TDWF and Commissioner of Taxation (Taxation)

[2022] AATA 2549

TDWF and Commissioner of Taxation (Taxation) [2022] AATA 2549 (4 July 2022)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):      2018/3919, 2018/3920, 2018/3921, 2018/3922, 2018/3923, 2018/3924 & 2018/3925

Re:TDWF

APPLICANT

Commissioner of Taxation And  

RESPONDENT

DECISION

Tribunal:Deputy President B W Rayment OAM QC

Date:4 July 2022

Place:Sydney

The respondent’s application for orders under s.35 of the Administrative Appeals Tribunal Act 1975, is dismissed.

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

Deputy President B W Rayment OAM QC

CATCHWORDS

Confidentiality order - delayed disclosure order – non-publication and non-disclosure order – whether documents should be withheld from the applicant until after evidence in chief at hearing – procedural fairness – openness in the Tribunal process - whether delayed disclosure is necessary for the respondent’s effective cross examination – whether delayed disclosure amounts to trial by ambush – application dismissed.

LEGISLATION

Administrative Appeals Tribunal Act 1975
Freedom of Information Act 1982

Taxation Administration Act 1953

CASES

ASIC v Rich [2009] NSWSC 1229
Australian Postal Commission v Hayes [1989] FCA 176; (1989) 23 FCR 320
Oliveri v Administrative Appeals Tribunal [1987] FCA 1303
Re Taxation Appeals NT 94/281-291 [1995] AATA 95

REASONS FOR DECISION

Deputy President B W Rayment

4 July 2022

1. The Commissioner of Taxation applies for two orders pursuant to s.35(3) and (4) of the Administrative Appeals Tribunal Act 1975 (the AAT Act) in relation to information in documents lodged with the Tribunal pursuant to directions made on 4 August 2021. The relevant parts of s.35 are as follows:

   (3) The Tribunal may, by order, give directions prohibiting or restricting the publication or other disclosure of:

   (a) information tending to reveal the identity of:

   (i) a party to or witness in a proceeding before the Tribunal; or

   (ii) any person related to or otherwise associated with any party to or witness in a proceeding before the Tribunal; or

   (b) information otherwise concerning a person referred to in paragraph (a).

   (4) The Tribunal may, by order, give directions prohibiting or restricting the publication or other disclosure to some or all of the parties, of information that:

   (a) relates to a proceeding; and

   (b) is any of the following:

   (i) information that comprises evidence or information about evidence;

   (ii) information lodged with or otherwise given to the Tribunal.

2. The Commissioner submits that, the onus being on the applicant, who challenges a default assessment made against her by the Commissioner, to show that the assessment is incorrect, her evidence is to be tested by cross-examination, and that the Commissioner, as a party to the review, is entitled to a reasonable opportunity to present his case, consistently with s.39(1) of the AAT Act, and that if the documents are disclosed to the applicant before she gives oral evidence, her cross-examination may be less effective.

3. The Commissioner seeks a similar order which would keep the documents from the applicant’s witnesses until after they have been cross-examined.

4. The applicant opposes the application, and desires to consider the documents the subject of the Commissioners’ application before she gives oral evidence.  She is, of course, also entitled to a reasonable opportunity to present her case. The applicant submits that her proposed cross-examination on documents unknown to her at this time would amount to ambush, and inferentially makes the same submission about her witnesses.

5. Two main Federal Court decisions and a decision of Matthews J sitting as the President of this Tribunal affect the present question.  They are the decision of Wilcox J in Australian Postal Commission v Hayes [1989] FCA 176; (1989) 23 FCR 320, the decision of Matthews J sitting as President of the Tribunal in Re Taxation Appeals NT 94/281-291 [1995] AATA95; (1995) 21 AAR 275 and the decision of Madgwick J in Oliveri v Administrative Appeals Tribunal [1987] FCA 1303.

6. In Hayes, Wilcox J held that a direction in this Tribunal in a workers compensation case, that film taken of the applicant be shown to the applicant prior to his cross-examination, denied procedural fairness to the respondent, and the interlocutory decision was set aside.

7. Several aspects of that decision should be noticed. To an argument of the applicant based upon s.37 of the AAT Act, his Honour held that the film having come into existence after the reviewable decision, s.37 was not relevant. Similarly, his Honour held since the 1971 Act applied to the case, a right in a claimant under the 1988 Act to obtain documents from the relevant authority did not apply, since the claim arose and was considered under the old Act, which had no such provision.

8. The AAT Act has been amended since the decision in Hayes. It is now the case that documents coming into existence since the reviewable decision are to be lodged with the Tribunal, under s.38AA of the AAT Act.

