Sharp, J.R. v Deputy Commissioner of Taxation

[1988] FCA 773

JUDGMENT No. ?.?iP..d?~%=

CATCHWORDS

PRACTICE AND PROCEDURE - Motion for d lsc losure of l d e n t l t y

of person who acted i n manner alleged t o be I n breach of

under tak ing t o cour t - c o u r t ' s j u r l s d i c t l o n t o commit a p e r s o n

no t a par ty t o an ac t ion for contempt of c o u r t - leave t o

c o u n s e l t o be heard as amicus curlae.

Administrative Decisions ( J u d i c i a l R e v l e w ) Act 1 9 7 7 ( C t h )

Income T a x Assessment A c t 1 9 3 6 ( C t h ) : S. 263

JEFFREY RALPH	SHARP	and GREENWOODS & FREEHILLS PTY. LTD.	v.
DEPUTY COMMISSIONER OF TAXATION,	ROBERT	FITTON,	PETER H A S S A R A N I ,
MALCOLM RILEN

G263 of	1 9 8 8
SYDNEY

LOCKHART J .

2 8 NOVEMBER 1 9 8 8

IN THE F E D E W COURT OF AUSTRALIA

1

NEW SOUTB W - DISTRICT REGISTRY No. G263 of 1988

1

GENERAL DIVISIQS 1

BETWEEN:  JEFFREY RALPH SHARP

First Applicant

GREENWOODS	&	FREEHILLS
PTY. LTD.

Second Applicant

AND :  - DEPUTY COMMISSIONER OF

TAXATION

First Respondent

ROBERT FITTON

Second Respondent

PETER HASSARANI

Third Respondent

MALCOLM RILEN

Fourth Respondent

m MKING ORDER: LOCKHART J.

ORDER W D E : SYDNEY

DATE ORDER M E :  28 NOVEMBER 1988

MINUTE OF ORDER

THE COURT 0- TEAT:

1.	The Deputy Commissioner of Taxation be at	liberty to
have access to the envelope which	is Exhibit PMBl	to the
Affidavit of Peter Nark	Butler, sworn	on 7 April 1988 in
these proceedings.
2. The applicants do all	things reasonably within	their

power to unable such access to be given.

3. Liberty be reserved to any party to apply on two days

notice.

4.    There be no order as to costs.

-	NOTE:	Settlement and entry of orders is dealt with in	Order
36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	1 1
NEW SOUTH WALES DISTRICT REGISTRY	1 NO. G263 Of 1988
1

GENERAL DIVISION 1

BETWEEN: JEFFREY RALPH SHARP

First Applicant

GREENWOODS	&	FREEHILLS
PTY. LTD.

Second Applicant

AND :  - DEPUTY COMMISSIONER OF

TAXATION

First Respondent

ROBERT FTTTON

Second Respondent

PETER HASSARANI

Third Respondent

MALCOLM RILEN

Fourth Respondent

28 November 1988

REASONS FOR JUDGMENT

LOCKHART J.

This matter derives from proceedings presently before

this Court although in a sense the present matter is

independent of those proceedings. It is necessary to give

some account of the curial history of the proceedings to put

in context the Notice of Motion brought by the Deputy

Commissioner of Taxation and now before the Court.

The first applicant, Geoffrey Ralph Sharp, is a director

of a firm of chartered accountants, the second applicant

Greenwoods and Freehills Pty. Limited ("the firm"). In

February this year taxation officers visited the firm's

business premises and demanded access to its facsimile record

book ("the book") pursuant to S. 263 of the Income Tax

Assessaent Act 1936 (Cth) ("the Assessment Act"). The book

recorded facsimile transmissions which	had been sent by the
firm.

On the occasion taxation officers visited the firm's

premises, the first applicant asked for an opportunity to

obtain legal advice. An arrangement was made by which a

photocopy of the book was placed in a sealed envelope and the

envelope placed in the Court's custody. The applicants then

commenced proceedings under the Administrative Decisions

(Judicial Review) Act 1977 (Cth) for judicial review of the

decision of the Deputy Commissioner of Taxation to gain

access to the book. They also sought interlocutory orders

that the envelope containing the copy of the book remain in

the custody of the Court until the determination of the

judicial review proceedings.

