CATCHWORDS Administrative law - contempt of court - power of Commissioner of Taxation to full and free access to nilaces for the purpose or purposes of the Income Tax Assessment Act 1936 - whether power extends to documents in custody of Court. Income Tax Assessment Act 1936 ss.16, 263, 264 Trade Practices Act 1974 s.155 COMMERCIAL BUREAU (AUSTRALIA) PTY. LTD. v. JAMES DOUGLAS ALLEN, ROBERT LYNDON LEE and DAVID LLOYD OWEN Ex parte THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA V. No. G.285 of 1983 Melbourne Northrop J. 29 March 1984 . IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) V. No. G.285 of 1983 ) ) GENERAL DIVISION BETWEEN: COMMERCIAL BUREAU (AUSTRALIA) PTY. LTD. Applicant and JAMES DOUGLAS ALLEN, ROBERT LYNDON LEE and DAVID LLOYD OWEN Respondents Ex parte THE COMMISSIONER OF TAXATION ; OF THE COMMONWEALTH OF AUSTRALIA CORAM: Northrop J. PLACE: Melbourne DATE: 29 March 1984 REASONS FOR JUDGMENT On 19 March 1984 the Court, as presently constituted, gave judgment in matters arising in this proceeding and in five other related proceedings. The background facts giving rise to the present matter are set out in that judgment and need not be repeated. For present purposes the relevant facts are stated in summary form. On 25 October 1983 Federal Police officers, pursuant tc search warrants granted under s.10 Crimes Act 1904, seized a large number of things including documents at premises occupied by Commercial Bureau (Australia) Pty. Ltd. ("Commercial Bureau") and at premises occupied by two officers of Commercial Bureau. Commercial Bureau and the officers commenced proceedings in the High Court challenging the validity of the search warrants and their execution. On 28 October 1983 the High Court made orders with the consent of the parties, including orders directing that the documents seized be delivered into the custody of the Registrar of the High Court. The relevant parts of those orders are set out: "2. That any documents or other things already seized by the said defendant and each or any of them or their servants or agents or otherwise pursuant to the warrant ... , together with any copies made or notes taken from any sich document or things be delivered forthwith into the custody of the Registrar of the High Court of Australia to be retained by the said Registrar until the trial of the action herein or further order and that within 7 days hereof the defendants notify the said Registrar as to which of the documents and things should be returned to the plaintiff whereupon the plaintiff or his solicitors shall be entitled to custody of such notified documents or things. 3. That the defendants and each of them, their servants or agents and any of them be restrained pending the disposal of the summons herein or further order from publishing, circulating, disclosing, divulging or in any way conveying or communicating to any person any of the documents or things or any part of the contents of the documents or things seized by them their servants or agents which have come into the possession or control of the defendants or any of their servants or agents or any of them by reason of the execution of the search warrant... 4. That the plaintiff by its servants or agents be at liberty to inspect and copy any of the said documents or things delivered into the custody of the Registrar of the High Court pending the trial of the action herein or further order." Subsequently, the proceedings in the High Court were remitted to be heard and determined by the Federal Court. As part of the remitter orders the documents and things seized and which had been placed into the custody of the Registrar of the High Court were remitted to the Registrar of the Federal Court and are now in his custody. Those documents and things are contained in eighteen boxes but, pursuant to paragraph 2 of the order set out above, the 'respondents in November 1983 notified the Registrar and the applicant that the documents in seven of those boxes were not needed and could be returned to the applicant. The applicant has not taken possession of the contents of those seven boxes, thus all the documents and things seized remain in the custody of the Registrar of the Federal Court. By notice dated 21 December 1983, the Commissioner of Taxation of the Commonwealth of Aastralia ("the Commissioner") gave notice that he would move the Court for met es tr ee oe ee er cer ree me ee ee ee ep ee orders that he have leave of the Court to inspect and copy the documents in the custody of the Registrar. On 24 February 1984 the Court made orders that all the documents in the custody of the Registrar remain in his custody until judgment was given in the matters arising in the six proceedings. That judgment was given on 19 March 1984, but the order was then varied so as to remain in operation until the hearing and determination of the motion by the Commissioner or until further order. The motion came on for hearing on 20 March 1983. In support of the motion, counsel for the Commissioner