Webb, J.R. v Deputy Federal Commissioner of Taxation
[1993] FCA 598
•27 Aug 1993
Attention: Judgments Clerk
Please find herewith iudqment - in the matter of James Reuinald
Webb. v. Deputy Federal ~omm.
JUDGES' CHAMBERS
FEDERAL COURT OF AUSTRALIA
ADELAIDE STREET
BRISBANEof Taxation No. G30 of 1993.
This judgment is for mt$IaED
~J9ESTRIBUTION . PleasE alsd
find computer disk enclosed
containing a copy of thisjudgment.
With thanks,
JUDGMENT No. ..... s???,..,.,.~.,22,
C A T C H W O R D S
Practice and procedure - evidence - inspection - legal professional privilege - judicial review - original action to recover money allegedly due as arrears of tax - proceedings compromised 11y a deed between the parties - other amounts payable - application for judicial review of decision refusing remission of additional tax for late payment - discovery and inspection in the context of judicial review - allegation of abuse of statutory power or duty - legal professional privilege claimed in respect of some documents before the decision-maker - whether reference without disclosure of the material amounts to a waiver by implication of the privilege.
Jncome Tax Assessment Act Sections 206 and 207(1A)
Grant v. Downs (1976) 135 CLR 674
Electricitv Trust of South Australia v. Mitsubishi Australia Ltd (1991) 57 SASR 48
Waterford v. The Commonwealth (1987) 163 CLR 54
Attornev-General (N.T.) v. Kearney (1985) 158 CLR 500R e Proudfoot and Human Riehts and Equal Op~ortunitv Commissioner (1992) l 6
AAR 411
National Emnlovees' Mutual General insurance Association Ltd. v. Waind (1979) 141
CLR 648
Baker v. Campbell (1983) 153 CLR 52
Re Director of Investivation and Research and Shell Canada Limited (1975) 55 DLR(3d) 713
Attornev-General (N.T.) v. Maurice (1986) 161 CLR 475
Nestle Australia Ltd. v. Commissioner of Taxation (1986) 11 FCR 453, (1986) 12 FCR257
SE TAXATION No. G30 of 1993 Cooper J.. Brisbane. 27 A u m t 1993
IN THE FEDERAL COURT OF AUSTRALIA
OUEENSLAND D I S T R m REGISTRY
GENERAL DIVISION No. G30 of 1993 BETWEEN. JAMES REGINALD WEBB
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DEPUTY FEDERAL COMMISSIONER OF TAXATION
Resoondent
JUDGE MAKING ORDER: Cooper J. WHERE MADE: Brisbane DATE OF ORDER: 27 August, 1993
MINUTES OF ORDER
THE COURT ORDERS:
1. The application for inspection of the documents in respect of which the respondent claims legal professional privilege is dismissed.
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| I - | Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court |
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JN THE FEDERAL COURT OF AUSTRALIA
OUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION No. G30 of 1993 BETWEEN: JAMES REGINALD WEBB
- AND: DEPUTY FEDERAL COMMISSIONER OF TAXATION
Respondent
CORAM: Cooper J. PLACE: Brisbane DATE: 27 August, 1993
,REASONS FOR JUDGMENT This is an application by the applicant for inspection of eighty-nine (89)
documents contained in a file described in an affidavit of Ms. Saarimaki, an officer of
the respondent, as "ilze inraiiorz debt file'! In relation to those documents the respondent resists an order for inspection on the ground of legal professional privilege.
The background to the application may be briefly stated. In February,
1986 the respondent fonvarded to the Australian Government Solicitor ("A.G.S.")
material and instructions to institute recovery proceedings against the applicant for money allegedly due as arrears of tax for past financial years. In consequence, writ action 1033 of 1986 was commenced in the Supreme Court of Queensland. Those proceedings were compromised by a deed between the parties agreed in 1989 and exec~~ted in 1990. The deed requircd payment by inslalme~~t of an agreed sum of $200,000.00.
Notices of Instalments of Quarterly Provisional Tax issued on 29 July,
1988, 22 October, 1988, 20 January, 1989 and 21 February, 1990. On 20 March, 1990a Notice of Assessment for the 1989 financial year issued. The assessment included a sum under the heading "OTHER AMOUNTS PAYABLE" of $179,246.91. This amount did not represent the balance due under the deed. The figure appears to include unpaid instalments of provisional tax for the 1988 and 1989 financial years and
additional tax for late payment of those instalments. Disputes arose as to how the respondent had calculated the applicant's tax liability, whether the obligation to pay the 1988 provisional tax was included within the compromise, the power of the applicant to require a credit for provisional tax to be offset against an instalment due under the deed, and the ent~tlement of the respondent to include and impose additional tax for late payment on quarterly provisional tax in instalments once a final assessment for the year issued. The quarterly provisional tax instalments were not paid during this period. Nor was the income tax for the 1989 financial year.