Beaumont J., who heard the application for interlocutory

relief, refused it on the ground that there was no serious

question to be tried: Sharp 6 Anor. v Deputy Federal

Commissioner of Taxation 88 ATC 4165. The applicants then

appealed, by leave, to a Full Court of this Court. In that

appeal the applicants relied on the point raised before the

learned primary Judge and also on a separate point not raised before him, namely, that the authorisations to gain access which had been produced to the applicants by the taxation

officers were not properly	signed and consequently	did	not
satisfy the terms of	S. 263 of the Assessment	Act.	The

authorisations had, in fact, been signed by the Deputy

Commissioner of Taxation in his own name, whereas it was argued that sub-s. 263(2) required that they be signed by the Commissioner of Taxation himself. The appeal was allowed by the Full Court on the ground that, whatever the strength or weakness of the question argued before the primary Judge, the additional argument of the applicants as to the form of

signature of the S. 263	authorisations raised	a	serious
question to be tried.	The Full Court found	that it	was
therefore	appropriate	to grant	interlocutory relief: see

Sharp c Anor. v Deputy Federal Commissioner of Taxation 88

ATC 4259. The Full Court ordered that the order preventing

the respondents from inspecting the book, which had been

continued in the application for leave to appeal, be

continued until further order of a Judge of this Court.	I am
informed that that order is still in force.

In the meantime, in other litigation reported as

Citibank Limited v Federal Commissioner of Taxation 88 ATC 4114, a question as to the construction and operation of S.

263 was determined by a single Judge of this Court. That

decision is the subject of an appeal to a Pull Court of this

Court to be heard early in December. The parties in this

case have taken the view that the hearing of the matter should abide the outcome of the Citibank Case given issues in common between the two proceedings.

The present Notice of Motion was filed on 18 October

this year on behalf of the Deputy Commissioner of Taxation,

seeking an order that he have access to an envelope described in the Notice of lotion as Exhibit PMBl to the affidavit of

Peter Mark Butler	sworn on 7 April 1988	and filed in these
proceedings.	It is necessary to refer	to certain matters

deposed to by Hr. Butler in that affidavit;	in a further
affidavit sworn by Mr. Butler on 8 April 1988; and	in an

affidavit of Stephen Catt sworn on 17 October 1988. Those

affidavits constitute the evidence in the motion now before

the Court.

Mr. Butler is a member of the firm of Freehill,

Hollingdale and Page, solicitors, who formerly acted for the

applicants in this matter. At the time he swore his

affidavit, nr. Butler had the conduct of the action on behalf
of the applicants.	There has since that time been a change

of solicitors for the applicants in the matter. At about 3 p.m. on 5 April 1988 Mr. Butler spoke to a Mr. Dennis Lear who is a director of the firm. Mr. Lear told Mr. Butler that

a client, whose name has been placed in a sealed envelope

marked PHBl, which is the exhibit to which the Notice of

Motion refers ("the client") had telephoned Mr. Lear on 24

March 1988. The client said he was concerned about problems

which could arise as a result of a tax investigation about

which the client had read in the press in connection with the

proceedings before Beaumont J. The client then enquired

whether his files, which were held by the firm, could be made

available to him for his collection.

Mr. h a t told the client that he would have to discuss

the matter with other directors of the firm, in the light of an undertaking which had previously been given to the single Judge of this Court who heard the motion for leave to appeal

from the decision of Beaumont J. declining interlocutory

relief. That undertaking was given to	the court by the
applicants in these terms:

"Witbout admissions, the Applicants undertake that
they will not (except with the written consent of
the first respondent) part with custody of or
destroy or deface any documents held by either of
them, or on their behalf, on behalf of any person
or Company who or which is named in Exhibit A as
having had a Pax sent on his or its behalf to EBC

or Acceptor Enterprises Ltd.

Liberty is reserved to the applicants to apply

witb such notice (if any) as the Judge shall allow

to n r y or discharge the above undertaking."

It is common ground that this undertaking is still

operative. Mr. Lear described the contents of the

undertaking in general terms to the client.

The client said he would ring Hr. Lear again in a few

days time. Be rang back at about 4.45 p.m. on Wednesday, 30

March. Hr. Lear informed him that he had discussed the matter with other directors of the firm and a decision had

been taken that the file could not be provided to the client.

The client requested a	meeting and	an appointment was made
for him to attend the offices	of the firm at	2 p.m. on S

April. The client arrived at about	9.45 a.m. that day and
asked Mr. Lear if he could be seen at about 10 a.m.	together
with a solicitor acting on his behalf ("the solicitor").	Mr.

Lear agreed to accommodate the client and the solicitor and a

conference commenced at about 10.15 a.m. that morning.

Mr. Lear showed both the client and the solicitor the

relevant file.	Mr. Lear discussed with them the terms of	the
undertaking and showed the client	and the solicitor a copy	of
that undertaking.	Mr. Lear said that	in the light of the

undertaking, he could not allow the client to take the file

as it appeared at least possible that the file fell within

the terms of the undertaking. The solicitor argued that the

undertaking did not apply to the file in question, while nr.

Lear said that he took a different view. The client became

very agitated and said that he did not like Mr. Lear's

response, although he appreciated Mr. Lear's difficult

position both in respect of the undertaking and also in

respect of the client's own position as a client.

