the NSWCC may carry out investigations in connection with its functions under the Criminal Assets Recovery Act and adds the NSWCC “may, for the purposes of [the Criminal Assets Recovery Act], make such use as it thinks fit of any information obtained by it in the execution of [the Crime Commission Act]”. As it happens, the information sought by the Commissioner in relation to the applicants was obtained by the NSWCC using powers under the Criminal Assets Recovery Act.
The Criminal Assets Recovery Act establishes a regime for detecting, assessing and confiscating the ill-gotten gains of persons engaged in serious criminal activity. The Act authorises the Supreme Court to make orders in relation to property, but the Court may also require the examination of an individual on oath concerning their affairs: s 12. A person examined pursuant to s 12 is unable to resist answering a question by invoking one of the common law privileges (see ss 13, 13A) but s 12(2) says:
A statement or disclosure made by a person in answer to a question put in the course of an examination under section 12, or any document or other thing obtained as a consequence of the statement or disclosure, is not admissible against the person in any civil or criminal proceedings…[except in limited circumstances that are not relevant here].
The Commissioner says the NSWCC has relevant information it obtained under the Criminal Assets Recovery Act about the applicants’ assets and affairs.[1] The applicants say to the extent that the information is comprised of statements made or documents provided in the course of an examination, it should not be made available to the Commissioner because it is privileged under s 12(2) of the Criminal Assets Recovery Act. If the information is not admissible, I was told, there can be no point in seeking it.
[1] The NSWCC also has powers under the Crime Commission Act to require the attendance of witnesses for questioning. Section 39(1) provides an examinee may not refuse to answer or decline to provide a document by invoking the privilege against self-incrimination – although s 39(2) says answers given and documents and provided under compulsion at such a hearing are “not….admissible in evidence against the person in any civil or criminal proceedings” except in limited circumstances that are not relevant here. As it happens, I do not need to focus on this provision in the Crime Commission Act since all of the information sought by the Commissioner under the summons relates to information obtained under the Criminal Assets Recovery Act.
Mr Coffee, the Commissioner’s counsel, acknowledged s 12(2) of the Criminal Assets Recovery Act might prevent the material produced under summons from being admitted into evidence in these proceedings. But he relied on the Tribunal’s decision in DVFW and Comcare [2019] AATA 2376 which dealt with an objection to a summons seeking information that was made inadmissible by s 10E(1) of the Family Law Act 1975. In that case, the Tribunal concluded the material should be produced in response to the summons even if there was a doubt about its admissibility because questions of admissibility would be resolved at the hearing. In the meantime, the material produced under the summons might still be of assistance insofar as it could indicate fresh lines of enquiry or suggest questions that might be asked in cross-examination.
The protected material in DVFW was a communication made to a family counsellor. There are good reasons why those communications are not generally admissible. But there is arguably a distinction between those communications and statements or documents provided under compulsion in circumstances where the examinee is unable to claim common law privileges. Disclosure of that material is arguably an even more serious matter given the traditional attachment to the right to silence which is protected by the common law privileges. As I understand it, Mr Josifoski, for the applicants, argues the words “not admissible” in s 12 of the Criminal Asset Recovery Act should be read broadly to prevent the material being provided under summons even where the Commissioner merely proposes to make derivative use of what he learns without tendering the summonsed material as evidence at the hearing. While there may be good policy reasons for Mr Josifoski’s preferred approach given the extraordinary nature of the compulsory information gathering powers, I must also acknowledge other provisions of the legislative scheme that I have already mentioned plainly anticipate the NSWCC will, on occasion, share information with other persons or agencies. I am constrained to conclude s 12(2) of the Criminal Asset Recovery Act does not preclude issuing and enforcing the summons.
The applicants also point to issues arising out of the terms of s 80 of the Crime Commission Act. Section 80 is a secrecy provision. Section 80(2) makes clear the officers of the NSWCC must not disclose information obtained in the course of the entity’s work, and s 80(3) says the NSWCC and any of its officers and staff:
cannot be required—
(a) to produce in any court any document or other thing that has come into the person’s possession, custody or control because of, or in the course of, the exercise of the person’s functions under this Act, or
(b) to divulge or communicate to any court any matter or thing that has come to the person’s notice in the exercise of the person’s functions under this Act.
Importantly, there are exceptions to the secrecy provisions. They are found in s 80(4). Of particular interest here, s 80(4)(c) provides an officer may divulge information:
…in accordance with a direction of the Commissioner or Management Committee, if the Commissioner or Chairperson of the Management Committee certifies that it is necessary for the information to be divulged in the public interest…
It is possible to make several short observations about the operation of s 80:
·The expression “any court” is defined in s 80(6) to include a tribunal, so there is no doubt the secrecy provision is potentially efficacious in these proceedings;
·a general information gathering power like that found in s 40A of the AAT Act is ordinarily read subject to a specific legislative prohibition which limits the information that can be provided: see, generally Re Rayson and Repatriation Commission [2008] AATA 1063 at [63]-[67] per DP Forgie and Re Khorramdel and Secretary, Department of Social Services [2013] AATA 848 at [29] per SM Britton; see also Federal Commissioner of Taxation v Tang (2006) 96 SASR 55;
·the fact the Tribunal’s power is contained in the AAT Act whereas the secrecy provision is found in state legislation does not give rise to any difficulty here given the High Court’s reasoning in P v P (1994) 181 CLR 583. Mason CJ, Deane, Toohey and Gaudron JJ pointed out (at 602) the Commonwealth parliament presumably intended (in the absence of express indication to the contrary) that a general information gathering power “will be exercised in the context of, and within the confines imposed by, the ordinary criminal law of the relevant State or Territory.” Given there is no indication of an intention in s 40A of the AAT Act to override the state provisions, it follows the specific secrecy provisions should be read as if they were contained in a Commonwealth statute.