contended that s.263 Income Tax Assessment Act 1936 conferred an unqualified power on the Commissioner of full and free access to all places and documents for any of the purposes of the Act. That section is set out in full: "263. The Commissioner, or any officer authorized by him in that behalf, shall at all times have full and free access to all buildings, places, books, documents and other papers for any of the purposes of this Act, ana for that purpose may make extracts from or copies of any such books, documents or papers." The Court expressed concern whether any inconsistency arose between the powers conferred by that section and the principle of public policy that there be no interference with the due administration of justice by the Federal Court. As a result, the parties agreed that two a ee re ne eee ee ee ee ee ae ee a ee ee ct me been te questions arising upon the motion be heard and determined separately and before other questions arising upon the motion. Those two questions are set out: 1. Is the Commissioner of Taxation entitled, subect to the undertaking set out in the Notice of Motion herein, pursuant to section 263 of the Income Tax Assessment Act 1936 to access to, and to copy, the documents placed in the custody of the Registrar of the Court pursuant to an Order of the Court in proceedings to which the Commissioner of Taxation is not a party? 2. Is the answer to question 1 different 1f the said Court Order - (a) was made by consent of the parties to the proceedings; and/or (ob) was in the terms of paragraphs 2, 3 and 4 of the Order of the Honourable Mr. Justice Deane made in action C23 on the 28th day of October 1983? There is no doubt that the power conferred by s.263 is unqualified and extremely wide; see O'Reilly v. Commissioner of State Bank of Victoria (No. 2) (1983) 46 A.L.R. 225. In that case Mason, Murphy, Brennan and Deane JJ., 1n relation to s.263, said at p.234: Later, Later, at at "As a matter of ordinary language, access to buildings and places involves availability of entry to them: access to books and documents involves availability of examination of their contents. The express provision that the Commissioner or his authorized officer shall have 'full' access prima facie conveys, at the least, that the availability of entry or examination to which the Commissioner or an authorized officer is entitled extends to any part of the relevant place or building and to the whole of the relevant books, documents and other papers. The express provision that the access shall be 'free' conveys, at the least, that access is to be without physical obstruction. Implicit in the grant of full and free access which the section contains is a grant of power to the Commissioner or an authorized officer to take whatever steps are, in all the circumstances, reasonably necessary and appropriate to remove any physical obstruction to that access. Like all statutory powers, that power must be used bona fide for the purposes for which it was conferred and that involves that its exercise be not excessive in the circumstances of the case." p-235 they said: "Section 263 does not in terms refer to any person other than the Commissioner and an authorized officer. By implication, the provisions of the section affect the rights of others in that they override any rights which, but for the section, others might have had physically to obstruct the full and free access which the section provides that the Commissioner and an authorized officer shall have." pp-235-6 they said: "The conclusion that s 263 does not impose any implied duty actively to assist or facilitate the obtaining of access by the Commissioner or an authorized officer does not mean that the Commissioner's rights of access under s 263 may be deliberately frustrated with impunity. As has been said, the provisions of s 263 override any rights which, but for the section, others might have physically to obstruct the Commissioner or an authorized officer from the access which the section says he shall have. More importantly, s 232 of the Act expressly provides that any person who obstructs or hinders any officer acting in the discharge of his duty under the Act or the regulations made thereunder shall be guilty of an offence. The Commissioner or an authorized officer who seeks access to a place, document or paper pursuant to s 263, is acting in the discharge of his duty under the Act and to obstruct or hinder him in so acting will constitute an offence under s 232." Despite the wide and unqualified nature of the power conferred by s.263, I am of opinion that there are some limitations imposed upon the exercise of that power. In O'Reilly (No. 2) the High Court considered the nature of the power conferred by s.263 in the context of the powers conferred by s.264 of the same Act. That section empowers the Commissioner, by notice in writing, to compel persons to furnish him with specified information. A person who fails to furnish that information is guilty of an offence under s.232. The power conferred