Ross, A.m. v Costigan, F.X

[1982] FCA 77

Re: ALAN MAXWELL ROSS and JOHN STAFFORD HEAP
And: FRANCIS XAVIER COSTIGAN and THE ATTORNEY-GENERAL OF THE COMMONWEALTH OF
AUSTRALIA (1982) 64 FLR 55
No. G68 of 1982
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Fox(1), Toohey(1) and Morling(1) JJ.

CATCHWORDS

Administrative Law - Appeal from the refusal to grant the appellants interlocutory relief - Royal Commission under Commonwealth and Victorian Letters Patent into conduct by Federated Ship and Painters and Dockers Union - width of enquiry under Commonwealth terms of reference - enquiry touches existence of tax minimization schemes - whether any illegal activity by a member of the Union was involved - Commission can look to what it bona fide believes will assist its enquiry.

Administrative Decisions (Judicial Review) Act 1977

Commonwealth Constitution: ss. 51(i), 51(xxxv), 51(xxxix)

Companies Act, 1961 (N.S.W.) s.67

Evidence Act, 1958 (Vic)

Judiciary Act 1903 s.78B

Naval Defence Act 1910

Royal Commissions Act, 1902

Crown - Royal Commission - Terms of reference - Persons using union for illegal activities - Tax minimization scheme - Union members company directors - Investigation of nonmembers' involvement in scheme - Whether separate and distinct inquiry - Power of Commissioner to make findings - Adverse references in report - Sufficiency of evidence.

HEADNOTE

The terms of reference of letters patent issued by the Governor-General required the Royal Commissioner to inquire, inter alia, whether any person was using the Federated Ship Painters and Dockers Union or its members for the purpose of illegal activities and directed the Commissioner not to make a finding that a union or person has engaged in conduct amounting to a criminal offence except on evidence admissible in a court of law sufficient to put it or him on trial.

In the course of such inquiries the Royal Commissioner heard evidence in relation to a number of tax minimization schemes and that a number of painters and dockers had been used as directors of companies which were an integral part of the schemes. The appellants, a taxpayer and accountant involved in such a scheme, sought injunctions restraining the Royal Commissioner from inquiring into whether there had been a conspiracy to commit a breach of s. 67 of the Companies Act, 1961 (N.S.W.) and from reporting accordingly.

Held: (1) The Royal Commissioner wished to investigate fully the transaction in which the appellants had been engaged, but not for the purpose, or with the object, of embarking on a separate or distinct inquiry as to whether they had been involved in a breach of, or a conspiracy to breach, s. 67 of the Companies Act, 1961 (N.S.W.).

(2) The direction not to make a finding that a union or person has engaged in conduct amounting to a criminal offence except on evidence admissible in a court of law sufficient to put it or him on trial, does not preclude the Royal Commissioner, as a matter of power, from referring adversely to the behaviour of some persons not found to have engaged in criminal conduct.

HEARING

Sydney, 1982, April 29-30; May 12, 18. #DATE 18:5:1982

APPEAL.

APPEAL from orders of Ellicott J. refusing an interlocutory injunction sought under the Administrative Decisions (Judicial Review) Act 1977 (Cth).

C. A. Sweeney, for the first appellant.

D. Bloom, for the second appellant.

K. Mason Q.C. and P. Flemming, for the respondents.

Cur. adv. vult.

Solicitors for the first appellant: Read & Read.

Solicitors for the second appellant: Noyce Olliver & Co.

Solicitor for the respondents: B. J. O'Donovan, Commonwealth Crown Solicitor.

H. W. FRASER

ORDER

1. The appeal be dismissed.

2. The appellants pay the respondents' costs. Appeal dismissed.

Appellants to pay respondents' costs.

JUDGE1

These are appeals from the refusal of a judge of this Court (Ellicott J) to grant the present appellants an interlocutory injunction which they sought under the Administrative Decisions (Judicial Review) Act 1977 against the first respondent. That respondent is a Royal Commissioner who is carrying out an inquiry under letters patent issued by both Commonwealth and Victorian Governments. As constitutional questions were raised, notices under s. 78B of the Judiciary Act 1903 were given to the Attorney-General of Wales. The latter appeared by the State Crown Solicitor the Commonwealth and the Attorney-General of New South and indicated that he did not wish to add anything to what would be put on behalf of the Attorney-General of the Commonwealth. Senior Counsel appearing for the Attorney-General of the Commonwealth represented the first respondent in the proceedings below, and has done so in these proceedings, and said in both cases that that respondent abides the decision of the Court.

