SRRRRR and SRTTTT and Commissioner of Taxation

[2008] AATA 181

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 181

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/748 and 749

GENERAL ADMINISTRATIVE DIVISION        )

Re             SRRRRR

First Applicant

And          Commissioner of Taxation

Respondent

Re             SRTTTT

Second Applicant

And          Commissioner of Taxation

Respondent

SECTION 42D DECISION

TribunalProfessor GD Walker, Deputy President

Date4 March 2008

PlaceSydney

DecisionThe s 42D application is granted

.............[sgd].................................

Professor GD Walker
  Deputy President

CATCHWORDS … section 42D application – power of remittal – respondent’s decision based on mistaken assumptions – respondent’s second application under section 42D - applicants will not suffer prejudice or hardship if the matter is remitted – remittal found to be the most efficient way of taking account of the new information and of minimising the time and cost of bringing the matter to a resolution – remittal allowed.

RELEVANT ACT/S:

Freedom of Information Act 1982 (FoI Act): ss 4, 15, 24, 37

Administrative Appeals Tribunal Act 1975: ss 26, 28, 33, 37, 42D

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CITATIONS

Re Delagarde Legal Services Pty Ltd and CSIRO (2006) AATA 722

Papps v Australian Postal Corporation (2004) 83 ALD 132

Re NT98/41-48 and Commissioner of Taxation No 12865 [1998] AATA 311

Re Lavery and Registrar, Supreme Court of Queensland (No 2) (1996) 23 AAR 52

N1112/00A v Minister for Immigration and Multicultural Affairs [2000] FCA 1597

Re Winpar Holdings Limited and Australian Securities and Investments Commission [2000] AATA 980, 35 ACSR 704

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REASONS FOR SECTION 42D DECISION

4 March 2008	Professor GD Walker, Deputy President
Basic facts

1.      On 14 November 2005 the applicants lodged with the Australian Tax Office (ATO) requests for information held by the ATO, pursuant to the Freedom of Information Act 1982 (FoI Act).  The access applications were lodged by a solicitor for each applicant and are in similar terms.  They seek access to documents concerning the income tax liability of the respective applicants over a period of 10 specified income years. At or about the same time, some 25 other FOI access applications were lodged by the same solicitor on behalf of other applicants, many of whom are persons of interest to an Australian Crime Commission (ACC) investigation being conducted as part of Project Wickenby.

2.      Project Wickenby is a multi-agency operation involving the Australian Crime Commission, the ATO, the Australian Securities and Investments Commission (ASIC), the Australian Federal Police, and the Commonwealth Director of Public Prosecutions, which is investigating promoters and participants in offshore tax schemes and allegedly fraudulent activities.

3. As approximately 25 other FoI access applications were lodged by the same solicitor on behalf of other applicants, many of whom were of interest to those conducting the Project Wickenby investigation, the ATO adopted the approach in the two cases in issue that any copies of tax returns, notices of assessment, business activity statements or the like would be provided outside the FoI Act on request. In so far as the applicants appeared to be requesting access to documents related to any Project Wickenby investigations, however, as those investigations were still proceeding, any such documents would qualify for exemption under s 37(1)(a) of the FoI Act.

4.      At both the primary decision-making level and the internal review stage, the ATO made no attempt to ascertain whether there were in fact in existence, as documents of the agency within the meaning of s 4 of the FoI Act, any documents coming within the description in the various FoI applications.  The ATO decision-makers took the view that they were entitled, under s 24(5) of the FoI Act, to refuse access to the requested documents without having identified any or all of the documents to which the request related, on the basis that it was apparent from the nature of the documents as described that all of the requested documents, other than copies of tax returns and the like, would be exempt.  Such an approach is permissible under s 24(5): Re Delagarde Legal Services Pty Ltd and CSIRO (2006) AATA 722 at paras 11-12; Papps v Australian Postal Corporation (2004) 83 ALD 132.

5.      The original decision refusing the requests on the basis that all the documents sought were exempt was made on 16 January 2006.

6.      On 16 February 2006, the applicants requested an internal review of the original FoI decision.  The review decision on 13 April 2006 affirmed the original decision on the same grounds.  The applicants on 23 June 2006 applied to this tribunal for review of the ATO’s decision of 16 February 2006.