by s.264 is, for present purposes, as wide and as unqualified as the power conferred py s.263. Nevertheless, in Baker v. Campbell (1983) 57 A.L.J.R. 749, judgment in which was given after the judgment in O'Reilly (No. 2), the High Court, by majority, held that legal professional privilege was available to be claimed in response to a demand to furnish information to the Commissioner under s.264. Similar issues have arisen with respect to the power conferred by s.155 Trade Practices Act 1974. For present purposes, that section confers a wide and unqualified power on the Trade Practices Commission or specified officers of that Commission to require a person to furnish information to the Commission. A refusal or failure to furnish that information is a criminal offence. In Brambles Holdings Ltd. v. Trade Practices Commission (1980) 44 F.L.R. 364, the Federal Court held that a notice given under s.155 to a party to proceedings pending in the Court in which the Commission was a party constituted a contempt of court. In Pioneer Concrete (Vic.) Pty. Ltd. v. Trade Practices Commission (1982) 57 A.L.J.R. 1, the High Court held that a notice under s.-155 did not constitute a contempt of court where it was directed to a party to legal proceedings pending in the Federal Court in which the Commission was not a party. In that case, Gibbs C.J. said at p.4: "The second argument submitted on behalf of the appellants 1s that the power given by s.155 permits interference with pending judicial proceedings. No doubt it 1s right to Say that the power conferred by the section might in some cases be used so as improperly to interfere with judicial proceedings. I incline to think that if the power were used to assist a party in proceedings already pending, in a way that would give such a party advantages which the rules of procedure would otherwise deny him, there would be a contempt of court. As at present advised I would agree with the decision in Brambles Holdings Ltd. v. Trade Practices Commission 1980), 32 A.L.R. 328. However, not every investigation into facts which are the subject of pending proceedings constitutes a contempt of court: see Victoria v. The Australian Building Construction Employees and Builders' Labourers" Federation (1982), 41 A.L.R. 71, and the authorities there discussed. In the present case it was not shown that the person who gave the notice had any intention to interfere with the course of justice, or that there was a real risk that the exercise of the powers under s.155 would in the circumstances have that effect. The power is a drastic power and is capable of abuse and must be exercised with care. However 1t was not shown that its exercise in the present case would amount to a contempt of court." At p.6 Mason J. said: "What I have already said is an answer to another argument, namely, that once a court begins to exercise the judicial power in relation to a particular matter it has the exclusive right to exercise, or control the exercise of, the functions which form part of that power or are incidental to it. As we have seen, s-155 is not part of the judicial power; nor is it incidental to that power. The possibility that the Commission could in exercising the power conferred interfere with court proceedings raises problems of a different order. -A statute expressed in general terms should not be construed so as to authorize the doing of any act which amounts to a contempt of court. The comment of Fullagar J. in Lockwood v. The Commonwealth (1954), 90 C.L.R. 177, at p.185 that 'what is expressly authorized by or under a statute' 1s not a contempt was directed to a statute authorizing the issue of Letters Patent directing a particular inquiry; the comment has no application to a statutory power which is expressed in very general terms, there - 10 - being no indication in the terms that Parliament contemplated the committing of what, but for the statute, would otherwise amount to a comtempt of court. Section 155, cast as it is 1n general terms, does not address itself to the question of contempt of court. It should therefore be read as not authorizing any action on the part of the Commission which would amount to such a4 contempt. Whether this leads to the conclusion that any action by the Commission which amounts to a comtempt would necessarily stand outside the power which the section confers is a larger and more difficult question. It is possible to read the section as conferring power on the Commission to act in accordance with its terms, but subject to the law of contempt, so that action taken under the section is subject to the exercise by the Federal Court of its contempt powers. This appeals to me as a more sensible construction of the sub-section, one which avoids locating the ambit of the power at the point, not readily identifiable, where . contempt begins. There are advantages in keeping questions of power and contempt separate." In my opinion similar principles apply with respect to the power conferred by _s.263 Income Tax Assessment