The Commonwealth letters patent were issued on 10 September 1980. Leaving aside formal parts they were as follows:

"WE DO by these Our Letters Patent issued in Our name by Our Governor-General of the Commonwealth of Australia on the advice of the Federal Executive Council and in pursuance of the Constitution of the Commonwealth of Australia, the Royal Commissions Act 1902 and other enabling powers, appoint you to be, on and from 1 October 1980, a Commissioner to inquire, for the purpose of the exercise and performance of the powers and functions of the Parliament and Government of the Commonwealth, whether the Federated Ship Painters and Dockers Union (hereinafter referred to as 'the Union') or any officer or member of the Union has engaged in illegal activities in relation to Shipping engaged in trade and commerce between Australia and places outside Australia or among the States or ships operated by, or on behalf of, the Commonwealth or in relation to any naval establishment within the meaning of the Naval Defence Act 1910:

AND, without restricting the scope of your inquiry, We direct you, for the purposes of your inquiry, to give particular attention to the following questions:

(a) whether any executive, administrative or other body forming part of, or established by, the Union has been used, or is being used, for the purposes of illegal activities, other than activities involving only breaches of laws, whether of the Commonwealth or a State, relating to trade unions;

(b) whether the Union or any of its officials or members has been or is engaged in demanding or receiving payments (other than payments of an ordinary commercial nature or payments in accordance with industrial award or agreement in respect of work actually performed or to be performed) from employers or other persons in relation to ships engaged in trade and commerce between Australia and places outside Australia or among the States, in relation to ships operated by, or on behalf of, the Commonwealth or in relation to any naval establishment within the meaning of the Naval Defence Act 1910 and, if any such payments have been made -

(i) the persons by whom and to whom any such payments have been made;

(ii) the reasons for, or the purpose of, any such payments;

(iii) the subsequent or proposed use or disposal of any such payments;

(c) whether the Union or any officers or members of the Union have engaged in illegal activities in relation to the election or appointment of officer of the Union or the conduct or purported conduct of the Union's affairs;

(d) if the Union or any officers or members of the Union have engaged in activities of any of the kind referred to in this or the preceding paragraphs, whether the employment conditions applying to the work of ship painters and dockers have contributed to the development of those activities

AND We direct you to make such recommendations arising out of your inquiry as you think appropriate, including recommendations regarding the legislative or administrative changes, if any, that are necessary or desirable:

AND We further direct that any finding that the Union or any officer or member of the Union has engaged in conduct amounting to a criminal offence be made only on evidence, admissible in a Court of Law, sufficient to place the Union, officer or member on trial for that offence.

AND We further direct that, in making your recommendations, you have regard to the announced intention of the Government of the Commonwealth to introduce a system of reporting of demands for, and payments of, monies following the report of the Royal Commission into Alleged Payments to Maritime Unions by the Honourable Mr Justice Sweeney:

AND We declare that you are authorized to conduct your inquiry into any matters under these Our Letters Patent in combination with any inquiry into the same or related matters that you are directed or authorized to make by any Commission issued, or in pursuance of any order or appointment made, by any of Our Governors of the States:

AND We require you as expeditiously as possible to make your inquiry and -

(e) not later than 31 March 1981, to furnish to Our Governor-General of the Commonwealth of Australia an interim report of the results of your inquiry; and

(f) not later than 30 September 1981, or such later date as We may be pleased to fix, to furnish to Our Governor-General of the Commonwealth of Australia a report of the results of your inquiry and your recommendations."

The Victorian letters patent were issued on 9 September 1980. They are sufficiently set out in the judgment of Ellicott J. and in the ruling of the Commissioner to which we later refer. The dates for reporting have been extended and the inquiry is still current. The Commissioner has made interim reports.

The events out of which the application for interlocutory relief arose occurred in late February and early March 1982 and the application was filed on 5 March 1982. The Commonwealth terms of reference were varied and supplemented by further letters patent issued on 1 April 1982. It is not disputed that these are relevant to the present proceedings. They were considered by the learned trial judge, who delivered his judgment on 19 April 1982. Their terms were as follows:
"WHEREAS by Letters Patent issued in Our name by Our Governor-General of the Commonwealth of Australia on 10 September 1980 We appointed you to be a Commissioner to inquire into and report upon certain matters relating to the Federated Ship Painters and Dockers Union (hereinafter referred to as 'the Union') and the officers and members of that Union:

AND WHEREAS it is desirable that your inquiry include certain matters that may not fall directly within the matters to be inquired into under the Letters Patent issued on 10 September 1980:

NOW THEREFORE We do, by these Our Letters Patent issued in Our name by Our Governor-General of the Commonwealth of Australia on the advice of the Federal Executive Council and in pursuance of the Constitution of the Commonwealth of Australia, the Royal Commissions Act 1902 and other enabling powers, vary the Letters Patent issued on 10 September 1980 so as to require that, to the extent that you are not required to do so by those Letters Patent, you inquire -

(a) whether the Union or any officers or members of the Union have engaged in illegal activities, other than activities in relation to shipping or any naval establishment;

(b) whether any person, group of persons or body established by, or associated with, the Union or its members is engaged in illegal activities; and

(c) whether any person is using the Union or its members for the purposes of illegal activities:

AND WE DECLARE that, for the purposes of these Our Letters Patent, 'illegal activities' means -

(d) activities involving any breach of a law of the Commonwealth or a Territory;

(e) activities in, or in relation to, trade and commerce between Australia and places outside Australia, among the States or between a State and a Territory, being activities which are contrary to a law of the Commonwealth, a State or a Territory; and

(f) activities that have the effect of, or are directed to, impeding, preventing or defeating, or that tend to impede, prevent or defeat, the operation, implementation or enforcement of a law of the Commonwealth or a Territory:

AND WE FURTHER DECLARE that, for the purposes of the Letters Patent issued on 10 September 1980, without limiting the meaning of the expression 'illegal activity', that expression includes any activity that is an illegal activity for the purposes of these Letters Patent:

AND WE FURTHER DECLARE That, for the purposes of the Letters Patent issued on 10 September 1980 and of these Letters Patent -

(g) a reference to officers or members of the Union includes a reference to persons purporting to be officers or members of the Union; and

(h) a reference to illegal activities engaged in by officers or members of the Union is a reference to illegal activities engaged in by officers or members of the Union, whether by themselves or in association with any other person:

AND WE FURTHER DECLARE that the Letters Patent issued on 10 September 1980 shall have effect as if the words -

'AND We further direct that any finding that the Union or any officer or member of the Union has engaged in conduct amounting to a criminal offence be made only on evidence, admissible in a Court of Law, sufficient to place the Union, officer or member on trial for that offence.'

be omitted and the following words substituted -

'AND WE FURTHER DIRECT that a finding that the Union or a person has engaged in conduct amounting to a criminal offence be made only on evidence, admissible in a Court of Law, sufficient to place the Union or that person, as the case may be, on trial for that offence.'"

We take from his Honour's judgment the background circumstances which eventually led to the making of the application under consideration. We do not understand the substantial accuracy of this account to be challenged:
"The Union (i.e. the Federated Ship Painters and Dockers Union) was established in 1900. It covers employees in ship building and ship repair in shipyards slipways and shipping companies. Two of the biggest work locations at which members have been employed are the naval dockyards at Williamstown, Victoria, and Garden Island, New South Wales.

At an early stage the respondent began investigating a company called Macbell Minerals Pty. Limited which became interested in obtaining contracts to supply lagging (that is the provision and fitting of insulation around pipes and boilers) to the naval dockyard at Williamstown. Evidence already before the Commission appears to establish that the membership and board of that company was changed in 1976, that most of the new members and directors were members of the Union or closely associated with it, that some of them had criminal records, that although it had no prior involvement in lagging it made determined attempts to secure the contract at Williamstown, that the Union gave strong support to these attempts and that it apparently did not seek to obtain any other lagging contract.

In the course of inspecting the office of Guy Keith Campbell, a director of Macbell Minerals Pty. Limited, documents were found relating to the company, Camper Timber and Trading Pty. Limited and the Commission then began investigating its activities. To date documents tendered and evidence given have revealed in relation to this company that in 1978 there were changes in its membership and board, that thereafter the directors included Campbell, Durston, Tariszynos/Sterling as well as a man called Alfred William John Johansen who was also a director of Macbell and a member of the Union, that, although its returns as filed show no assets or liabilities, approximately $9M passed through its bank accounts between September 1978 and June 1979 and that Ward, Knight and Dunn Pty. Limited acted for it in a number of transactions.

Evidence has been placed before the Commission by Counsel assisting with a view to establishing that approximately $1.5M of the $9M was money which came to Camper Timber and Trading Pty. Limited through transactions which were effected on 2 February 1979 involving the payment of amounts totalling that sum by J.S. Heap Pty. Limited and Culloden (No. 1) Pty. Limited to Pliton Finance Pty. Limited and the payment of that sum by Pliton Finance Pty. Limited to Camper Timber and Trading Pty. Limited. It is also suggested by counsel assisting that the balance of the $9M came from other tax minimisation schemes arranged by Ward Knight and Dunn Pty. Limited in which Camper Trading and Timber Pty. Limited was involved.