7. After the respondent had lodged its T documents, and during a directions hearing, the respondent indicated that the decisions under review had been based on mistaken assumptions and sought to reconsider its previous decisions pursuant to a remission under s 42D of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). Over the applicants’ opposition the tribunal remitted the matter to the ATO.

8.      The respondent reached a decision on 5 January 2007, releasing about 14 documents, comprising some 28 pages, and claiming no general exemption.  That is the decision under review in the present proceedings.

9.      Following a further directions hearing in this tribunal, a mediation was held, but the matter was not resolved.

10.     A further directions hearing was held on 30 May 2007 and additional directions made.  The only issue clearly raised for determination by the tribunal is the adequacy or reasonableness of the decision of 5 January 2007 on the basis that it demonstrates an inadequacy of the search for responsive documents conducted by the respondent.

11.     The tribunal granted the respondent three extensions of time to file its evidence.

12.     Pursuant to a tribunal direction, Mr William Laurence Day, general counsel for the ATO, swore an affidavit on 31 October 2007 (Exhibit R1), which was accompanied by voluminous exhibits.

13. The respondent wrote to the applicants on 12 November 2007 (Exhibit R2) seeking their consent to an order under s 26(1)(b) of the AAT Act permitting the respondent to vary the reviewable decision by dealing with the documents identified in annexure WLD4 to be dealt with in the manner proposed by Mr Day in paragraph 14 of his affidavit. The applicants did not consent to that application.

14. On 30 November 2007, the respondent wrote to the Tribunal informing them of its intention to seek another remission pursuant to s 42D (Exhibit R4). The applicants opposed that application.

Applicants’ submissions

15.     The applicants pointed out that more than two years have elapsed since the FoI access applications were first lodged with the ATO, and almost 18 months since proceedings were commenced in this tribunal.  This was despite the respondent having conceded in late 2006 that it had proceeded on mistaken assumptions and stating that it had conducted further searches.  A similar concession was made on 5 January 2007.

16. The applicants had incurred considerable private cost and suffered considerable delay as a result of the respondent’s conceded inability, not yet fully explained, to deal with the requests appropriately. The kind of search conducted by Mr Day should have been carried out in the first place, or on remittal. The applicants consider themselves entitled to view with some scepticism the ability or willingness of the respondent properly to respond to their FoI access requests. Repeated referral of matters back to the decision-maker under s 42D as sought by the respondent would diminish the applicants’ confidence in the review process.

17.     In Re NT98/41-48 and Commissioner of TaxationNo 12865 [1998] AATA 311, Senior Member (as he then was) Block had stated that the power given by s 42D should not be exercised simply because inadequate findings of fact, references to evidence or reasons have been given. Nor should it be exercised simply because a decision-maker supports a decision on a basis that is different from that originally put forward.

18. Senior Member Block had opined that the section confers a power that will be exercised rarely, for example where the reasons are so unsatisfactory that is fair to infer that the decision-maker has not applied his or her mind, or where reasons can be characterised as a sham. Any inadequacies in a decision could be dealt with by using powers under ss 28, 33 and 37 of the AAT Act (paras 21-27). In reaching his conclusion Block SM followed Deputy President Forgie’s reasons in Re Lavery and Registrar, Supreme Court of Queensland (No 2) (1996) 23 AAR 52.

19.     The applicants urged that the application to review the decision of 5 January 2007 be set down for a review on the merits as quickly as possible.  If satisfied that the decision was not the correct or preferable one, the tribunal could then set it aside and substitute another, or remit the matter for reconsideration in accordance with any directions or recommendations it chose to make.

Consideration

20.     The respondent’s legal representatives state that according to their instructions only one document responding to the application made by SRRRRR, and a relatively small number of documents meeting the descriptions in the application made by SRTTTT have been found.  The respondent’s position is that most of the material in those documents would not qualify for exemption from disclosure to the respective applicants, although some would come within other exemptions and other material requires more careful analysis to determine whether exemption should be claimed in relation to it.

21.     The respondent accepts that the decisions it made were based on the same mistaken assumptions as those apparently reflected in the applications, and that it is not appropriate to rely on s 24(5) of the FoI Act.  The respondent thus seeks to reconsider and change its decision so as to acknowledge the existence of responsive documents, grant access to them in whole or in part, and properly formulate any exemption claims.  Thus, it is the respondent, not the applicants, that is seeking remittal, in contrast with the position in AAT case 12865.  Nor is it a case of seeking to improve a statement of reasons that was inadequate or which could be improved, as was the case in Re Lavery.  The respondent is thus seeking remittal in order to change fundamentally the basis of the reviewable decision.

