Winter v Deputy Commissioner of Taxation

[1987] FCA 344

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NOT CONSIDERED SUITABLE FOR DISTRIBUTION

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IN THE FEDERAL COURT OF	AUSTRALIA	1
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NEW	SOUTH WALES	DISTRICT	REGISTRY	1	No. G.490 of 1986
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GENERAL	DIVISION	1
BETWEEN:

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WINTER

Appllcant

- AND:

DEPUTY COMMISSIONER

OF TAXATION

i Respondent

EX-TEMPORE REASONS FOR JUDGMENT

BURCHETT J.

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In this matter Mr. Downes raised a jurlsdictional

question as to the scope of the power of this Court under s.23 of

the Federal Court of Australia Act 1976. I thlnk it is most

convenient if I put that to	ne	side	and consider the
discretionary question.

Mr. Flick says that the ambit of the application for an

order of review is sufficiently wide to call in itself for

consideration whether the respondent should be permltted to act further upon the subpoenas which have been issued in the Supreme Court for the production of documents, since Mr. Flick says that the whole of the proceedings In the Supreme Court may be rendered

futile by the decision of this Court. It is conceded by him,

however, that I would have to weigh that consideratlon against

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the suggestion raised in the evidence of the respondent, to the extent that I accept that suggestion, of course, that there may

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have been some impeding of the investigation by the Commlssioner, and some obstruction to his access to some documents. Mr. Flick then proceeds to point out that at the heart of the Supreme Court

proceedings is the validity of the contested assessment. He says

that the Mareva injunctions which have already been granted in i

the Supreme Court offer the Commissioner protection, but, of

course, those injunctions are for a fixed period only, and in

relation to the particular matters the	su	ject of the current
orders.

It is pointed out that some dist nction can be drawn

between those subpoenas pursuant to which documents have been

produced, and at least so far as the particular documents are

concerned have the protection of the custody of the Court, and

those subpoenas under which documents have not yet be n produced.

What is sought by the applicant's notice of motion is an order

I restraining the respondent or any of hls officers from calling

upon, or taking any further action in relation to, subpoenas

issued to Olga Winter, Rita Winter, Henry Winter, Sarosa Pty

Limited, Ilerace Pty Limited and Vimair Pty Limited in Supreme

Court proceedings between the Deputy Commissioner of Taxation and

Henry Victor Winter and others, no. 16020 of 1986, untll the

I	proceedings In this Court are finally determined; and further an
order restraining the respondents or any of his officers from
l	inspecting documents produced on subpoena by Messrs Baker and
MacKenzie and Messrs Ferrier and Company, Solicitors, until these
I	proceedlngs have been flnally determined.

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R e l i a n c e is a l so p l a c e d o n t h e f a c t t h a t t h e p r o c e e d i n g s

i n t h i s C o u r t are now d u e for h e a r i n g i n a c o u p l e o f w e e k s time.

I t is s a i d t h a t t h e r e f o r e t h e r e a r e s t r o n g c o n s i d e r a t i o n s of

c o n v e n i e n c e i n f a v o u r o f t h e a p p l i c a t i o n , a n d t h a t i n e f f e c t some

ha ras smen t of t h e a p p l i c a n t a n d h i s a d v i s e r s c o u l d r e s u l t f r o m

t h e i r b e i n g c o m p e l l e d t o d e a l w i t h t h e s u b p o e n a s a t t h i s c r u c i a l

s tage. However, i t seems t o m e t h a t i t h a s to be b o r n e i n m i n d

t h a t h e p r o c e e d i n g s may commence i n t h i s C o u r t i n a c o u p l e o f

weeks' time, b u t t h e y w i l l n o t n e c e s s a r i l y c o n c l u d e t h e n , a n d

c e r t a i n l y i t c a n n o t b e s a i d t h a t h e y w i l l n e c e s s a r i l y be

d e t e r m i n e d i n a s h o r t s p a c e o f time,

A matter t h a t seems to me to be of impor t ance is t h a t

t h e e v i d e n c e a d d u c e d b y t h e r e s p o n d e n t s h o w s , a n d i n d e e d w i t h o u t

s u c h e v i d e n c e o n e m i g h t well f e e l t h a t o n e c o u l d t a k e ~ u d l c i a l

not ice of t h e f ac t , t h a t d o c u m e n t s , p a r t i c u l a r l y f i n a n c i a l

records, may b e d e s t r o y e d q u i t e i n n o c e n t l y b y b a n k s a n d o t h e r

i n s t i t u t i o n s i n t h e o r d i n a r y c o u r s e of a p rogramme o f des t roy ing

s t a l e d o c u m e n t s w i t h i n a s e t p e r i o d o f t lme , w h i c h i n m o d e r n

commercial p r a c t i c e may be q u i t e s h o r t . From t h i s po in t of v iew,