On 26 October, 1992 the A.G.S., on behalf of the respondent,
demanded payment of $209,801.21 being the quarterly provisional tax for the 1988
and 1989 financial years together with add~tional tax for late payment calculated to 13 October, 1992. On 23 November, 1992 the respondent conceded that the quarterly
prov~sional tax for the 1988 financial year was compromised in the deed and issued a
new demand for payment of the amount $69,224.54 as the tax due for the 1989
financial year together with additional tax for late payment alleied to be calculated in
accordance with the decision in JQnnv v. D e ~ u t v Commissioner of Taxation 88 ATC 4049. The primary tax claimed was $29,158.65 and the additional tax for late payment was $40,065.89.
The applicant applied for an extension of time to pay under section 206
of the bcome Tax Assessment Act ("ITAA") and for remission of the additional taxfor late payment under section 207(1A) of the ITAA. The request for an extension of
time was refused on 19 January, 1993. The request for remission was refused on 10 February, 1993. The applicant on 10 March, 1993 applied to this court for review of the
decision to refuse remission. The applicant relies upon a number of grounds to
support his application. Included in those grounds are the following :-
"(B) 771e Respotzdetzf took into account irrelevant
cotrrideratiotzs namely :(i) l7zat tire Applicntrt shorild be prcrzkized for lzavbrg beet1 in dispute tvitlr the Respotrder~t for nzaizy years before
etlteritlg a Deed of Comprornke wit11 the Resporldetzr on or aborit June 1990; (iii) That the Applicarzf ought be purzislzed for dkputitlg ilze seriously errotzeous, both itz pritlciple and amourrt, claim by tlze Respondent otr 26th October 1992 for $209,801.21. E're Respotzderzr subseqrier~tly acknowledged only ajier detailed and pe~sktetzt submiFsiorrs by t l~e Applicarzt, illat the claim, borlt in pritlciple and anzouttt, was srcbsfat~tiully
erroneous.
The Resporzderzr acted ivitlz bias arzd irr breach of ltis
(C) statutory duty to act inzpnriially i ~ t detemirzirzg tlze
Applicatiorzs irz tlzaf :
0) irz paragmplt 3(b)(iii) was suclt a The adnzissiorz of tlze error referred fo serious embarrnssnzerzt to a member of tlze Resporrdcnt's sfa/f; MS Leerza Saaranzaki [sic], as to prevent her, slrorily aper tlzai evetrf, from aclitzg witlz suclr art operz arld impariial mu~d
in relafiorz to tlte Applicarrt's alfnirs as would be necessary to take orzly relevarzt corrtidernriorrt into accourzt:
(ii) Accordingly, tlte Re.porzdent ougl~! to /rave preverzted MS Sanramaki [sic] from havirzg any sigtijicarzf ittfience tiporz ilze decisiorzs uporz rlze Applica iiorrt;
(iii)
nze Resporrdetzt failed to so preve~z!'!
On or about 10 February, 1993 the respondent gave written reasons for
the decision to refuse to remit the additional tax for late payment. The reasons are those of MS Saarimaki who was the officer of the respondent who made the relevant
decision. MS Saarimaki filed an affidavit in which she deposed :-
'2 At tlze time I made tlze said deciriorz I lzad
before me a taxaiiorz file relatirzg to tlre applicarzt's outs~arzdir~g tax debt ('ilze irotiort debt jiIe')and file applicariorz wlriclt is Arzrzexure "MJH18" to tlze aff~dnvit of Miclzael Janzes IJan swonz lzereirt orr 29 April 1993. I assumed resporrtibility ivitlzirz tlze office for tlte taxatiorz debt fle orz 16 September, 1992. Orz reviewitzg flzat file on takirrg it over I rrored flzen tlzat rzeitlzer provisiorzal tar nor irzconze tax for tlze 1989 year had beerz paid by tile applicarzr, rzor
Izad 1988 provisiorzal tax. By the time I carile to make tlte decisiorr lrrzder review I had reached the view tlral amouizfs outstar~dirzg irz respect of the 1988 year had beerr compromised under rlze Deed of Settlemetrt to wlziclz I refer later iit rlzk affravif artd tlzat save for the issue of additio?zat tax for late paymerzt of ir~.stalnzerzis, ilze irzdebledrzess gerzerared by the 1989 provisiorral tax irzstalnterlt rlotices had beerr subsunled by the subsequerzt issue of rlze applicarzt's 1989 year rlorice of assmnerzt. I studied bollz rlre taxatiort debt jile and tlze aforesaid applicatiorz before makirzg nzy decisiorr. I ascerfained the facts wlziclz I fourzd br n y Statenzerlt of Reasor~s jiom the correspoirderlce and ir~ormatiorz contained or1 tlze taxatiorz debt jile as well as the aforesaid application'!