The client said that he had been advised by another

lawyer that if Mr. Lear had no knowledge of what happened to
the file then Mr. Lear could not be held to be in breach of
the undertaking. Hr. Lear said he was not prepared to be put

l .

in a position where the file could be taken. The client then

suddenly and without hesitation or warning took the file from

Mr. Lear's desk, put the file in his open zip bag and

hurriedly left Hr. Lear's office, saying words to the effect of "This is the only way". This occurred at about 11.15 a.m.

The solicitor remained in the office and commented that he

had not expected the client to take the action he had taken,

and had	not come	to the conference with	the intention of
allowing the client to take such	action. Neither	Mr.	Lear

nor the solicitor took any physical action to restrain the client, it being said that events occurred very quickly. Mr. Lear did object orally with the words "You can't take the

file". This objection apparently had no effect on the

client, who did not look back or stop to respond.

When later that day Mr. Lear informed Hr. Butler of

these events, Mr. Lear and Hr. Butler determined to do

everything which could be done to recover the file. An

urgent telegram was sent later that afternoon by Mr. Butler,

asking the client to return the file immediately. He

attempted to telephone the client thereafter more than once

throughout the afternoon and, indeed, until about 8.30 p.m.

in the evening. Other persons on behalf of Messrs. Freehill,

Hollingdale and Page also sought to get in touch with the

client by telephone until he finally rang in response to

those attempts.

Hr. Butler telephoned the solicitor at his office on the

morning of 6 April and outlined to the solicitor Mr. Lear's

version of th events which took place during the conference. The solicitor agreed that what had been said was an accurate version of th conference. Hr. Butler urged the solicitor to

make every effort to speak to the client and warned him that

the client vould be in contempt of court if the documents

were not returned immediately. The solicitor agreed that the documents should be returned and said he would telephone the client as a natter of urgency. That afternoon the client

telephoned Hr. Butler and told him he had spoken to the

solicitor. Be told him that the documents which he had

removed were no longer in existence. The client said that he

had destroyed the documents by tearing them into little

pieces and flushing them down the lavatory. The client agreed that what Hr. Lear had told Hr. Butler was an accurate version of the conference.

The client said that he was extremely upset and

concerned about the matter but did not think he was doing

anything whicb was unlawful. The client said that he understood, from what the solicitor had told him during the conference, that since he had not made the undertaking he

would not be behaving unlawfully if he ignored it. Mr.

Butler advised the client to seek urgent legal advice.

In Hr. Butler's second statement, he says in essence

that certain documents remain missing despite an attempt by Mr. Lear to reconstruct the missing file from copy documents.

Mr. Catt, who appears for the Deputy Commissioner on this motion, rays that the first respondent seeks access to

the envelope referred to as Exhibit PMBl to the affidavit of

Mr. Butler to enable him to move the Court for an order that

the client be found guilty of contempt of court. Hr. Catt

has informed me from	the bar table that he has instructions
from the ?irst Respondent	to take the necessary proceedings

to bring the client before the court on a motion for

contempt.

The court has jurisdiction to commit for contempt a

person not a party to an action who, knowing of an injunction

or undertaking to the court, sets the court at defiance:

Seaward v Paterson 118971 1 Ch 545 per Lindley LJ. at 554.

His Lordship there observed that where a person conducts himself so as to obstruct the course of justice, "the Court

will not allow its process to be	set at nought and treated
with contempt" (at 556).	Rigby L.J. remarked that

"It is for the good, not of the plaintiff or of any

party to the action, but of the public, that the orders of the Court should not be disregarded, and that people should not be permitted to assist in the breach of those orders or what is properly

called contempt of the court". (at 558)

That jurisdiction was affirmed in the Court of Appeal in - 2

Limited v A-2 and AA-LL (1982) 1 QB 558, especially per

Eveleigh L.J. at 580-581. See also Marengo v Daily Sketch

and Sunday Graphic Ltd. 119481 1 All ER 406; Borrie & Lowe,

Law of Contempt, 2nd Edn, pp. 403-410. Whether the court's

jurisdiction to commit a person for contempt who is not a

party to the proceeding is confined to the case where the

person aids and abets the defendant in breaching the

injunction or undertaking is an arguable question, but I do

not have to decide it for the purposes of these proceedings.

It is sufficient to say for present purposes that the

question is reasonably arguable either way.

nr. Catt informed the Court that there is no suggestion

that the applicants have, or either of them has, acted

otherwise than properly in connection with the removal of the

file by the client. In the light of the respondents'

concession as to the propriety of the acts of the applicants,

the applicants did	not seek to take	an active role in the
motion.

