Simionato Holdings Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia

[1995] FCA 790

IN THE FEDERAL COURT OF AUSTRALIA )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY )    No. SG 57 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:

SIMIONATO HOLDINGS PTY LTD

(ACN 065 117 259)

Applicant

- and -

THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

EX TEMPORE REASONS FOR DECISION

CORAM:    Branson J
PLACE:    Adelaide
DATE:        19 September 1995

I propose to give ex tempore reasons because I regard the matter as one of some urgency.  I reserve the right to edit these reasons once they are available.

The applicant has applied for judicial review of certain decisions and/or conduct of the respondent and of officers of the respondent.  The decisions and conduct complained of relates to:-

(a)the obtaining by the respondent of certain bank records of the applicant from the Monte Paschi Australia Limited Bank in Adelaide and the Commonwealth Bank in Hindmarsh respectively, ("the bank records"); and

(b)the delivery of such bank records to Mr Douglas Meagher QC, counsel for the respondent in certain proceedings in this Court concerning certain companies known as the Emanuel Group of Companies, for the purpose of his using them - as it is conceded that he has - in his capacity as senior counsel for the
liquidator of certain of the Emanuel Group of Companies ("the liquidator") on the public examination of certain persons before a Master of the Supreme Court of South Australia.

By its application the applicant has also sought interlocutory orders that the bank records and all copies and extracts made of them be delivered to the Court pending the determination of the application, and that the respondent provide a list of the persons who have been supplied with any of the bank records or with information obtained from them.

The Court sat late yesterday afternoon to hear the interlocutory application as a matter of urgency.  Argument in full was heard.  Further consideration of the matter was adjourned until this afternoon to allow counsel for the applicant time to give consideration to whether the application should be amended to reflect factual circumstances which have come to the attention of their client since the application was filed.

I requested the respondent to make available to the applicant by this morning a list of the documents which comprised the bank records.  I did so to facilitate consideration by counsel for the applicant of the terms of any order which it might seek from the Court should the Court be minded to grant interlocutory relief.  It was not my intention to re-open today argument concluded yesterday.

In support of the interlocutory application, the applicant relies on an affidavit of Effie Kavadas, solicitor.  No affidavit material was filed by the respondent on the interlocutory application prior to it being called on for hearing yesterday.  At that time counsel for the respondent indicated that no affidavit material was to be filed on behalf of the respondent.  Today, an affidavit of Geoffrey Ivan Merrit sworn today has been filed and counsel for the respondent has sought to rely on it.  Following argument on the admissibility of the affidavit before me I have ruled against the affidavit being able to be read on this interlocutory application.

The respondent sought and obtained the bank records in purported reliance on s263(1) of the Income Tax Assessment Act 1936 (Cth) ("the Act"). Section 263(1) provides as follows:-

"The Commissioner, or any officer authorised by him in that behalf, shall at all times have full and free access to all buildings, places, books, documents and other papers for any of the purposes of this Act, and for that purpose may make extracts from or copies of any such books, documents or papers."

It was accepted on all sides that s263 gives very wide powers. However, it was submitted on behalf of the applicant that the power must be exercised in good faith and for the purpose for which it was conferred (see Clyne v Deputy Federal Commissioner of Taxation & Anor (1985) 8 FCR 130 at 132 and the cases there cited). It was conceded on behalf of the respondent by his counsel that it was his intention, at the time that he reached his decision to utilise his powers under s263 of the Act, to make the bank documents available to Mr Meagher QC for use by him in his capacity as counsel for the liquidator if he, that is
Mr Meagher, should think fit.  However, it was not conceded that this was the purpose for which access to the documents was obtained.

It is not in dispute that members of the Emanuel Group of Companies are indebted to the respondent in significant amounts. The recovery of unpaid tax is, in my view, a purpose of the Act. The bank records have an apparent relevance to such purpose. Lack of good faith and/or an absence of proper purpose on the part of the respondent is not in such circumstances lightly to be inferred. In the circumstances I am not satisfied that there has been shown at this stage of the proceedings to be a serious question to be determined as to the validity of the decision and/or the conduct of the respondent in seeking and obtaining access to the bank records.