On 30 July, 1993 I ordered that inspection be given of "tlze laxatiorz debt
jile" subject to the respondent's right to withhold from inspection documents in
respect of which legal professional privilege was claimed.
The documents in issue were produced to the court for inspection.
They fall into the following categories :-
(a> Advice, communications, file notes etc. of and passing between the A.G.S. and the respondent relating to the institution and compromise of
documents brought into existence for the sole purpose of the litigation. category are documents relating solely to the giving of legal advice and the recovery proceedings in the Supreme Court of Queensland. In this (b) Advice, communications, file notes etc. of and passing between the A.G.S. and the respondent relating to the performance by the applicant of his obl~gations under the deed and as to possible action in respect thereof. In this category are documents relating to the giving of legal
advice. and documents which were brought into existence solely in contemplation of the institution of recovery proceedings under the deed and additionally for recovery of tax and additional tax for late payment for the 1989 financial year.
Advice, communications etc. of and passing between the A.G.S. and the respondent relating to the application for an extension of time made by
the applicant and refused by the respondent.(c']
Advice, communicat~ons etc. of and passing between the A.G.S. and the respondent relating to the decision the subject of these proceedings. The applicant appeared in person and submitted :-
(a) The documents were relevant because they formed part of the material whicli was before the decision-maker and to which she referred in
making the decision under review.
(b) The documentation relating to the compromised proceedings in the Supreme Court were brought into existence for the purpose of that litigation and that that litigation having concluded, legal professional
privilege no longer attached to them for the purpose of these
proceedings or alternatively that reference to them for the purpose of
making the decision, the subject of these proceedings, meant that any legal professional privilege which previously may have attached to them
was lost.
The documentation other than that relating to the earlier litigation was
not brought into existence for the sole purpose of the proceedings now before the court and thus did not satisfy the test in Grant v. Downs
(1976) 135 CLR 674.
The documentation relating to the decision in issue having formed part
of the material to which reference was made by the decision-maker was
not material to which legal professional privilege attached.
The respondent submitted that :-
(a) There existed as between the A.G.S. and the respondent a solicitor/ client relationship.
@I The documentation was brought into existence for the purpose of either giving legal advice or for the purposes of litigation or anticipated
lit~gation. Legal professional privilege attached to the material at the time it came into existence and remained thereafter irrespective of what use the material may thereafter be put to by the respondent. In this respect the respondent relied on the decision of the Full Court of the Supreme Court of South Australia in Electricitv Trust of South Australia v.
Mitsub~shi Austral~a Ltd. (1991) 57 SASK 48. The respondent had not intentionally or impl~edly waived the privilege by the decision-maker referring to the documents before making her decision. No basis for a case in terms of paragraphs 3(B)(i) and (iii) and 3(C) of the principal application had been established on the material before the court and the application for inspection was "fishing".
The applicant did not contest that a relationship of solicitor and client existed between the A.G.S. and the respondent, nor that the material in the documentation in issue came into existence and was communicated on a confidential
basis. A perusal of the documentation shows that such is clearly the case. Nor did
the applicant contend that legal professional privilege couId not arise in relation to legal advice between one department or branch of government and another. That it
can is established by the decision of the High Court in Waterford v. The
Commonwealth (1987) 163 CLR 54. The applicant did not refer the court to any authority in support of the
propositions he contended for. Such support as there is for the contention that legal
professional privilege has no role to play when the legal advice forms part of an
administrative decision making process, as opposed to legal adv~ce when government is engaged in the legal process eg. litigation, is to be found in the judgments of
Dawson J. in Attornev Gcncral !N.T.I v. Kean~ey (1985) 158 CLR 500 a t 532 - 533 and in Waterford v. The Comrnonwealtl~ at 100 - 101. Deane J. in Waterford v. The ComrnonwealtQ accepted that legal professional privilege may extend to protect communications with or within the Executive Government. However, his acceptance was subject to one qualification the extent of which it was unnecessary for his Honour to determine in Waterford v, The Commonwealt~. His Honour said (at 83) :-
"rite qua11)icatiort is titat it i r urtrrecessary for preserzt purposes to determirze tize exterzt, ij at all, to witiclt tlze pritlciple of legal professiorld privilege erliitles an admi~zistrative officer to keep confier~tial egal advice, wlricla corrstituted art act~ral basis of a purponed exercise by him of statutory powers irz tire petjformarrce of a public duiy, irr proceedings irzvolviizg a clzallertge to rl~at puporled exercise uport ilze grourtd tlrat it was vitiated by jiirzdamerttal misappreiterrsiort or collateral purpose. At least bt fitat limited area, I see great force irz rite observaiiorrs of Dawsor~
J. irz iris disserztirrg judgment in Attorney-General (MT.) v.
Kearney (1985) 158 C.L.R, at pp. 532 - 533 to the effect rlzat, for some purposes, tlte doctrine of public irzterest immrriziiy slrould be recognized as solely govenzirzg tlze riglzt to irtsist uport ilze coizfierliiality of professiorzal legal advice".
