Croker v Commissioner of Taxation of the Commonwealth of Australia S186/1999 [2000] HCATrans 104 (17 March 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S186 of 1999

B e t w e e n -

CLAYTON ROBERT CROKER

Applicant

and

COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

Application for special leave to appeal

GUMMOW J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 17 MARCH 2000, AT 2.54 PM

Copyright in the High Court of Australia

MR C.R. CROKER appeared in person.

MR I.S. YOUNG: If it please the Court, I appear for the respondent in this matter. (instructed by the Australian Government Solicitor)

GUMMOW J: Yes, Mr Croker.

MR CROKER: Your Honours, I bring this matter on appeal from the decisions of the Court of Appeal on the basis of the secrecy of the Act on the Income Tax Assessment Act 1936 section 16(1) and (3).

GUMMOW J: Yes, we are familiar with that provision.

MR CROKER: The application was that the grounds that the information was short was that the defendant in the inferior court was making several allegations to his business.

GUMMOW J: We understand that too, but you have to satisfy us that there is any error of law in the rather large body of decisions, which Justice Dunford referred to at page 3 and which Justice Sheller in the Court of Appeal, on page 8 of the application book, said represented the generally understood position of the law in construing section 16 of the Income Tax Assessment Act.

MR CROKER: Your Honour, in respect to page 3, approximately 15 down to 25, the actual cases referred to at that stage in proceedings are actually cases which deal with the Department of Taxation in matters that are relevant to taxation matters, in that the Tribunal - - -

GUMMOW J: That is the point.

MR CROKER: That is the point which I argue. The point I argue is that there are grounds, even though the field might be well toiled in the release of documents under section 16(1) and (3), there still seems to be cases where the obligated party is obligated to release documents to the court for the inspection of the court and used in proceedings.

KIRBY J: But is that not your problem, that the Act gives an exemption where the demand for the records is for the purpose of the administration of the Act and your proceedings are not for that purpose. It was necessary to have that exemption in order that in a case where there is a dispute, relevant to the administration of the Tax Act, you could get the documents under compulsory process to the court, otherwise you could not resolve that particular dispute? But for a high principle of privacy and of the protection of the private communications between taxpayers and the Commissioner, this general embargo has been installed and, so far as I know, it has been applied in the way that it has been done by Justice Dunford in the Court of Appeal all my professional lifetime; lots of subpoenas never allowed.

MR CROKER: Your Honour, in due respect to the past judgments and the criticism of the application of the Act, under a common law as we look at for a car and normal holdings, the release there was of public interest. I bring the appeal on public interest as that the offence of perverting the course of - - -

GUMMOW J: You are bringing the appeal to advance your interests presumably.

MR CROKER: I bring it to the Court that it is public interest and also that the defendant is - - -

GUMMOW J: Why is it in the public interest? The taxpayer's private affairs should be liable to revelation on a subpoena from some stranger with whom they happen to be in litigation?

MR CROKER: If they are statements from the stranger that offences against a Commonwealth statute and - - -

KIRBY J: I think the theory behind it is, and this is the reason why successive federal parliaments - and I think it went before the 1936 Act - have had it, is to encourage people to be totally candid. Say, for example, a person is running a brothel so that they will give candid information and not be subject or liable to having that embarrassing or even criminal information come before a court of law subsequently, but that they will pay their tax; that is the policy.

MR CROKER: That is all good and well, but - - -

GUMMOW J: You see, the policy is to encourage, as Justice Kirby says to you, full disclosure to the Commissioner, and if you do not make full disclosure to the Commissioner, you as a taxpayer can have adverse consequences for your own tax position.

MR CROKER: That is fine, but I concede that where the secrecy between the taxpayer and the Commissioner for Taxation should be warranted, secrecy, but I can still see matters of importance, that the information would be available to the court itself in other fields. The application is one that the defendant has committed an offence of perjury and it is known to myself through earlier litigation with the defendant and - - -

KIRBY J: We understand that, and we understand your sense of frustration, but we must obey the law, and the Act of Parliament, it seems to me, is entirely clear; it is a general rule, an exception for a particular case. You do not fall within the exception. You fall within the general rule and, arguably, there are good reasons for this general rule: to encourage people to be candid in their tax returns. That is in the public interest. That is in your interest as a taxpayer, that other people should come forward and reveal their financial affairs honestly, even if they are embarrassing, even if they are criminal.

MR CROKER: Even in that case, if the Income Tax Assessment Act on section 16 was fully used to its extent, there could be a stranger walk into any courtroom and blatantly lie about his tax return and feel quite at ease, knowing too well that his tax return could not be actually brought forward to the forum. It seems, in a situation like that, that the law would be quite unjust. This is what we are saying. In criminal matters, or even in a civil matter, access to documents which are relevant to the proceedings and carry weight to the proceedings and are admissible, should be accessed by the parties involved, and even to the extent that the justice or the court has access to them themselves to actually make judgment.

GUMMOW J: Yes.