Act. That section does not empower the Commissioner to engage in conduct amounting to contempt of court in the sense of improperly interfering with a judicial proceeding in the Federal Court of Australia. If the Commissioner did attempt to exercise the power conferred by s.263 in such a way 'as to constitute a contempt of court, I have no doubt that the Court would, in an appropriate case, restrain the Commissioner from so acting. ~ il - In the present proceedings, counsel for Commercial Bureau contended that the Commissioner, in exercising the power conferred by s.263 to inspect the documents while they, were in the custody of the Registrar, would be committing a contempt of court. He contended, quite correctly, that the Registrar was an officer of the Federal Court and was subject to the direction of the Court. In support of his contentions, counsel relied upon the speeches delivered in Harman v. Secretary of State for the Home Department (1983) 1 A.C. 280. In that case, the solicitor for a party to proceedings in court disclosed to a reporter the contents of documents which had been discovered by the opposing party and which had been read out in court during the hearing of the action. The House of Lords held that the solicitor, in obtaining copies of those documents by discovery, had given an implied undertaking to the court not to allow those documents to be used for purposes other than the proper conduct of the action, and by majority held that in disclosing the contents to a reporter, even though the documents had been read out in open court, she had committed a breach of that undertaking and this constituted a contempt of court. The speeches in that decision do not assist Commercial Bureau in the present case. There is no doubt that had the documents remained in the possession of the persons from whom they had been seized, the Commissioner, in -12- the exercise of the powers conferred by s.263, would have had full and free access to the place where the documents were being held and could have made extracts from, of copies of, any of those documents. Section 16 Income Tax Assessment Act imposes very strict duties of secrecy upon the Commissioner and his officers. The fact that the documents sought to be inspected happened to be situated in a place in which a court sits does not by itself prevent the Commissioner exercising the power conferred by s.263. Court buildings do not of themselves provide a latter-day type of sanctuary for documents. Different considerations may arise if a court, in the exercise of judicial power, was examining documents in a courtroom and the Commissioner attempted to exercise the powers conferred by s.263 with respect to those documents. Those facts, however, do not apply to the present case. The Commission is not a party to the pending proceedings in the Court between Commercial Bureau and the respondents, nor to any of the related proceedings. Thus, inspection of the documents by the Commissioner will not give him advantages in those proceedings which the normal procedures of the Court would deny him. The documents in the custody of the Registrar are there pursuant to an order of the Court. They are not exhibits in court proceedings. They have been placed in the -13- custody of the Registrar in order to preserve them pending the outcome of litigation. They have no greater immunity from due processes of law while in that custody than they would have had 1f they were not in the custody of the Court. The powers conferred on the Commissioner, or any officer authorized by him by s.263, are wide and unqualified and would extend to having full and free access to all places for the purposes of the Act. That power overrides any other privilege which a person may have to the right of privacy. Unless one of the recognized grounds of public policy applies, that power appears to overcome the rights and privileges arising from the need to maintain the right to privacy in individuals. In all the circumstances of the case, the Commissioner is not in contempt of court in seeking to exercise the powers under s.263. Of necessity, the Court has power to give leave to the Commissioner to inspect and copy any of the documents in the custody of the Registrar. The principles expressed in cases such as Rochfort v. Trade Practices Commission (1982) 43 A.L.R. 659 and National Employers' Mutual General Association Ltd. v. Waind [1978] 1 N.S.W.L.R. 372, which apply in cases_\where persons not being a party to legal proceedings are compelled by subpoena duces tucem to produce documents to Court were discussed in argument. Those principles are not relevant in Geciding the question of the extent of the Commissioner's powers under s.263 raised by the preliminary questions. are: i. Yes. 2. (a) (b) i Reasons for Judgment herem of the Accordingly, the answers to the questions raised No. No. SS RR ao certify that this and the / 3 3 nrocediny pages are a true copy of the a Honourable Mr, Justice AOATKcA asoxind hg FL. a Wl ! Dated: 27 Marat RY i I. SS Soren