The majority of the court (Mason, Wilson and Brennan JJ.) rejected the
dissenting opinion of Dawson J. in Kearney (Mason and Wilson JJ. at 65; Brennan J.
In their joint judgment, Mason and Wilson JJ. said (at 63 - 64) :- "Rze comrnorl law, ut tlze view ilzat we have taker~,
recognizes lltat legal professior~a privilege atmclzes to
corlfiderrtial, professiorzal commurzicatio?zs beiweerr
goventrnerzt agencies mzd tl~eir salaried legal oficers
crrldenakerz for rlze sole purpose of seekirzg or givirrg legaladvice or irz corzrrexiorz with arzticipuied or pertdirtg litigation.
Provided tltat tlze sole purpose test erzurzciated irr Gmni v.
1
Downs i~ satisfied, there is tzo warrarzt to draw arz arbirmty litre tIrroug/z rlre futzctiotrs of govenznretzt in order to exclude tlre privilege from rlzose described as of an adnrinistrative nature. All tlre fut~ctiotrs of rlre executive government nray be so described. No distbrctiotz cntz be drawir betweetr a decisiotz to gmrzt a perrsioir arrd a decisiorz wlret/rer to defend a claim itz tort or cotrtract. E'ze growitrg comple~iiy of tlre legal fianzework witizirz w/ziclz govenzmetrt must be canied otz rerrders tlte ratiortale of tlze privilege, as expressed irz Gmnl v. D o m , itzcreasirzgly compellirzg wlzerz applied to decisiorz- makers irz tlze public sector. Tlte wisdom of the cettiuries is tltat the &tetzce of tlre privilege erzcor4rages resort to t/tose skilled in the law arzd tltat i/zir makes for a better legal sysrem. Govenzmetzt olficers need rlrat etzcouragemetzt, albeit, perhaps, for reasorrs difleretrt to tlzose wlziclz miglrt be expected to motivate r/ze citizen'!
Brennan J. said (at 74 - 75) :-
"In arty event, I sltould ii~itrk firat tile public utterest is truly served by according legal professiotzal privilege to commutricatioirs brouglzt irzto eristetzce by a govenzmetrt depatfmetrt for tlre purpose of seeking or giving Iegal advice as to t/re tzature, exietzt and the matzrrer irz wlriclz the powers, jirtrctiotrs and duties of govenzmetrt officers are required to be exercised or performed. If tlte repository of a power does not hrow the ttahlre or cxtettt of tire power or if /re does tzoi appreciate tlze legal restraint.^ on tlze marrtzer i t z wlziclz he is required to exetrise it, there is a signifcaizt risk that a pr4rported exercise of ilre porver will miscany. 7lte same nzay be said of tlre petfornzatzce of futzctiotrs atrd duties. Tire public uzterest k mtkimizirrg tlrat risk by etzcouragitzg resort to legal advice is greater, perlzaps, t/zatz tlze public itzterest in mitrinrizitzg the risk tlrat itzdividualr may act witlzout proper appreciation of tlteir Iegal riglzis and obligariorrs. Itt ilze case of govenzments rro less tirati itz tlze case of ittdivkiuals, legal profes.siiorzn1 privilege ietrds to errltatrce applicariot~ of the law, arzd tire public ltas a substatttial itzterest i r z r/ze nraitrtetzartce of the rule of law over public admirzisfratiott. Provided the sole purpose for wlriclr a docrcmetzt is broug/zt itrto exister~ce is tlre seeking or giving of Iegal advice as to tlze petjomrarzce of a siatutoy porver or tlte perfonnarrce of a statutory futzctiorz or duty, rltere is no reasort wly it slrould rzot be the subject of Iegal professiotzal privilege'! I
In my opinion the majority decision in Waterford v. The Commonwealth supports the conclusion that the fact that the advice relates to the exercise of a statutory power or the performance of a statutory duty or function does not preclude legal professional privilege attaching to it. (See also Re Proudfoot and Human Riehts
and Eaual Opportunitv Commissioner (1992) 16 AAR 411 at 415 (O'Connor J. (President), Travers and Attwood (Members)). The documentation relating to advice
given by the A.G.S. on the issues of extension of time and remittance of additional tax
for late payment is therefore privileged. The privilege is not limited to documents
brought into existence for the sole purpose of litigation. It extends to documents
relating to the giving of general legal advice. In each case the sole purpose test must
be met.