The secrecy provisions in s 80 appear to be a problem for the Commissioner, but Mr Coffee informed me at the interlocutory hearing that the NSWCC had apparently agreed to produce the material without invoking s 80. To this end, I was provided with a copy of a letter from the NSWCC dated 16 September 2022 which said, relevantly:
The Commission has not made, or at this stage intends to make, any claims under section 80 of the Crime Commission Act 2012 (NSW) in respect of the documents falling withing the scope of the revised Summons.
Mr Josifoski pointed out the terms of the letter were ambivalent. After an adjournment, Mr Coffee informed me from the bar table that the NSWCC had confirmed in oral communications with his instructors that it was not seeking to invoke s 80 but it had not supplied a formal certification that the material was being provided in the public interest. It was unclear whether the NSWCC planned to provide that certification in the future.
That is, at a minimum, inelegant. If the NSWCC is prepared to produce the material in question because it is in the public interest for the Commissioner to see and potentially use the material in these proceedings (subject to the limitation in s 12(2) of the Criminal Assets Recovery Act, of course), then there is no need to use a summons. The Commissioner can make a formal request outside the summons process which identifies the public interest and the NSWCC can respond accordingly by divulging the material in reliance upon s 80(4) once it satisfies itself – as it might already have done – that disclosure is, in fact, in the public interest. While that course might occasion some minor delay while the formalities are completed, the delay is preferable to using a summons in circumstances where it may cause embarrassment because there is some doubt about whether the NSWCC is invoking the public interest exception in s 80(4). To use the summons as a medium for collecting information might obscure the decision-making process that is presumably required of the NSWCC under its own legislation before it shares information.
In those circumstances, I am satisfied it is appropriate to set aside the summons issued to the NSWCC. Any documents that have been produced pursuant to that summons can be returned to the NSWCC forthwith while the Commissioner formulates an invitation to provide the documents if he remains of the view the documents are relevant.
The summons to the Police
That brings me to the second summons dated 9 August 2022 which was issued to the Commissioner of the New South Wales Police Force. That summons seeks a bail report and criminal record for each of the applicants and a “CNI profile” for each applicant. The CNI – or Criminal Names Index – is a profile for each person which records information the Police compile in relation to that individual. The summons expressly excludes “intelligence or current investigations” from the request.
Information recorded in the CNI profile is sensitive, and much of it might be the subject of a claim for public interest immunity by the Police. That has not (yet) occurred in this case, so I need not consider that issue at this juncture.
I must focus instead on whether this material is required for a legitimate forensic purpose. The applicants say there are a number of difficulties: for a start, the bail and criminal records are not confined to the relevant years of income. Moreover, Mr Josifoski argues the material held by the Police is likely to be of limited evidentiary value to the extent it contains speculation or reports of individual interactions, and it appears to be sought for the purpose of impeaching credit.
The Commissioner relied on the recent decision of the New South Wales Court of Appeal in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council [2021] NSWCA 145 to argue the documents held by the NSWCC in this case are required for a legitimate forensic purpose. (That case considered the use of a subpoena but the same general principles are relevant to the issue of a summons under s 40A of the AAT Act.) Using the words of Bell P in Blacktown City Council (at [80]), the Commissioner says those documents “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”. Mr Coffee, counsel for the Commissioner, pointed out in written submissions that Brereton JA observed (at [89]) to similar effect in the same case:
I agree with Bell P, for the reasons given by his Honour, that an issuing party is not required to show that it is “likely” (or “on the cards”) 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.
His Honour added a summons might legitimately be directed to documents which related to credit. His Honour observed (at [89]):
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.[
That explanation of the general principles appears to be consistent with the reasoning of Bennett J in Comcare v Maganga [2008] FCA 285 at [37].
Mr Josifoski said the Tribunal was traditionally wary of a summons that sought documents going only to credit and pointed out the applicants’ credit had not been put expressly in issue: see, generally, Re Bird and Military Rehabilitation and Compensation Commission [2006] AATA 109. While Mr Josifoski is right to say the Tribunal will look askance at a summons request that goes only to credit where credit is not in issue, questions of credit are likely to arise in these proceedings given the nature of the contest described in the reasons for decision: see document T2 at p 45. It remains to be seen whether any records of past offences or interactions with the police would be admissible at the hearing, but that does not mean the material cannot be sought under a summons.
I am also untroubled (at least for present purposes) by the fact the criminal and bail record requests are not confined to the income years under review. I gather the Commissioner is alleging, at least by implication, a pattern of conduct on behalf of the applicants which might continue over a lengthy period. I am not prepared to say at this point that it would be irrelevant to take into account offences which are consistent with that theory of the case merely because they fall outside the years of income.
The proceedings will involve the Commissioner testing explanations about the way in which the applicants have conducted their financial affairs. In doing so, he will presumably focus on particular transactions that may also have been the subject of attention from law enforcement agencies. I am satisfied the material referred to in the summons might shed light on those matters.
The application to set aside the summons to the Police is refused.
I certify that the preceding 32 (thirty -two) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe
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Associate
Dated: 26 September 2022
Date(s) of hearing: 23 September 2022 Counsel for the Applicant: Mr Keni Josifoski Solicitors for the Applicant: Fortis Law Group Counsel for the Respondent: Ryan Coffey Solicitors for the Respondent: Australian Government Solicitor
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