Counsel sought to be heard before me as amicus curiae

for the	purpose of putting 6ubmissions	to	the court with
respect to	the motion, but not to	call evidence	in the

matter. Counsel took this course because to have sought

leave to intervene in the matter on behalf of the client,

whom obviously he in substance represents, would have

involved disclosure of the client's name. That would, so it was said, set at nought the effect of the order of the Full

Court in Sharp's Case (supra). There are many cases which

consider the role of an amicus curiae in this country, in the United Kingdom and in particular in the United States of

America:  sec generally the unreported decision of a Full

Court of this Court in United States Tobacco Company v - The

.	11.
. .

Minister for Coosumer Affairs, 15 September 1988,	especially
at pp. 24-33.

Unless I had allowed counsel to appear as amicus curiae,

there would have been no person to put any argument on behalf of the client on the hearing of the motion, and the client

would have lacked an opportunity to be heard despite the

prejudice to his interests which might result from the

success of	the motion. I therefore took the view that
counsel should be	allowed to make submissions to the court
as amicus curiae.

Counsel appearing as amicus curiae put essentially two

arguments. The first was that it would frustrate the judgment of the Full Court in Sharp’s Case (supra) if the

order sought in the notice of motion were to be made.

Counsel relied upon the reasons for judgment of the Full

Court at 4266, which are to the effect	that the copies of the
book should remain in the custody of the	Court and the Deputy

Commissioner and his officers should be prevented from

inspecting them until the determination of the judicial

review proceedings. The Court noted the submission that

otherwise the Deputy Commissioner would achieve his object

if it were found that he was not entitled to access to the book, and the latter would have become academic so far as the applicants were concerned.

In my view, that submission cannot be accepted. All

that is sought in the motion is the disclosure of identity of

the client. DiSClOSure is sought for a particular purpose, namely, in aid of the commencement and prosecution of contempt proceedings against the client at the behest of the Deputy Corrmi~sioner. The order that is sought, if granted, does not in any way nullify the order of the Full Court in Sharp's Case, nor would the grant of the order be contrary to any part of the Full Court's reasoning.

Further, even if the grant of an order that the identity of the client be	disclosed did run counter to the reasoning
of the Full Court, there would be	a very strong reason why

the order sought should be made. The interests of justice, and the proper administration of justice, are not only served

by ensuring that the substratum of litigation is not set at

nought during the continuation of proceedings, but also require that the guilt or innocence of persons, be they parties to the litigation or not, said to have committed contempt of orders of the Court or undertakings given to the court be determined expeditiously. The latter is a matter

which goes beyond the interests of the parties themselves,

being deeply rooted in the notion that contempt of orders	or
of undertakings is inimical to the proper administration of

the law by the courts of this country.

Counsel, as amicus curiae, submitted in the second place that any contempt proceedings could be brought at some later point. I am prepared to assume that the question of guilt or innocence of the client in relation to the allegation of

contempt is a question which can be determined after the

.

matter of Sharp	v Deputy Commissioner of Taxation has been
determined, although I recognise that the litigation	may take

some considerable time to complete. In my opinion, however,
the question of a possible contempt by the client is a matter

which should be determined in the near future and not at a

substantially later date, having	regard to the interests of
justice and the proper administration of the law, and	having
regard also to the interests of the client himself	so that he
knows where he stands with respect to the matter.

It is, of course, not necessary for me to determine at

this stage whether the client is or is not guilty of contempt

of court. All I have to determine is whether or not the name

of the client should	be revealed to the Deputy Commissioner
of Taxation.	In considering that matter I have had regard to
the question of the strength or weakness of the case	for

contempt which might be brought against the client. I have,

of course, no concluded view on the matter, but it seems to me that on the evidence before me, which is not contested at this stage, that there is a serious question to be tried if

at the	hearing of the motion for contempt the evidence
remained in its present form.

Accordingly, the Court orders that the Deputy

Commissioner of Taxation be at liberty to have access to the envelope which is Exhibit PMBl to the Affidavit of Peter Mark Butler, sworn on 7 April 1988 in these proceedings, and that

the applicants do all things reasonably within their power	to
enable such access to be given.	The Court grants liberty to
any party to apply on two days	notice.

c ? 1 4 .

NO party seeks any order for costs. Accordingly, I make

no order as to costs.

I certify that this and the preceding

thirteen (13) pages are a true copy of

the reasons for judgment herein of the

Honourable Hr. Justice Lockhart.

Associate	J &y,b
Date: 28 November,	1988

Counsel for the applicants

(respondents to the notice

of motion):	Hr. G.A. Flick
solicitors for the applicants: Allen	Allen C Hemsley
Solicitors for the respondents

(applicants on the	notice	of	Australian	Government
motion) :	Solicitor

Counsel as Amicus Curiae:	Mr. R.S. Toner
Date of Hearing:	28 November 1988
Date of Jmdgment:	28 November 1988