On 27 October and 25 November 1981 summonses were issued by the respondent pursuant to s.2 of the Royal Commissions Act 1902 (Commonwealth) requiring the applicant, Mr. Heap, to attend to give evidence and produce documents.

He subsequently gave evidence before the respondent in the course of which he indicated he relied heavily on the advice of his accountant, the first applicant, Mr. Ross. Counsel for Mr. Heap then offered to ask the applicant, Mr. Ross, to give evidence about the transaction involving Mr. Heap and Camper Timber and Trading Pty. Limited and later the applicant, Mr. Ross, came before the Commission and gave evidence. The evidence which has been given before the Commission establishes that Ward, Knight & Dunn Pty. Limited acted for Camper Timber and Trading Pty. Limited in relation to various so-called tax minimisation schemes of which the transaction involving the applicants was one."

We understand that the appellants have been excused by the Royal Commissioner from attendance to give additional evidence unless further notified, and that no notice has as yet been given. Some evidence relating to the transaction in which they were concerned was given after they gave evidence (and Mr. Ross had produced documents). They were present at the hearing on 17 February 1982, on which day counsel assisting the Commissioner made the following announcement:
"Earlier in the life of the commission I indicated that as a matter of policy at a time when those assisting you formed a view that it was likely they would urge you to make recommendations that criminal charges be laid, notice would be given so that all of those likely to be concerned in such charges would be aware that that was in the minds of those assisting you and you treat the matter accordingly. That situation has now been reached in respect of the matters that have been put before you both at the end of last year and in the hearings that took place last week and this week of this year. The likely criminal charge which it will be urged upon you to recommend should be laid is one of a conspiracy to commit illegal acts. The people likely to be the subject of the submission are in the first place the Painters and Dockers who have been involved in the companies - -

THE COMMISSIONER: In the company as directors?

As company directors in the companies, at least those at Mona Place and those with which Wakoola and Camper Timber have dealt with in which they have been directors. It is at that level together with their associates such as Mr. Campbell and Mr. Durstam, but perhaps close to that level Mr. Tariszynas is the person through whom it appears they dealt, and at the second level there are people such as Mr. Ward and Mr. Knight and other people in their office who were in a position to and were issuing instructions, whom they dealt which were involved in the Slutskin (sic) style schemes and about whom it might be said they at least should have been aware of the breach of section 67 of the Companies Act."

Counsel had been appearing on behalf of Mr. Heap, the second-named appellant, and shortly after this statement was made, leave was sought and given for counsel to appear on behalf of Mr. Ross. Submissions were made on the following day that the Commissioner would be embarking on an inquiry outside his terms of reference under the Commonwealth letters patent if he pursued the course foreshadowed by counsel assisting the Commissioner. The Commissioner was in the course of the inquiry, and the submission was therefore to the effect that questions related to the offending subject matter should not be asked, and the report should not make recommendations related to it. The situation as seen by counsel was that the Commissioner was threatening to inquire whether there had been a conspiracy to commit a breach of s.67 of the Companies Act, 1961 (NSW), which prohibits a company from financing a purchase of its own shares, and to report accordingly.

The Commissioner gave a ruling on the submissions on 4 March 1982 as follows (omitting for convenience of space the citation he made from R v Collins ex parte ACTU- Solo Enterprises Pty. Ltd. (1976) 8 ALR 691):
"Submissions have been made to me in relation to the extent of my powers under my two Commissions firstly to receive certain evidence and secondly to entertain certain submissions as to recommendations for prosecution of persons other than members of the Union.

It is desirable to outline briefly the area of evidence which has provoked these submissions prior to turning to an examination of their substance.

Evidence has been called in relation to a number of tax minimisation schemes operated by promoters. The nature of one of these schemes has been set out in my third Interim Report dated 18th December 1981 which has now been made public. The initial involvement of the Commission in this area arose from the fact that a number of painters and dockers have been used as directors of companies which were an integral part of the scheme. The details of one such scheme may be usefully set out by a quotation from two paragraphs of my Report:

'2.04 Following Slutzkin it seems that many contrived situations have come into existence. Evidence before the Commission indicates that the ability to contrive such situations attracted the attention of intelligent but less than honest members of the community and that they relied upon the services of ship painters and dockers to give effect to their schemes. I will return to the role of the painters and dockers a little later in this report. A scheme was devised which gained superficial support from the decision in Slutzkin's case but which I preferred to describe in public session of the Commission as fraudulent. The substance of the scheme can be described shortly. Two companies are brought into existence (or shelf companies acquired) to facilitate the scheme's execution: one is a finance company, the other is a purchasing company. Agreements are made between the purchasing company and the shareholders of the target company (i.e. the company which has income in its hands) whereby the shares are sold for a percentage (say 90 percent) of the income generated by the target company. If the income is, for example, $1,000,000 then the shares are sold for $900,000. Settlement takes place with all parties including bank managers being present. The directors of the target company (being either the shareholders in it or their representatives) on receipt of the bank cheque being the purchase price of the shares immediately change the bank authority of the target company so that such bank account can be at once operated by the agent of the purchasing company. That agent then causes the target company to transfer $1 million to the finance company which in turn transfers the same $1 million to the purchasing company. That company then applies $900,000 to purchase bank cheques to be handed over to the original shareholders in exchange for their shares and the remaining $100,000 is paid to the promoters of the scheme. All relevant shares are transferred. The entire transaction is completed within minutes.

2.05 In the result the target company is left with its income of $1 million but now has no assets save for the "loan" due to it by the finance company. It has new shareholders and directors, both of whom are closely connected with the directors and shareholders of the finance company. The "loan" is not repaid and in fact the finance company is sold to another company. This company fails to submit annual returns and other returns required by the Companies Act. Notices are sent out by the Corporate Affairs office. There is no compliance with these notices save for the response that the directors and company secretary "are not known at this address". This information should cause no surprise. The names are false. The addresses are false. In at least one significant company the directors are painters and dockers. In due course the Corporate Affairs office loses patience and the finance company is struck off. The 'loan' to the original target company remains unpaid. The company records disappear.'

In order properly to understand the involvement of painters and dockers it has been necessary for me to consider the detail of the arrangements surrounding these schemes and to follow their implementation step by step. This has involved a consideration of the following questions (inter alia):

(a) How was the taxpayer (or his accountant and/or lawyer) introduced to the promoter of the scheme?

(b) Did the taxpayer know of the involvement of painters and dockers in the scheme?

(c) If not aware of the involvement of painters and dockers ought he to have been aware by the application of normal commercial prudence?

(d) Was the taxpayer aware of the fact that the schemes involved one or more illegalities?

(e) If not so aware ought he to have been aware by the application of normal commercial prudence?

(f) Questions similar to (b), (c), (d) and (e) in relation to the taxpayers accountant and/or lawyer?

(g) Did the promoter know of the involvement of painters and dockers in the scheme?

(h) What was the reason for this involvement?

(i) By what means did the promoter access painters and dockers?

(j) Did the initiative for use of painters and dockers come from:

(w) the promoter

(x) painters and dockers

(y) the union

(z) some other and which person or persons?

There are many other similar questions which could be framed, all directed to the basic inquiry as to whether painters and dockers were involved in these schemes and the full nature of their involvement.

Before I turn to the submissions put to me it is necessary to say something about the nature of an inquiry conducted by a Royal Commission. The High Court has recently considered this question in the case of R v COLLINS ex parte ACTU-SOLO ENTERPRISES PTY. LTD. 8 ALR 691. In that case application was made for an order nisi to quash the report of a Royal Commission. At pages 694 and 696 His Honour Mr. Justice Stephen discusses the nature of a Royal Commission in the following terms: (omitted)

It is necessary to consider the terms of reference of my two Commissions.

The Commonwealth Commission requires me to inquire whether the Federated Ship Painters and Dockers Union or any office or member of the Union has engaged in illegal activities in relation to shipping employed in trade or commerce between Australia or among the States or ships operated by, or on behalf of, the Commonwealth or in relation to any naval establishment within the meaning of the Naval Defence Act 1910.

The Victorian Commission needs to be set out in somewhat greater detail. It requires me to inquire:

'whether the Federated Ship Painters and Dockers Union (hereinafter referred to as "the Union") or any officer or member of the Union in the course of or in relation to the affairs of the Union, has engaged in any illegal activities (other than activities involving only breaches of the law whether of the Commonwealth or a State relating to trade unions).