The applicant further challenges the decision and conduct of the respondent and/or his officers in deciding to provide such documents to Mr Meagher for use by him in his capacity as senior counsel for the liquidator. Section 16(2) of the Act provides as follows:-

"Subject to this section, an officer shall not either directly or indirectly, except in the performance of any duty as an officer, and either while he is, or after he ceases to be an officer, make a record of, or divulge or communicate to any person any information respecting the affairs of another person acquired by the officer as mentioned in the definition of "officer" in subsection (1)."

It was submitted on behalf of the respondent that Mr Meagher is himself an "officer" within the meaning of s16 of the Act, by reason of the definition of "officer" contained in s16(1), as extended by s16(1A). I accept that this is so. As such an officer Mr Meagher himself is under an obligation to comply with s16(2) of the Act (Consolidated Press Holdings Limited & Ors v Federal Commissioner of Taxation & Anor (1995) 95 ATC 4231). It was not suggested that s16(4) has any application in the circumstances of this case.

In my view, in all the circumstances of this case, there is a serious issue to be tried as to whether the decision to provide the bank records, or alternatively, to allow the bank records to be provided to Mr Meagher in his capacity as senior counsel for the liquidator, was a decision calculated to result in a breach of s16 of the Act.

There is also in my view a serious issue to be tried as to whether Mr Meagher divulged or communicated to any person information in respect of another person from the bank records, apparently acquired by him as an officer within the meaning of s16(1) of the Act, other than in the performance of a duty by him as such an officer.

I turn to consider the balance of convenience.

Mr Whitington sought leave to appear on the hearing of the interlocutory application as counsel for the liquidator.  Mr Beaumont QC, senior counsel for the applicant, objected to such leave being granted.  I nonetheless agreed to hear Mr Whitington on the issue of balance of convenience but not otherwise.  Mr Whitington requested time to place affidavit material before the Court on the issue of the balance of convenience.  In the circumstances that the liquidator is not a party to these proceedings and that the respondent had apparently made a decision not to place such material before the Court, I declined to grant an adjournment to allow the filing of affidavit material on behalf of the liquidator.

Mr Whitington placed two broad submissions before the Court.  First, he submitted that the liquidator was in the process of securing assets of the Emanuel Group of Companies and of seeking to recover assets of that group of companies.  He drew attention to a payment in the sum of $4.6 million made by one of the former financiers of the Emanuel Group of Companies to the applicant.  I recognise the importance of these matters and I take them into account.  I also take into account that one of the exhibits to the affidavit of Effie Kavadas is a copy order with injunction made by Judge Anderson, Master of the Supreme Court of South Australia, which restrains the applicant, without the prior consent of the liquidator, from, in effect, dealing with its assets.

Secondly, Mr Whitington challenged the utility of any interlocutory order in this case on the basis that some of the bank records have already been placed in the public domain and copies of others of them have been obtained from other sources.  I am not satisfied that any interlocutory order which I might make in this case would be without utility.  This, so far as I am aware, is not a case like Johns v Australian Securities Commission and Others (1993) 178 CLR 408 in which the material has been widely disseminated in the press so as to place the contents of the bank records in the public domain.

I consider it to be appropriate, so far as it is within the power of this Court, to prevent any further public or other dissemination of the contents of the bank records pending a determination of the issues of the lawfulness of their provision to, and use by, senior counsel for the liquidator.  I note that should the second submission of Mr Whitington be accepted, it would appear that the liquidator will be little inconvenienced by any order that the Court might make.

In my view the balance of convenience favours the making of interlocutory orders to prevent further divulgence of the contents of the bank records in the manner complained of pending the determination of the application for judicial review and other relief.  I will hear counsel as to the precise form of those orders.

I certify that this and the preceding     pages are a true copy of the Ex Tempore Reasons for Decision of Justice Branson.

Associate:

Dated:

Counsel for the Applicant            :    Mr G Beaumont QC

with him Mr P Power

Solicitors for the Applicant     :    Aroni Colman

Counsel for the Respondent       :    Ms S Maharaj

with her Mr R Chrzaszcz

Solicitors for the Respondent        :    Australian Government Solicitor

Counsel for the liquidator
Mr P Macks  :    Mr R Whitington

Solicitors for the liquidator
Mr P Macks  :    Fisher Jeffries

Counsel for Australian
Securities Commission            :    Mr V Malinaric

Solicitors for Australian
Securities Commission            :    Australian Securities            
  Commission

Hearing Date  :    18 & 19 September 1995