In my opinion the documents which came into existence solely for the
purpose of the litigation in the Supreme Court and for the purpose of anticipated
litigation to enforce performance of the deed of compromise and further to recover
the tax assessed together with additlonal tax for late payment for the 1989 financial
year, satisfy the tests laid down in Grant v. Downs at 682 - 683;
Mutual General Insurance Association Ltd. v. Waind (1979) 141 CLR 648 and Waterford v. The Commonwealth to support a claim to immunity from disclosure on the basis of legal professional privilege. That privilege comes into existence at the time the documents come into existence. The privilege is not limited to that litigation but exists generally and in respect of later litigation whether or not it is associated
with the earlier litigation (Baker v. Carnubell (1983) 153 CLR 52 at 96, 114; F & Director of Investigation and Research and Shell Canada Limited (1975) 55 DLR (3d) 713 at 723; Waterford v. D e ~ a r t ~ n e n t of the Treasury (19'85) 5 FCR 76 at 82; Calcraft v. Guest [l8981 1 Q.B. 759 at 761; Bray on Discovery (1885) at 371). The use of the documents for a subsequent different purpose from that
for which they were brought into existence does not mean that the original legal
professional privilege is lost unless the documents are used in such a way that their
contents are disclosed in circumstances which would constitute an implied or actual waiver of the privilege by the client (Electricitv Trust of South Australia v. Mitsubishi Australia Ltd. at 59).
Is the legal professional privilege which attached to the documents in
issue lost merely because the decision-maker had reference to them in the
circumstances disclosed in her affidavit? The applicant submits it is because the process of judicial review of administrative decisions exposes the material before the decision-maker and in consequence reference to the material constituted a waiver of
the privilege on the part of the decision-maker. Although waiver was not argued in Waterford v. The Commonwealth, the underlying reasoning of the majority is against
communications for the sole purpose of giving legal advice or in connection with such a result. If legal professional privilege attaches to confidential professional anticipated or pending litigation where the particular function of government in issue is an administrative process, to hold that reference to the advice in the making of the
administrative decision is a waiver of the privilege is to render nugatory the recognitton of the privilege. More importantly authority is against the contention of the applicant.
13. I
Mere reference of itself to the material to which legal professional
privilege attaches and without its disclosure does not amount to a waiver by implication of the privilege. There must be additionally some conduct on the privilege holder's part wt~ich makes it unfair to maintain the privilege before waiver will be
implied. In Attornev-General (N.T.) v. Maurice (1986) 161 C.L.R. 475, Gibbs C.J.
said (at 481) :-"There was of course no express waiver itz tize presetzt case and ttrere is rzotlrirzg to suggest tltat /Ire claimatrts lzad aray actrtal itztetztiotz to waive privilege itr tlze sorrrce documetzts. nze pritzczjde applicable in tlzese circumstarrces seems to me to be well stated in Wrgmore, op. cit, par. 2327:
%z deciding it, regard must be had to the double elemetrts tlzat are predicated irz every waiver, i.e., tzot orzly the elemetzf of implied itztetztiorz, but ako the elemetzt of fairness atzd cotwistetzcy. A privileged pemotz would seldom he fourid to waive, if ifzis
it~tetitiotz riot to abarzdotz could alorre cotztrol tlze situatiorz. Tlzere k always also the objective corzsideratiotz that wlzetz Iris cotiduct touches a cerfairz poi~zt of disclosure, fainzess requires tlzat Izir privilege siznll cease wizetizer ize itztetzded tizat result or tzot. He catztzot be allowed, afier dirclositlg as muclz as he pleases, to witititold the remaitrder. He may elect to ~vitizlzold or to dirclose, hut afier a ceriaita poit~t iris electiotz murl remnitr fiznl'.