And, without restricting the scope of your inquiry, we direct you, for the purposes of your inquiry, to give particular attention to the following questions:

(a) whether any executive, administrative or other body forming part of, or established by, the Union has been used, or is being used, for the purposes of illegal activities, other than activities involving only breaches of laws, whether of the Commonwealth or a State, relating to trade unions;

(b) whether the Union or any of its officials or members has been or is engaged in demanding or receiving payment (other than payments of an ordinary commercial nature or payments in accordance with an industrial award or agreement in respect of work actually performed or to be performed) from employers or other persons and, if any such payments have been made -

(i) the persons by whom and to whom any such payments have been made;

(ii) the reasons for, or the purpose of, any such payments;

(iii) the subsequent or proposed use or disposal of any such payments;

(c) whether the Union or any officers or members of the Union have engaged in illegal activities in relation to the election or appointment of officers of the Union or the conduct or purported conduct of the Union's affairs;

(d) if the Union or any officers or members of the Union have engaged in activities of any of the kinds referred to in this or the preceding paragraph, whether the employment conditions applying to the work of ship painters and dockers have contributed to the development of those activities.

And We direct you to make such recommendations arising out of your inquiry as you think appropriate, including recommendations regarding the legislative or administrative changes, if any, that are necessary or desirable.

And We further direct that any finding that the Union or any officer or member of the Union has engaged in conduct amounting to a criminal offence be made only on evidence, admissible in a Court of Law, sufficient to place the Union, officer or member on trial for that offence.

And We further direct that, in making your recommendations, you have regard to the announced intention of the Government of the Commonwealth to introduce a system of reporting of demands for, any payments of, monies following the report of the Royal Commission into Alleged Payments to Maritime Unions by the Honourable Mr. Justice Sweeney.

And We do by these presents give and grant unto you full power and authority to call before you such person or persons as you shall judge likely to afford you any information upon the subject of this Our Commission, and to inquire of and concerning the premises by all other lawful ways and means whatsoever.

And We declare that you are authorized to conduct your inquiry into the matters mentioned aforesaid under these our Letters Patent in combination with any inquiry into the matters that you are directed or authorized to make by any Commission or Commissions issued, or in pursuance of any Order or appointment made, by the Governor-General of the Commonwealth of Australia or the Governor of any State of the Commonwealth of Australia.'

The debate on the submissions proceeded on the basis that I should have regard to the terms of both Commissions. It was essential that this should be so: the Commissions are in terms interrelated.

I have underlined various parts of the Victorian Commission. They demonstrate the width of my task. I am required to ascertain whether any member of the union has engaged in any illegal activities. The only exception relates to activities involving only breaches of the law whether of the Commonwealth or a State relating to trade unions: all other laws whether of the Commonwealth or a State are to be considered.

In relation to such inquiry, though without restricting its scope, I am directed to give particular attention to certain questions. One important question is whether any executive body forming part of the Union has been used or is being used for the purpose of illegal activities. Another is paragraph (b) which directs me to inquire whether the Union or its members has been engaged in receiving payments from . . . other persons, and if so,

(b) 'whether the Union or any of its officials or members has been or is engaged in demanding or receiving payment (other than payments of an ordinary commercial nature or payments in accordance with an industrial award or agreement in respect of work actually performed or to be performed) from employers or other persons and, if any such payments have been made -

(i) the persons by whom and to whom any such payments have been made;

(ii) the reasons for, or the purpose of, any such payments;

(iii) the subsequent or proposed use or disposal of any such payments;'

In these circumstances it was submitted to me by Mr. Sweeney of Counsel and Mr. Bloom of Counsel on behalf of an accountant and a taxpayer involved in one of the schemes that:

(a) the Commission should not inquire into whether either of those parties may have been party to or involved in a criminal conspiracy, and

(b) a fortiori the Commission should make no finding or recommendation in relation to those matters.

Both these submissions arose out of an indication given the previous day by Mr. Meagher of Counsel assisting the Commission that he proposed in due course to make submissions that I should recommend to Government the prosecution of persons involved in these schemes.

It seems to me that these submissions need to be dealt with separately.

The obligation cast on me by my Commissions is to inquire fully into the matters covered by my terms of reference. I am, of course, aware of and accept the limitations imposed by those terms of reference, expressed succintly by His Honour Mr. Justice Sholl in Johns & Waygood Ltd. v Utah Australia Ltd. 1963 V.R. 70 @ 75:

'I reject the argument advanced by the learned Solicitor-General, on behalf of the present Commissioners, that once a valid common law appointment is made there is no limitation upon the statutory powers of such a Commission, and no way in which their exercise can be curtailed or controlled by reference to the law of contempt of court. For, after all, they are only powers, and it cannot possibly be right to hold, for example, that a Royal Commission appointed to inquire into subject matter A can, by the mere use of its statutory powers under the Evidence Act, lawfully proceed to summon and examine witnesses with respect to an unrelated subject-matter B.'

