ae 2. CS LIMITED DISTRIBUTION CATCHWORDS PRACTICE AND PROCEDURE ~- Application for stay of an order for discovery of documents ~ Last day for compliance with order - Intended application for leave to appeal against order - Failure of applicant to take any steps to obtain leave - Intended appeal related to general question of operation of s.16 of Income Tax Assessment Act - Necessity for parties to move promptly for leave to appeal against interlocutory order - Application for stay refused. Income Tax Assessment Act 1936 s.16 NSW G.184 of 1985 NESTLE AUSTRALIA LIMITED v_ THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Wilcox J Sydney 13 August 1986 LIMITED DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G.184 of 1985 ) ) GENERAL DIVISION BETWEEN: NESTLE AUSTRALIA LIMITED Applicant AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 13 AUGUST 1986 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The application for a stay of the order made on 30 July 1986 be refused. rs Note: The Commissioner of Taxation pay to Nestle Australia Limited its costs of this application. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G.184 of 1985 ) ) LIMITED DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BETWEEN: NESTLE AUSTRALIA LIMITED Applicant AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent CORAM : WILCOX J PLACE : SYDNEY DATE: 13 AUGUST 1986 EXTEMPORE REASONS FOR JUDGMENT This is an application by the Commissioner of Taxation of the Commonwealth of Australia, the respondent in proceedings G.184 of 1985, for a stay of an order made by me . on 30 July 1986. By that order it was directed that within fourteen days the respondent produce for inspection by the applicant in the proceedings, Nestle Australia Limited, copies of all documents referred to in part II of schedule I of the List of Documents filed on behalf of the respondent other than certain documents which were specified. . The order that was made on 30 July was the most recent of a number of orders and directions made in regard to the production of documents. The principal proceeding is an application by Nestle Australia Limited for review of a decision by the Commissioner not to grant an extension of time for the payment of the amount due under a number of income tax assessments. The principal proceedings were commenced on 18 July 1985. A question arose as to the discovery of documents and I dealt with those questions in a judgment delivered on 14 February 1986. At that time I made an order requiring the respondent to give discovery in respect of all documents, recording the steps taken during the course of (a) the investigation undertaken by or on behalf of the respondent in relation to the business conducted by the applicant during the years 1970-1982 inclusive; or (b) the formation of an . estimate by the respondent of the amount of the taxable income that might be expected to arise from that business, but not including documents relating merely to the basis upon which the said estimate was made. No application was made for leave to appeal against that order. However, the Commissioner subsequently claimed that the production of documents in accordance with that order would involve the disclosure of documents which ought, in the public interest, not be disclosed. This matter came before me on a number of occasions and various directions were made as to the filing of affidavits. There was some delay in the various affidavits being filed. This, no doubt, was at least partly attributable to the number of documents which had to be considered, but I must say that I felt that the process of sorting out the documents and specifying the grounds of objection took much longer than the period which I would have thought necessary. However, eventually the matter came before me for hearing on 10 July 1986. At that time, the objections which were pressed fell into three categories. There was first a general objection in relation to the production of any documents. The basis of this objection was s.16 of the Income Tax Assessment Act 1936 which was said to preclude the production of documents by an officer of the Taxation Office. In the event, I held against the submission made by the Commissioner on this ground. The second and third objections were more restricted. The second objection related to documents and information provided by trading competitors of the applicant. To a very large extent, I upheld that objection. The variations made by me between the documents and parts of documents which were the subject of objection to production and the documents and parts of documents which I ordered to be disclosed were quite minor. The main difference related to documents of two companies who were, and possibly still are, trading competitors of the applicant, but who have expressly agreed to the production to the applicant of their documents. I took the view that having regard to that attitude, there was no public interest in refusing access to those documents. The third category consisted of documents and information provided by foreign governments. This objection was upheld almost entirely. Any variations made by me in regard to those documents consisted merely of very minor variations to the extent of the document which I thought ought not to be produced. The third category consisted of documents and information provided by foreign governments. This objection was upheld almost entirely. Any variations made by me in regard to those documents consisted