nze decisiotw bz wlziciz tizk questioti iras beetz corr~idered
seem to me to be pariicular ~pplicatiotls of tlze rule tizat irz a case wizere tltere is tzo itztetztiotzal waiver tile qrtestiotz ~vitetiter a waiver sizould be implied depetzds otz wlzetizer it would be utlfnir or mislendirzg to allow a party to refer to or use material arrd yet asseri titat tizat material, or material associated with it, is privileged from productiotz. 7lim it has been Iteld tliat ilze privilege itz respect of a documetzt is rzot waived by tile mere reference to tizat documetzt in pleaditzgs (Robetis v. Oppenheim (1884) 26 C1t.D. 724; Bultes Oil
Co. v. Hammer [No. 3) [I9811 Q.B. 223, at pp. 252) or itz arz affidavit (Lye11 v. Kennedy (1884) 27 C1r.D. I, at p. 24; Infieldr, v. P. Rosen & Son [l9381 3 All E.R 591, at p. 597 Tare & Lyle 'Inlemational Co. Ud v. Government lkading Corpomfbn: ;Ihe %er 24 October, 1984),
14. l
alflzon~giz rlze positiott will be di/leretzt if [Ire du~krnzetzf is reproduced itz full it1 the pleaditzg or affiavit: Butter Oil Co. v. Hammer [No. 31 [I9811 Q.B., at p. 252. Tlzese cases may be explaitzed by saying tizat it is tzot uttfair or misleadittg to refer to a docunze~zt itt a pleaditzg or affiavif wiziciz is tzot put into evidetzce but fltat if tlze documerzt i~ set out in full tile privilege is waived A fortiori, oJ course, privilege itt respect of materiak used in drawing a pleaditig or att afJiavit atrd trot referred to tizereitz, ~vorrld ttot lose tlzeir privilege because tlzey Izad been used it1 tlzat way'!
(See also Mason and Brennan JJ. at 487 - 488, Deane J. at 492 - 493, Dawson J. at
In the instant case there was no intention to waive the privilege nor has
there been any partial disclosure of the contents of the material in the reasons for the decision furnished by the decision-maker or in the affidavit material filed in these
proceedings by the respondent. Where is the unfairness in maintaining the privilege
from disclosure? The applicant submits that the unfairness lies in his not knowing
what the legal advice was and what was communicated by the respondent to the A.G.S. for the purpose of obtaining the advice or in preparing or undertaking the actual or threatened litigation. However, that is an "utljhinress" which is the inevitable consequence of the operation of legal professional privilege. For that reason the
privilege is confined. As Mason and Brennan JJ. said in Attornev-General (N.T. v. Maurice ( at 487) :- "Wlzett rite privilege applies, it etzables tlze clietzt to keep tlze commuizicatiotz from disclosrrre atzd itzterferes wirlz tile public's 'rglzr to evey matr's evidertce': Cobbat's Parliamentay H&oy (1812), vol. 12, p. 675. Because of tlzis corzflcr betweert tlte public irtferest irz ertsuririg the availability of all relevar~t evidetzce itr a padcular case and tlze public itzteresf in tire admitlistratiorz of justice ihrouglt elfective legal represetztatiotz, tlze privilege is cotzfilted withitz strict limits: Gmnt v. D o w (1976) 135 C.L R. 674, at p.
685, per Slepllerz, Mason and MurpIy JJ."
Further, it is difficult to see that disclosure of the privileged material is
necessary to the applicant in the preparation of his case, save perhaps in one area
which I will deal with shortly.
The grounds relied upon by the applicant are that the respondent failed
to take into account relevant considerations (paragraph 3(A)), took into account irrelevant considerations (paragraph 3(B)) and acted with bias and in breach of statutory duty (paragraph 3(C)).
The matters particularised in paragraph ~ (A) ( I ) - (v) are matters of fact,
the proof and relevance of which is not in any way assisted or dependent upon disclosure of the privileged material. The matters particularised in 3(B)(ii) and (iv) require consideration of communications passing between the parties, their meaning and effect and what relevance ought, if any, to have been given to them by the decision-maker. Again proof and relevance of them is in no way assisted by disclosure
of the privileged material.
The allegations in paragraphs 3(B)(i) and (iii) "[tJI~ai the applica~tt ought
to be prtrlkl~ed" and paragraph 3(C) amount to an allegation of an abuse of a statutory power or duty for an improper purpose. Where such conduct is alleged, it is not a question of waiver of the privilege or the exercise of some discretionary power in the
court to order inspection notwithstanding the privilege; it is a question of whether the
conduct is such as to bring thc matter within the category of exceptions which denies privilege to documents which would othenvise normally obtain the benefit of legal
professional privilege. Such a positron was considered by the High Court in Attornev-
General (N.T.) v. Kearney (1985) 158 CLR 500.