In so far as the evidence before me discloses an involvement by painters and dockers in tax minimisation schemes and illegalities associated with them (including breaches of the Companies Acts of various States and the Income Tax Assessment Act) it is incumbent upon me to understand as fully as possible the ramifications of such schemes (and possible illegalities) so that I can direct my mind to the way in which the Union may have been used for such purposes, and whether, and by whom, any payments have been made to members of the Union. In an inquiry of this kind it is impossible to lay down in advance the limits of investigation. And yet this is what the submission made to me would require me to do. Is not one view of the evidence that the payment made to a painter and docker company director came to him (at least indirectly) from aataxpayer? At the very least am I not bound to inquire into this matter? If the evidence should disclose that a taxpayer either knew or ought to have known that his tax was being minimised by the use of painters and dockers as company directors, am I not obliged to inquire as to whether this falls within the concept of 'use of the union for illegal activities'? I am not making any findings on these matters at this stage and will not until the evidence is complete and submissions have been advanced on that evidence by those who wish to make them. But it is not possible to limit my inquiries into these areas by producing a conclusion mid-way through those inquiries.

In so far as the submission requires me to limit my inquiries I am accordingly forced to reject it.

The second leg of the submission relates to the indication given by Counsel assisting me that he is likely to submit that I should recommend to Government the prosecution for criminal conspiracy of a number of people including not only painters and dockers but also promoters and taxpayers and their professional advisers. It is put to me that such a recommendation would be beyond my terms of reference.

My primary obligation to report to Government flows from the last paragraphs of my Commissions whereby I am required (within the time limit there set out or as extended) to report the results of my inquiry and my recommendations. These paragraphs seem logically to be attached to those sections of the Commissions which set out the terms of reference. They do not in terms define any limits to my recommendations provided they flow from my inquiry. Are they to be read down by the earlier paragraph which deals specifically with any finding that the Union or any officer or member of it has engaged in conduct amounting to a criminal offence?

The question can be framed in other ways. If as a result of my inquiry I find that a person (other than a painter and docker) has committed an offence am I not required to report that fact? If it should be my opinion, after considering all the evidence and hearing submissions, that there has been a conspiracy involving painters and dockers and others, am I not required to report that fact?

The answer to these questions must be influenced by the considerations referred to earlier in this ruling as to the true nature of an inquiry by a Royal Commission. It is not a Court of law, pronouncing upon the rights of persons. Its findings do not affect rights or liberties. Such a result can occur only after a judicial determination in a Court of law acting on evidence and according to well established procedures. My task is quite different. It is to inquire into multitudinous factual situations so as to discover the truth. For this purpose I am granted under my Commission 'full power and authority to call before me such person or persons as I shall judge likely to afford me any information upon the subject of my Commission.' When I have collected all such information I would expect to hear submissions from Counsel assisting me and from Counsel appearing for other parties as to the conclusions I should come to in my report. If the evidence then before me raises for example a question of criminal conspiracy I would expect to hear submissions from all interested parties as to whether I should draw that conclusion. If the conclusion is based on evidence admissible in a Court of law sufficient to place such persons on trial for that offence, it is my view that I would be required under my Commission to recommend the appropriate action.

In the event therefore I rule against the submissions and will allow the evidence to be adduced."

The principal argument before us was that under the Commonwealth terms of reference, the Commission does not have power to conduct an inquiry as to whether or not there has been a conspiracy to commit a breach of s.67 of the Companies Act. The emphasis has been on this section. The reason given as to why the Commonwealth terms only are referred to is that there is no power to command attendance under the relevant Victorian legislation (the Evidence Act, 1958) because the appellants are in New South Wales. We do not pause to test the validity of this explanation in a case such as the present where the appellants have already attended before the Commission. There is also a concealed premise, namely that if the further attendance of the appellants was procured they could not be asked questions pursuant to the Victorian terms of reference, or in relation to a subject matter which could be supported only under those terms. It is not necessary in the circumstances for us to consider this question. It is also submitted that it would be beyond constitutional power for the Commonwealth to authorise an inquiry such as that referred to.