22.     Further, it is seeking remittal at a relatively early stage in the proceedings, in contrast with the situation in N1112/00A v Minister for Immigration and Multicultural Affairs [2000] FCA 1597, in which the respondent had applied for remittal some five or six days into the hearing of an application to review a criminal deportation decision. Another reason for rejecting the application in that case was that the respondent simply wished to support the decision on a different basis from that which originally prompted the decision. Emmet J considered that the discretion to remit might well be exercised, however, where a new fact situation emerged that completely changed the circumstances considered by the original decision-maker, which would make it more efficient, and less costly if the matter went back for reconsideration. That is the situation in the present case.

23.     If the existing decision were to be reviewed as it stands, substantial amounts of new documentation would be required to enable the tribunal to decide the matter on the facts as they exist at the time of the hearing.

24.     Here, in contrast with the situation in Re Lavery and AAT case 12865, it cannot be said that no useful purpose would be served by remitting the applications to the respondent.  Remittal would serve the purpose of giving the respondent the opportunity to reconsider a total refusal of access on the basis of an incorrect approach, and to grant access in whole or in part to some documents, while properly articulating the reasons for claiming exemptions in relation to others.

25.     Much was made by the applicants of the amount of time that has elapsed since the original applications and the time and effort that the applicants have expended on the applications and review process.  While a degree of impatience and exasperation might be understandable, any past wasted effort involved can no longer be recouped.  The relevant question is what course of action will involve the most efficient disposition of the issues at the least cost in the future.

26.     The applicants submitted that no explanation had been offered by the respondent for not undertaking a search such as the one conducted by Mr Day at the outset.  The explanation, however, lies in s 15(5)(b) of the FoI Act: the respondent had only 30 days after receiving the request to notify the applicants of its decision.  Mr Day was subject to no time limit, and his investigation was extraordinarily extensive, occupying 64 days or 468 hours for Mr Day alone, together with the time spent by his assistant.  The respondent said that such an exhaustive search had been undertaken in order to put to rest the applicants’ allegations of mala fides, and the seniority of the official selected for the task corroborates that explanation.

27. The applicants do not suggest that the costs incurred by remittal would be higher than those incurred in bringing the matter forward to hearing on an incorrect basis and making any necessary adjustments. As the respondent submitted, an alternative approach might be to alter the decision as provided for by s 26(1) of the AAT Act. But that course requires the consent of both parties, and the applicants did not consent when the respondent suggested that approach at an earlier stage (Exhibit R4). Nor did the applicants explain why they had withheld their consent, beyond saying that they were sceptical about the respondent’s ability or willingness to respond to their FoI access applications in a proper manner.

28.     The applicants state that they have incurred considerable cost and suffered delay because of the manner in which the respondent has handled their requests, but they do not claim that they will suffer prejudice or hardship if the matter is remitted.

29.     As Deputy President McMahon pointed out in Re Winpar Holdings Limited and Australian Securities and Investments Commission [2000] AATA 980, 35 ACSR 704 at 713-714, s 42D preserves the existence of the application before the tribunal and makes provision for the final outcome, depending upon the result of the reconsideration.

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It must be accepted that a referral back to the original decision-maker, in the light of new information, is a desirable procedure.  It follows a trend to be found in other areas.  …  The policy behind the [then] proposed section is no doubt to continue the trend in administrative review of ensuring that all material before the reviewing body has first been seen by the primary decision-maker.

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30. In my view remittal under s 42D is the most efficient way of taking account of the new information available and of minimising the time and cost of bringing the matter to a resolution.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Professor GD Walker, Deputy President

Signed:   ..........................[sgd]...............................................
               R. Wallace, Associate

Date/s of s 42D Hearing: 25 February 2008
Date of s 42D Decision: 4 March 2008
Solicitor for the Applicant:                  David Rydon, Robinson Legal
Solicitor for the Respondent:             Jeffrey Hilton of counsel
Counsel for the Respondent:            Stephen Catt, AGS