In Attoroev-General (N.T.) v. Kearnev the allegation was that the power
to make regulations under the Town Planning Ordinance 1964 (N.T.) had been used to defeat aboriginal land claims made under the Aboriginal Land Rights (Northern Te r r i t o~ ) Act 1976 (Cth). Legal professional privilege was claimed in respect of advice and communications between the Northern Territory government and the government's legal officers relating to the making of the regulations. The court by a
majority (Gibbs CJ, Mason, Wilson and Brennan JJ.) held that the communications
were not privileged. Gibbs U. said (at 515 - 516) :-'%I my opi~liorz tlze present case conzes rvitl~irt tile priizciple wlriclt forms tlte bask of ilze rule tizat h i e s privilege to contn~ur~ico~iorzs made to furher an illegnl purpose. It rvorrld be corttmty to the public interest wlticlt h e privilege is desigrled to secure - the better admir~irrratio~t of jrutice - to allorv it to be used to protect cornrnu~ticatiorzs made to furilzer a deliberate abrae of stnfritory power and by t/znt
law. It would shake public corzfde~zce in the law if rltere abuse to prevent oilten from exercisirtg tlteir rights under rlze was reasonable ground for believing iliat a regulatiort itad beer1 e~tacted for arz ur~autl~orized purpose a~td wit11 tlze i~lieftt of Jnisrratilzg legitinlate clainzs, and yet rlze law protected from disclosure tlte contrnunicatio~rs made to seek and give advice irz canyirtg out ilzat purpose. It is
rr~t~zecessary to consider wlzetiter ille decision in Crescent
Farm ( S W ) S ' Lad v. Sterling OJ7u:e.s Ltd [I9721 CIt. 553 wns too restrictive, or wltetlzer tlze view apres.sed in flze rnodenz United States cases fltnt llte prirlciple eiiendr to cornnzztrricatiorzs made for tlte purpose of conzmitti~tg a tori
is too wide. iVte law strikes a balarlce between securing proper represerttatio~r by e~tcouragi~tg ficll disclosure on tlte one hand, and requiring the productiolt of all relevant eviderzce otr ilze ollzer, but rlze balattce trzore readily itrclirres it2 favour of disclosure where privilege from disclos~tre nt&/tt cotrceal atz abuse of delegated powets to ettact legislatiotz, atzd ~ I I I L T obstntct a proper c/zallettge to tlre validity of part of
the law itsee nze bask of ilte privilege is ttor etldartgered
ir is held rlrat it does ttot protect comn~ur~icatiotzs made by a
public autl~otity for the prttpose of obtaittirtg advice or assisfatzce to exceed its stnlutoy powers. f ie privilege is of course ttot displaced by ntakitrg a mere cltaqe of crime or fraud or, as irr tire presetlt case, a cltarge that powers have been exercked for arz ulteriorpurpose. nris was trtade clear itz BuUivant v. Atlornqr-Geneml (Vif.)
/I901] A.C., at pp. 201, 203, 205 attd in O'Rouke v. Dar5ishk L19201 A.C. 581, at pp. 604, 613 - 614, 622 - 623, 632 - 633. As V~couttt Fittlay said itt tlze latter case [I9201 A.C. at p. 604, 'there must be sotrzetlziltg to give
colorlr to tire clzarge! His Lordsltip corrtittued: 'The staternetrt mrist be made in clear attd dejiltite ienns, and there mlut furtlzer be some prima facie evidence that it Itas some fou~rdatiorz in fact. ..The Court will aercise its discretiott, not merely as to tlte tenns in wlticlz the allegatiotz is ntnde, but also as to the s~t~~outtditzg circr~tr~~latrces, for tlze purpose of seeitzg ~llzetlzer the c/targe k made ltotzestly and with sufficiettt probability of its ttuilz to make it right to disallow tlze privilege o f professional conrm~~tticatiot~~!
(See also Mason and Brennan JJ. at 517; Wilson J. at 524 - 525).
In the instant case there is no material which would satisfy a finding that
a prima facie case exists that there has been a deliberate abuse of statutory power in the manner alleged by the applicant, as was the case in Attornev-General (N.T.) v. Kearney, nor even that a colourable one has been made out. The decision-maker has
given written reasons for her decision, and ~dentified and provided copies of all
documents she says she relied upon in making her decision. Those reasons and the
documents do not disclose any colour of a deliberate abuse of statutory power or bias but do expose a process of reasoning which may or may not ultimately be held to be
unobjectionable.
The applicant alleges against the respondent in paragraphs 4 to 30 of
his affidavit filed on 24 April, 1993 conduct which he contends demonstrates that his allegations in paragraphs 3(B)(i) and (iii) and 3(C) are made out. Certain of the conduct relates to the respondent having had struck out before the Administrative Appeals Tribunal a number of taxation appeals due to the non-appearance of the
applicant or his legal representatives on directions hearings before the Tribunal. The
appeals were struck out on two occasions.
On the first occasion they were reinstated by the Tribunal on the
applicant's request without objection by the respondent. On the second occasion the Tribunal refused to reinstate the appeals. Those appeals concerned a taxation
minimisation scheme of a type which was subsequently upheld. The applicant alleges that although the respondent gave the benefit of the ruling to others similarly placed to the applicant who had appeals pending, the respondent refused to do the same for
the applicant on the basis that he had no current appeal pending. The applicant contends that to the knowledge of the respondent it was always his intention to prosecute the appeals and that the respondent acted in seeking the striking out of
them to deny him the benefit of the deduction in issue which was substantial.