MR CROKER: Your Honours, furthermore I can only bring the attention of the forum to the cases that have been pleaded: Pooraka Holdings Pty Ltd v Participation Nominees Pty Ltd, in which there was a public interest that the documents were produced, even though they were actually a process of discovery. Also in the case of - on page 23 at 30 - it is James Salem v The Queen, attempting to further the course of justice, the subpoenaed documents were supplied on request. I ask your Honours to look at the weight and the bearing on the - - -

KIRBY J: The Act is expressed in terms of "An officer shall not be required to produce in Court". Now it may be, I am not sure, that that has been interpreted as permitting the Commissioner in an appropriate case to provide the documents voluntarily, I do not know, but the Act says that if the Commissioner objects, as he does in this case, a court shall not require him.

MR CROKER: There is that theory, but then again, if the Commissioner is an officer as well, which we have no definition of - - -

GUMMOW J: Well, he is an officer of the Commonwealth. They are all officers of the Commonwealth.

MR CROKER: And if all the Department is - - -

GUMMOW J: And some of them happen to be tax officers as well.

MR CROKER: That is correct. If there is that blind or that shield that protects them again, it will just lead to a state of confusion with the taxation reports that are coming out of plaintiffs or defendants in the forum. Obviously there must be some common law ground where there is access to documents, and I have shown one, at the moment, and there has been several other unreported cases, which do not have so much of an interesting point of law, but still demonstrate that the purposes and the use of documents subpoenaed from the Commissioner of Taxation for use in the forum.

GUMMOW J: Yes, anything you want to add?

MR CROKER: Not at the moment, your Honour.

GUMMOW J: Thank you. Mr Young.

KIRBY J: Mr Young, reference has been made by Mr Croker too, to other cases; is there any case where, in an extreme situation, there would be perjury to a court, that there has been held to be some exception or not? The language of the statute seems intractable, but are there any cases which have found a way, in the extreme case, to get around that embargo that you are aware of?

MR YOUNG: Your Honour, not in my experience have I ever heard of a subpoena being allowed to go to the Commissioner to produce that sort of information, not even in the extreme perjury case. I am not aware of any. Certainly, in my experience - - -

KIRBY J: I suppose we ultimately have to go back to the statute, and the statute says "An officer shall not be required". That means that if the officer is objecting. What about the point that the Commissioner himself is not an officer under the Act?

MR YOUNG: Your Honour, if I could sort of answer that at two levels, one slightly flippantly and the other more seriously. If the Commissioner were not an officer and not himself personally bound to section 16, then I can see a situation where the Commissioner would be a very busy individual, personally answering a plethora of potential subpoenas.

KIRBY J: Yes, it would destroy the utility of the section and cannot have been intended and the Commissioner acts through the officers of the Australian Taxation Office. So that must be the policy and scheme of the Act.

MR YOUNG: Yes, your Honour.

KIRBY J: You said you have two levels, but I think that is probably enough.

MR YOUNG: Well, your Honour, the second clear answer is that adverted to by the presiding Judge, and that is the Commissioner is an appointed person. The definition of "officer" in section 16(1) refers to "a person who is or has been appointed or employed" in the office of the Australian Taxation Office. The Commissioner is a statutory appointment pursuant to the Tax Administration Act.

KIRBY J: Yes, that is the juxtaposition that is intended in the section.

MR YOUNG: Yes, your Honour.

GUMMOW J: We do not need to hear you further, Mr Young.

MR YOUNG: If the Court pleases.

GUMMOW J: Is there anything you want to say in response to what has just been said, Mr Croker?

MR CROKER: No, your Honours.

GUMMOW J: Any appeal would enjoy no prospects of success, given the long-established body of authority respecting the operation of section 16 of the Income Tax Assessment Act which is referred to at first instance by Justice Dunford and later by reference in the judgment of Justice Sheller in the New South Wales Court of Appeal. Accordingly, special leave to appeal is refused.

Do you ask for costs?

MR YOUNG: Yes, your Honour.

GUMMOW J: Do you want to say anything about that, Mr Croker?

MR CROKER: It is quite pressing, costs, your Honour. I would ask that costs would be reserved.

GUMMOW J: Well, what do you say about what is said on that subject in the application book on page 20, paragraph 19?

KIRBY J: Of course, it is one thing for courts - courts would normally order costs in a case like this because you have lost. That is the general rule in Australia. As to whether the costs can actually be recovered from you, that is a different matter and courts are not concerned with that. But it would seem that it is appropriate, unless there is some statutory provision which relieves you as - I gather you are an invalid pension, from the obligation to pay costs, I do not see why we would not make the ordinary rule, and then it is up to the Commissioner to see whether it is worthwhile to recover the costs from you.

MR CROKER: At the moment, your Honour, the financial pressures are quite extreme under the circumstances and an application would be - an appeal would be asked that costs are wavered to lessen an undue hardship. That would be the main - - -

KIRBY J: By the time many litigants get to this Court the pressures on them are extreme. There are also pressures on other parties. They are entitled to defend their position. You have pursued your rights and you have lost. The ordinary rule is you must pay. I am afraid I do not think, speaking for myself, there is any reason to exempt you from the ordinary rule.

GUMMOW J: Special leave is refused with costs.

AT 3.08 PM THE MATTER WAS CONCLUDED