9. Section 37 is not absolute in its terms as to giving a copy of the documents lodged to each other party, because s.37(1AE) permits the Tribunal to direct otherwise. Absent such a direction, the person lodging documents must give a copy of the documents lodged to other parties. Section 37(1AE) also affects s.38AA.

10. Wilcox J pointed out that nothing in s.37 required a person lodging documents under s.37 as it then stood to give documents lodged to the other party. That is no longer the case with s.37, although the power of the AAT to order otherwise is contained in the Statute.

11. In the course of his reasons, Wilcox J observed that openness is a notable feature of the Tribunal’s procedures, which has contributed significantly to the Tribunal’s efficiency and which has enhanced the status of its decisions.   Observing that there is everything to be said, in the vast majority of cases, for insisting on the full and early disclosure of all material documents. He added that in an exceptional case in which a party can demonstrate that the temporary suppression of a document is necessary for the proper presentation of its case, the ideal of openness must give way to the Tribunal’s statutory obligation to give all parties a reasonable opportunity to present their cases.

12. Typically in practice, a person asking for a direction under s.37(1AE) would also seek an order under s.35 of the AAT Act, as the Commissioner has done in this case. In a freedom of information case, such an order would be made as of course prior to any determination by the Tribunal that a document is an exempt document, having regard to s.58E of the Freedom of Information Act, 1982.

13. For tax matters in the Tribunal, s.37 is altered in some respects, as discussed below. Section 38AA is not replicated in the taxation legislation, although the Commissioner has now filed confidential documents and sought, on notice, an order under s.35.

14. The approach of Wilcox J in relation to the early disclosure of a film in a compensation case was to disfavour such an order, on the ground that it deprived the respondent of its right effectively to cross-examine the applicant, including the right to cross-examine as to credit.

15. Re Taxation Appeals NT94/281-291 concerned an application by the Commissioner for a s.35 order over documents lodged under s.37 of the AAT Act, on the basis that to give the applicant warning of adverse material on which cross-examination on credit would be based would deprive the Commissioner of the right effectively to cross-examine the applicant, and the Commissioner relied upon the judgment of Wilcox J in Hayes.   Her Honour having noted that the Judgment of Wilcox J was written six years earlier in 1989, said: “The intervening years have seen increased openness in the litigation process, together with a move away from the traditionally adversarial “ambush” method of conducting trials.

    This in my view is to be applauded. Little is to be gained in my experience by adopting confrontationist approach to litigation. This approach very frequently leads to an outcome which is welcome to no-one, at least to none of the parties. On the other hand, openness and cooperation can often serve to produce agreement where agreement had been thought to be impossible, and at the very least to isolate and focus upon the major issues in a case, thus containing what can sometimes be prohibitively expensive both in human and financial terms. This “cards on the table” approach has recently led the English courts to conclude that, in all but very rare personal injury cases, video films should be disclosed to plaintiffs. (Khan v Annaguard Ltd [1994] 3 All ER 545 )

    (19) The overriding consideration in all these situations is that of procedural fairness. Would a party be so impeded in the presentation of its own case and in the challenging of its opponent's case that fairness dictates that relevant material be withheld from the opponent? The situations in which this question were to receive an affirmative answer would, in my view, be rare indeed. It would certainly not be sufficient for a party merely to show that the material was capable of contradicting another party's version, even accepting that the credibility of that other party was critical to the case.

    (20) I should also say that it would be very unfortunate indeed if any rule of practice or procedure were to be developed within the tribunal which assumed that witnesses before the tribunal, whether they be parties or otherwise, were likely to lie upon their oath and to temper their evidence according to their knowledge of the material which was available to their opponents. It is important to maintain the distinction between safeguards designed to ensure that parties before the tribunal are given the opportunity to present their cases fully and fairly, and devices which are designed to trap and expose unwary witnesses.

    (21) This returns me to the circumstances of this case. Certainly the truthfulness or otherwise of the applicants’ version as to the origin of these monies will be central to the outcome of the case. But this is not a situation where the acceptance of their truthfulness is solely dependent upon what they say. It is, after all, the actual origin of the monies which will determine the outcome of the proceedings. No doubt the accounts given by the applicants will constitute part of the evidence on this subject — perhaps a very important part — but it cannot be said that it will be the only evidence capable of throwing light on the matter.