I t h i n k i t is proper t o t a k e i n t o a c c o u n t n o t o n l y d o c u m e n t s

c o v e r e d b y t h e terms of t h e s u b p o e n a s b u t a l s o t h e p o s s i b i l i t y ,

a n d p e r h a p s e v e n p r o b a b i l i t y , t h a t t h e r e c o u l d b e o t h e r d o c u m e n t s

t h e ex l s t ence of which might be disclosed by documents covered by

t h e terms of t h e s u b p o e n a s , a n d i n r e s p e c t of w h i c h f u r t h e r

s u b p o e n a s m i g h t s u b s e q u e n t l y r e q u i r e t o b e i s s u e d o r , ~ n d e e d ,

a l t o g e t h e r o t h e r s t e p s t a k e n w i t h a v iew t o a s c e r t a i n i n g t h e l r

c o n t e n t s and p r e s e r v i n g t h e m . I t h i n k t h e r e f o r e t h a t t h e r e is a

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weiqhty consideration arising from delay in access to documents,

quite apart from the other matters that have been argued.

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As Mr. Downes put it, in the balance of things the

preservation of evidence is an important factor, and I think that

is not just from any suggested depredations of a party but from

the depredations of time itself. The grounds of attack by the

applicant on the assessments in this case, it is also put by Mr. Downes, of their nature do not dispute that some, or at least one of a number of related entities, owe or owes a significant amount of tax, and very largely the subpoenas would not be affected lf the Commissioner were assessing against one only rather than all of these related entities.

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I think, also, that time is important in the preparation

of the final hearing in the Supreme Court, in respect of the

injunction proceedings there. Even though the Injunctions

currently extend to 12 August, that is relatively close if one

has regard to the extent and complexity of the web of

Interrelated transactions alleged to be involved.

In these proceedings I cannot, of course, determlne the

accuracy of any allegation, and must take into account the desirabillty of the party making an allegation having the

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opportunity to investigate it properly and prove it, if it can be 1. i

proved. In this case steps have already been taken to sort out a

number of the problems that would be involved in production of

the documents In question. A number of questions related to

privilege have been looked at, and there does appear to be a

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signiflcanL body of documents, free of any claims of privilege, which the Commissioner wishes to examine. I think he ought to have the opportunity to do so and, for the reasons that I have already discussed, I do not think that opportunity ought to be

lost, or that he should be unduly hampered, with the attendant

risks involved in delay.

Mr. Downes has indicated that the Deputy Commlssioner

would not seek to agitate before the completion of the hearing of

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the matter in this Court any question arising out of claims

actually made for privilege in respect of particular documents.

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On the other hand, I can see that that concession could possibly

not provide sufficient protection to the applicant's advisers,

who ought not to be placed in the position where their

preparation for the imminent hearing in this Court is unduly

hampered by their being required to devote large amounts of time,

in the quite short period in the next couple of weeks, to other

questions. At the same time, these proceedlngs have been pending

for a number of months, and there is no reason why they should

not be expected to spend a reasonable amount of time on a task

which is not, after all, unrelated to the questions in issue.

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In all the circumstances, I think that it is appropriate

that I should adopt the alternative course which Mr. Downes

suggests of declining at this stage to make any order, and

standing the motion over to the hearing of the application,

granting liberty to apply to each party on 24 hours notice. I do that on the basis that I am not prepared to grant the relief that is sought, and that I am confident that what Mr. Downes has said

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about the attitude to be taken by his client on the subject of privilege is not likely in practice to give rise to any serious problems but, at the same time, in case it does transpire that an undue burden is placed on those advising the applicant, liberty to apply would enable the matter to be re-agitated on a narrower basis. At the same time, the liberty to the respondent would in the event that the spirit of these reasons is not complied with

enable hlm to bring the matter back.

It will be apparent, having regard to the reasons I have

given, that I find it unnecessary to consider the ~urisdictional

question which has been raised, but I am not to be taken to

accede to the proposition that there is some limitation, as a

matter of power, to be read into the very broad discretion of the

Court under s.23, rather than a discretionary limitation of the

occasions when the exercise of the power 1 s called for. It may

be worth adding that, on any view of the power, I should think

that the narrower basis to which I have referred lust a few

moments ago would clearly fall wlthin the power conferred by

s.23, and Indeed within the inherent jurisdiction of the Court as

that expression has been defined in modern authority.

For these reasons, I decline to make any order at this

stage. I stand the matter over to the hearing of the

application, and I grant liberty to apply to each party on 2 4

hours notice.

I certify that this and the

preceding five ( 5 ) pages are a

true copy of the Reasons for

Judgment herein of his Honour

Mr. Justice Burchett.

d& Associate

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Dated: 2 June, 1987.