Without going into the merits of this complaint, the fact remains that
the Tribunal refused to reinstate the proceedings presumably on what appeared to it
to be good and substantial grounds. Further, all or some of the matters, the subject of the appeals, were compromised in the deed executed by the parties.
The applicant also complains of the conduct of a Mr. Pulverenti, an
officer of the respondent, who used information of the assets of the applicant in "wiil~oui prej14dice" negotiations after dismissal of the appeals to seize those assets while negotiat~ons were continuing and without due compliance with section 218 of the ITAA. This conduct of the respondent, it is alleged, caused the applicant acute embarrassment.
In the negotiations in the later part of 1989 the applicant's solicitors
requested a reconc~liation of the amounts being claimed by the respondent in order that the applicant and his advisers could make an offer to resolve all outstanding matters. It is alleged that the information was not provided. Without the information the applicant alleges that he was in a position of disadvantage in negotiating the compromise and only signed the deed to avoid bankruptcy.
The amount of tax and additional tax for late payment claimed by the
respondent prior to the compromise for the years 1977 to 1988 was $435,343.50 being $160,693.91 for primary tax and $274,649.59 for additional tax. The tax payable was
compromised into an obligation under the deed to pay $200,000.00. The deed also recited that all appeals which had been referred to the Administrative Appeals Tribunal "wit11 i11e corzscrli of i l ~ e taxpayer now have been settled or wiil~drawn'! Prima
facie the matter was compromised to the applicant's advantage and resolved the
issues in dispute up to and including the 1988 financial year.
The applicant concedes in his affidavit that relations between himself and Mr. Pulverenti were not good. However Mr. Pulverenti seems to have had nothing to do with the relevant file since 16 September, 1992 when Ms. Saarimaki took responsibility for it.
Controversy between the parties was renewed with the demand for
payment made on 26 October, 1992.
The applicant in his affidavit details a number of requests for
information to the respondent which were not replied to, confusion as to the form in
which assessments issued, claims for amounts which were subject of the deed of compromise, cla~ms for both the provisional tax and the tax as finally assessed in the
1989 income year and miscalculation of the additional tax payable. Some of these matters were conceded by the respondent; others were not. Whilst they are matters to ground arguments of relevancy of the matters to which the decision-maker ought to
have taken account, they do not in themselves colour the conduct of the respondent as an abuse of statutory power or duty as particularised by the applicant. What a perusal of the material shows is that the applicant appears to
have understood the amount in the assessments under the heading "OTHER
AMOUNTS PAYABLE" as the balance outstanding under the deed which was not
the case. Whether or not he was entitled to do so and whether or not the respondent made an adequate and timely explanation of what was claimed and the basis of the assessment are issues in the primary application. However, the parties being at cross- purposes does not of itself bespeak an abuse of statutory power or duty. Nor does
the fact that the respondent conceded the correctness of the applicant's contentions
and substantially reduced the amount demanded.
There are further reasons against making the order sought. Discovery
and inspection in the context of judicial review will not be allowed where an applicant is "Jsi~ing" for a ground upon which the decision can be attacked (Nestle Australia
Limited v. Commissioner of Taxation (1986) 11 FCR 453 and on appeal (1986) 12
FCR 257. In the instant case the applicant has had access to all of the documentation
other than that in respect of which legal professional privilege is claimed. The applicant does not put any of that material forward to ground a case of abuse of statutory power or duty or bias. The respondent has undertaken to make Ms. Saarirnaki available for cross-examination on the hearing of the application so that the
applicant does not run any risk that he will be denied an opportunity to test the basis
upon which the decision was made. Further, I have inspected the documents to satisfy myself that the plea of legal professional privilege has not been used to cover
any abuse of statutory power or duty as alleged.
In my opinion there is nothing in the
documents in issue which would assist the applicant to make out such a ground.
In the final result I am satisfied that the claim to legal professional
privilege is well-founded, has not been waived and does not operate to cause an
injustice to the applicant in the prosecution of his application. The application will be
dismissed.
THE COURT ORDERS:
| I | 1. | The application for inspection of the documents in respect of which the |
| respondent claims legal professional privilege is dismissed. | ||
| I c e q that this and the preceding twenty-one (21) pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Cooper. | ||
|
Associate
Counsel for the Applicant: Mr. Logan Solicitors for the Applicant: Australian Government Solicitor Applicant in Person: Mr. J.R. Webb Date of Hearing: 16 August, 1993 Place of Hearing: Brisbane Datc of Judgment: 27 August, 1993
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