    (22) The tribunal is bound, under s 33 of the AAT Act, to conduct its proceedings with as little formality and technicality as the circumstances permit. It is of course bound to apply the rules of procedural fairness. But unless these rules or a legislative enactment require that relevant material be withheld from a party, then the fundamental principles under which the AAT operates — as enshrined in ss 35(3) and 36(4) of the AAT Act — dictate that there be openness in its proceedings, and that each party be made aware of all relevant material in the possession of the other. The principle of trial by ambush is in retreat even in the court system. It has never held sway in this tribunal and I hope it never will. One of the great strengths of the AAT is its capacity to deal flexibly and informally with a wide range of disputes. Cooperation rather than confrontation has been encouraged at all levels of its proceedings, an approach which has generally proved extremely successful. Forensic devices designed for adversarial purposes have no part to play in the normal processes of the tribunal.

    (23) The disclosure to the applicants of the documents contained in T150 would certainly deprive the respondent of the forensic advantage of surprise. To this extent the effectiveness of its cross-examination might well be curtailed, at least to some extent. But if this were sufficient to amount to a breach of the rules of procedural fairness then it would mean that a large number of documents lodged with the tribunal under s 37 could routinely be withheld from applicants under s 35(2). This was never envisaged by Wilcox J In Hayes. To the contrary, his Honour considered that this would be necessary only in exceptional circumstances. Moreover it would be entirely contrary to the principle set out in s 35(3).

16. Earlier in her reasons for decision Matthews J had referred to ‘the normal presumption that documents lodged under s.37, being documents relevant to the Tribunal’s determinations, should be disclosed to all parties”. Section 37(1AE) did not commence until 16 December 1995, about 8 months after her Honour’s reasons for decision. That is not to deny that any presumption that such documents should be disclosed no longer applies in the Tribunal. A direction under s.37(1AE)is far from common, and an order under s.35 is not the norm.

17. As Matthews J said, Tribunal processes normally follow a “cards of the table” approach.

18. In BHP Pty Co Ltd v Mason (1996) SASR 436, Debelle J considered both Hayes, the decision of Matthews J and a South Australian Full Court decision, and held that denying the defendant the opportunity to keep a film until the claimant worker was cross-examined denied the employer procedural fairness.

19. The decision of Matthews J was referred to by Madgwick J in Oliveri v Administrative Appeals Tribunal [1997] FCA 1303. His Honour held that there was no conflict between the approaches taken in Hayes and by Matthews J. In particular he expressed agreement with what had been said by Matthews J. Madgwick J observed that in most cases, indeed in all but exceptional cases, the detriment to the applicant of not permitting disclosure of the relevant document outweighs the loss of any advantage by the respondent.

20. The Commissioner submitted that the course desired to be followed did not involve ambush, and referred to remarks made by Austin J in ASIC v Rich [2009] NSWSC 1229 at [52], [54], and [55]-[58]. The applicant referred to remarks about the outdated ambush approach to civil litigation in the New South Wales Court of Appeal.

21. The varied form of s.37 in taxation matters is to be found in s.14ZZF(1)(a)(v) of the Taxation Administration Act, 1953 which prevails over s.37 of the AAT Act by substituting a requirement for the Commissioner to lodge with the Tribunal a copy of “every other document that is in the Commissioner’s possession or under the Commissioner’s control and is considered by the Commissioner to be necessary to the review of the objection decision concerned”. The explanatory memorandum indicated that use of s.37 prior to the amendment introducing s.14ZZF led to many copies of documents being lodged with the Tribunal which were never referred to in the review or were otherwise unnecessary.

22. In the present case, the documents sought to be kept confidential in the present application have in fact been lodged with the Tribunal, so it is not necessary to examine s.14ZZF in detail.

23. In my opinion, the reasons for decision of Matthews J as President of the Tribunal are entitled to particular respect in this Tribunal and it has often been so treated since the reasons were published. What her Honour describes as the usual course in this Tribunal accords with my own experience. In my opinion neither a delayed disclosure order nor any order under s.35 ought to be made.

24. Also, the applicant has committed herself to a detailed account of relevant facts in lengthy affidavits and the Commissioner has a version of the facts on which cross-examination may take place.  A suggestion that if the applicant sees the documents she may tailor her evidence loses some force in those circumstances. I mention that I have, as requested, examined the nature of the documents in question.

25. In my opinion, no order should be made under s.35 of the AAT Act and the applicant should have access to the documents. The Commissioner’s application is dismissed.

I certify that the preceding 25 (twenty -five) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment OAM QC.

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

Associate

Dated: 4 July 2022

Date(s) of hearing:	9 March 2022
Counsel for the Applicant:	Mr T Cleary
Solicitors for the Applicant:	Gibson Howlin Lawyers
Counsel for the Respondent:	Mr B Kasep & Mr E Chan
Solicitors for the Respondent:	Minter Ellison