"2 Ah NOT CONSIDERED SUITABLE FOR DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G.490 of 1986 wee ww GENERAL DIVISION BETWEEN: WINTER Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent EX-TEMPORE REASONS FOR JUDGMENT BURCHETT J. In this matter Mr. Downes raised a jurisdictional question as to the scope of the power of this Court under s.23 of the Federal Court of Australia Act 1976. I think it is most convenient if I put that to one 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 permitted 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 consideration against - be 2. the suggestion raised in the evidence of the respondent, to the extent that I accept that suggestion, of course, that there may have been some impeding of the investigation by the Commissioner, 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 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 subject of the current orders. It is pointed out that some distinction 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 been produced. What is sought by the applicant's notice of motion is an order restraining the respondent or any of his 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, until the proceedings in this Court are finally determined; and further an order restraining the respondents or any of his officers from inspecting documents produced on subpoena by Messrs Baker and MacKenzie and Messrs Ferrier and Company, Solicitors, until these proceedings have been finally determined. oa re 1? f I:{ i: ,, ; i Reliance is also placed on the fact that the proceedings in this Court are now due for hearing in a couple of weeks time. It is said that therefore there are strong considerations of convenience in favour of the application, and that in effect some harassment of the applicant and his advisers could result from their being compelled to deal with the subpoenas at this crucial stage. However, it seems to me that it has to be borne in mind that the proceedings may commence in this Court in a couple of weeks' time, but they will not necessarily conclude then, and certainly it cannot be said that they will necessarily be determined in a short space of time. A matter that seems to me to be of importance is that the evidence adduced by the respondent shows, and indeed without such evidence one might well feel that one could take judicial notice of the fact, that documents, particularly financial records, may be destroyed guite innocently by banks and other institutions in the ordinary course of a programme of destroying stale documents within a set period of time, which in modern commercial practice may be quite short. From this point of view, I think it is proper to take into account not only documents covered by the terms of the subpoenas but also the possibility, and perhaps even probability, that there could be other documents the existence of which might be disclosed by documents covered by the terms of the subpoenas, and in respect of which further subpoenas might subsequently require to be issued or, indeed, altogether other steps taken with a view to ascertaining their contents and preserving them. I think therefore that there is a pee ce eee pee ae ee ee ee ge oe 4. weighty consideration arising from delay in access to documents, quite apart from the other matters that have been argued. 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 1s 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 1f the Commissioner were assessing against one only rather than all of these related entities. 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, determine the accuracy of any allegation, and must take into account the desirability of the party making an allegation having the opportunity to investigate it properly and prove it, if it can be 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 renee eae 5. significant 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 Commissioner would not seek to agitate before the completion of the hearing of the matter in this Court any question arising out of claims actually made for privilege in respect of particular documents. 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 proceedings 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. 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 ae apres anes nae toe wp a et me ee 6. 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 him 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 jurisdictional 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 1s 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 just a few moments ago would clearly fall within 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 24 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. Kon Che; Associate Dated: 2 June, 1987. (ome ery ors ied