merely of very minor variations to the extent of the document which I thought ought not to be produced. When I handed down judgment on 30 July 1986, reference was made by counsel for the Commissioner to the possibility of an application for leave to appeal and to the question of whether there ought to be a stay of my order in the meantime. I intimated to counsel my view, namely that no stay ought to be granted until it appeared that leave to appeal would be granted. No application for leave to appeal has yet been made, despite the fact that today is the final day for compliance with the directions of 30 July. Yesterday afternoon a Notice of Motion was filed returnable this morning seeking a stay of the orders of 30 July pending determination by a Full Court of a motion for leave to appeal against the judgment of 30 July. From a supporting affidavit sworn by Miss Barbara Pearson, a Principal Legal Officer in the office of the Australian Government Solicitor, it appears that the instructions from the Commissioner are to seek leave to appeal not only against the decision of 30 July, but also against the decision of 14 February. It is submitted on behalf of the Commissioner that having regard to the intention to seek leave to appeal, particularly against the more recent decision, a stay of proceedings ought to be granted, otherwise an appeal would be nugatory. I accept that an appeal against the decision of 30 July would be nugatory in relation to the particular documents if no stay 1s granted and if it is therefore necessary for the respondent to comply with the direction by producing the documents before close of business today. I must say that my impression is that the concern of the Commissioner in respect of my decision of 30 July is not so much concern regarding the particular documents which would have to be produced, but rather regarding the general question of the application of s.16 of the Income Tax Assessment Act. I say this because, as I have already mentioned, the Commissioner almost entirely succeeded in respect of the documents which were covered by an objection other than s.16. I can understand that the question of the application of s.16 has some general importance, and is a matter which the Commissioner may at some stage wish to take on appeal; although I observe that there have already been a number of cases, including decisions in the High Court, in which the application of s.16 to discovery andproduction of documents on subpoena has been considered. In relation to the desire to appeal against the decision of 14 February, I do no more than observe that it is now exactly six months since that decision was reached, and - this the first which has been said about any such desire. I am of the opinion that a stay of proceedings ought not to be granted. I think that the Commissioner of Taxation no less than any other litigant is obliged to act promptly and decisively if he wishes to preserve his position. The situation is that the hearing of the principal proceedings has been extensively delayed because of arguments regarding the production of documents. As I have mentioned, when I handed down judgment on 30 July, I made clear that, so far as I was concerned, the granting of a stay of proceedings would be dependent upon a successful application for leave to appeal. I should have thought that it would be abundantly clear to the Commissioner and those representing him that it was most important to take prompt action to obtain a hearing of an application for leave to appeal. If it had been desired to have the application for leave heard by a Full Court, steps could have been taken to approach the Chief Judge to constitute a Full Court for that purpose. No action in that regard has been taken until now, and, even at this moment, counsel is unable to give me any indication as to when a Full Court might be constituted to hear the leave application. Alternatively, if there was a problem about constituting a Full Court, an application for leave to appeal against the decision of 30 July could have been made to a single Judge of the Court. No such application has been made. I do not think that it is good enough for any litigant to wait until the last day for compliance with an order, and then to come to the Court seeking a stay of the order, thus imposing upon the opponent a further delay. I think that a litigant who desires to appeal against a particular order has a responsibility to ensure that there is an opportunity for the application for leave to appeal to be heard before the matter becomes critical. Although If appreciate the desire of the Commissioner to have a ruling of a Full Court of this Court in relation to the matter of s.16 and discovery, I think that the principle that litigants are expected to act promptly and efficiently is more important. There will no doubt be other opportunities for s.16 to be argued at an appellate level. I therefore refuse the application for a stay of proceedings. I order that the Commissioner of Taxation pay to the applicant in the principal proceedings its costs of this application. T certify this and the seven (7) . preceding pages to be a true copy of - the Reasons for Judgment of his Honour Mr Justice Wilcox. Associate: Duma A- tHe Lroa Date: 27 August 1986 Counsel for the Applicant: Solicitors for the Applicant: Counsel for the Respondent: Solicitors for the Respondent: Date(s) of hearing: Mr AH Slater Minter Simpson Mr C J Stevens Australian Government Solicitor 13 August 1986