In our view, the appellants fail in limine on the facts. The case is not one in our opinion in which the Commissioner is intending or threatening to carry out an inquiry such as that posited. This was also the conclusion of the learned trial judge. There is no doubt that counsel assisting referred more than once to s.67, but the Commissioner did not in his ruling state any intention to carry out an inquiry solely or principally related to that section, let alone to do so under the Commonwealth letters patent. He did not in his ruling specifically refer to that section, or its Victorian equivalent, or their subject matter although he did refer to possible breaches of "Companies Acts". We agree that if one reads relevant parts of the transcript of the argument before him, there is at times ambiguity in the expressions, particularly those of counsel assisting, as to the direction which the Commission is or might be taking. Even so, there are clear statements in the course of argument of the view of the situation taken by the Commissioner. He was at the time acting under the original Commonwealth terms and emphasised repeatedly that what he was looking at was whether the Union or an officer or member thereof was or had been engaged in an illegal activity of the nature referred to in those terms. For reasons which appeaered sufficient to him, he wished to investigate fully the transaction in which the appellants had been engaged, but not for the purpose, or with the object, of embarking on a separate or distinct inquiry as to whether they had been involved in a breach of, or a conspiracy to breach, s.67. He explained in his ruling how wide he thought the inquiry might have to be. He did so by reference to one case, also involving a Slutzkin type transaction, in which there had been fraudulent participation by one or more members of the Union (see report of this decision, sub. nom Slutzkin & Others v The Commissioner of Taxation of the Commonwealth of Australia (1976-77) 140 CLR 314). The Slutzkin type of transaction inevitably raises questions concerning s.67 and equivalent provisions in other jurisdictions, but the issue as the Commissioner saw it was whether any illegal activity by a member of the union was involved; whether, for example, union members had been involved as company directors in illegal activities. The principal emphasis in what the Commissioner said was on fraudulent tax minimisation schemes. His power to inquire in this area has been made clear in the enlarged terms. We would not wish to be taken as agreeing to all that the Commissioner said in his ruling, but we believe he negatived clearly enough the intention attributed to him by counsel for the appellants. The onus is of course on the appellants to show that he did have such an intention, and, in the present case, to show that there was a case for an interlocutory injunction, which if granted would be on a quia timet basis.

Since the ruling was given, the terms have been widened, but this is not of critical significance for present purposes, except possibly in one respect. Counsel for the appellants have argued that questions related to s.67 should not in the circumstances be asked at all. This is to go too far. Whether or not there has been a breach of some provision of the law may be relevant to an inquiry directed to a different subject matter. Knowledge on the part of some person that he was involved in the commission of a breach of the law may, a fortiori, be relevant. What questions the Commissioner should ask, or allow to be asked, is a matter for his own good sense and judgment. The terms have been widened, the scope of the inquiry has been expanded, and the limits of what is relevant have been correspondingly extended. Counsel sought, we think in relation to this submission, to avoid an inquiry (assumed to be threatened) in relation to their clients by saying that there was no evidence linking them with members of the union or any relevant illegality, and indeed, that the evidence was to the contrary. This provides no reason why the Commissioner should not inquire further, and require further evidence from them, if he considers these courses desirable in the performance of his function. We should add that "relevance" may not strictly be the appropriate term; what the Commissioner can look to is what he bona fide believes will assist him in his inquiry.

By the Commonwealth terms of reference the Commissioner is directed not to make a finding that the Union or a person has engaged in conduct amounting to a criminal offence except on evidence admissible in a court of law sufficient to put it or him on trial. This is thought to be a desirable protection, having in mind, in particular, that the Commissioner has a mandate to inquire, and is not bound by the rules of evidence. It has been submitted that the Commissioner cannot make an incidental finding concerning the conduct of a person, not being criminal conduct. This proposition is also too wide. It is obvious that a Royal Commissioner should act in relation to such a matter with fairness and with proper restraint and, of course, he must comply faithfully with the requirement concerning criminal conduct such as that to which we have just referred. It is certainly not possible to say that he cannot, as a matter of power, refer adversely to the behaviour of some persons, not found to have been engaged in criminal conduct. He is, after all, providing for the executive government a report on the subject of the inquiry. The Commissioner in this case seems clearly to have taken a strong view unfavourable to people engaging in contrived tax minimisation schemes, but we would not wish to deal in the abstract with what he can, or should say, in this connection under his amended terms of reference.

Mr Bloom, who appeared for the second appellant argued that paragraph (a) of the amended Letters Patent as elaborated by paragraph (e) thereof was beyond Commonwealth power. It will be observed that these paragraphs confine the first respondent's inquiry to activities with respect to which the Commonwealth plainly has powers to make laws - vide s.51(i) of the Constitution. It was vital to Mr Bloom's submission that the Commissioner had embarked, or was about to embark, upon an inquiry into breaches of s.67 of the Companies Act without regard to the involvement of the Painters and Dockers Union or its officers, or any connection between such breaches and the activities stated in paragraph (e). For the reasons already given we are not persuaded that the Commissioner had embarked, or was about to embark, upon such an inquiry. Accordingly we are of the opinion that Mr Bloom's argument cannot succeed.

It is unnecessary to deal with other arguments raised.

We are of the view that the appeal should be dismissed, with costs.