JUDGMENT No, .A68%, §8— prom? ror ererany Ar CcCATCHWORDS PRACTICE AND PROCEDURE — sought - informal further Taxation Appeal ~- specific discovery discovery - delay - need to specify documents or classes of documents said not to have been discovered - motion dismissed. Federal Court Rules 0.15 r Australian Broadcasting Co mmission v Parish (1981) 48 FLR 292 ANTONY GORDON OATES v THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA No. WAG 2039 of 1987 FRENCH J. PERTH 17 AUGUST 1988 te. ' - f ' ooo wo IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY WESTERN AUSTRALIA ) ) ) GENERAL DIVISION BETWEEN: No. WAG 2039 of 1987 IN THE MATTER of the Income Tax Assessment Act 1936 and IN THE MATTER of an appeal thereunder by ANTONY GORDON OATES against an assessment of income tax on income derived during the year ended 30 June 1981 Applicant and ANTONY GORDON OATES THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 17 August 1988 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The respondent's motion dated 11 dismissed. August 1988 The respondent to pay the applicant's costs of the motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. is cee tee ee ee ee Lor aboe gee ate ee we oe ow Tt epee *r IN THE FE OF AUSTRALIA WESTERN AUSTRALIA DISTRICT GENERAL DIVISION BETWE CORAM: an order following (a) (b) (c) (d) (e) DERAL COURT REGISTRY No. WAG 2039 of 1987 IN THE MATTER of the Income Tax Assessment Act 1936 and IN THE MATTER of an appeal thereunder by ANTONY GORDON OATES against an assessment of income tax on income derived during the year ended 30 June 1981 EN: ANTONY GORDON OATES Applicant and THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent FRENCH J. 17 AUGUST 1988 EX TEMPORE REASONS FOR JUDGMENT ON MOTION FOR SPECIFIC DISCOVERY This is a return of a motion by the respondent seeking that the applicant give specific discovery of the classes of documents:- share transfers, scrip, registers and journals; accounting and banking records; minutes of meeting; financial accounts statements and reports; and correspondence, memoranda, instructions, agreements, loan applications and agreements, guarantees, authorisations, proposals, forecasts and development plans, Mp er yr Ra ey ee etree ye te ore — 2. relating to the surrounding circumstances , financial transactions, commercial agreements, business undertakings, plans, program and scheme whereby the applicant derived profit at issue in this appeal. The application is brought under 0.15 r.8 of the Federal Court Rules which provides:- "Where, at any stage of the proceeding, it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed in the proceeding that there are grounds for a belief that some document or class of document relating to any matter in question in the proceeding may be or may have been in the possession, custody or power of a party, the Court may order that party -— (a) to file any affidavit stating whether that document or any document of that class is or has been in his possession, custody or power and, if it has been but is not then in his possession, custody or power, when he parted with it and what has become of it; and (b) to serve the affidavit on any other party." 1S This Court has already decided in Australian Broadcasting Commission v Parish (1981) 48 FLR 292, 295 (Franki J.), that notwithstanding that the grounds specified in 0.15 r.8 are established, it has a discretion whether or not to order specific discovery. The motion 1s supported by an affidavit sworn by Mr David Cook, an officer of the Australian Taxation Office in Perth. In that affidavit he refers to a letter written on 20 August 1984 to the applicant in which various documents and items of information were sought. The letter runs to some five anda half pages and seeks an extensive range of documentation and wt we opoce 3. information. Mr Cook says that on 8 October 1984 he was informed by Ray Anderson of Coopers & Lybrand, the tax agents for the applicant, that he had spoken with a Mr Mews of Price Waterhouse, until recently the auditors for Bond Corporation Holdings Ltd, on 4 October 1984 and that it would take some time for the information requested in the letter to be obtained. On 12 October he was informed by Anderson in a further telephone conversation, that the information requested was being compiled. A number of exchanges took place over the next few months and on 8 May 1985, Anderson told Cook that he had checked with Bond Corporation and had been advised that all documents requested had been extracted and some answers to requests for information had been drafted. Anderson further told him that the respective advisors of the applicant and Messrs. Bond, Mitchell and Beckwith, his fellow directors in Rowdore Pty Ltd, would meet that week or the following week to prepare a consolidated reply. Correspondence with the National Trust was said to be contained in the two lever arch files. On 9 August 1985 Cook attended the office of Price Waterhouse and there spoke to Mews. Mews produced a lever arch file which, he' said, contained photocopies of the documents requested in the letter of 20 August 1984. The photocopied documents had been arranged in the same order that they were sought in the letter. The file appeared to Cook, to contain several hundred folios. Examination of it, if it commenced, was not completed however as Cook and Mews were diverted by discussions relating to matters of evidence, the intention of the parties and related issues. It was agreed that they would return Seed ~vey qe ne pene were 4. to an examination of the file if mecessary depending on the outcome of further discussions and submissions on the merits of the case generally. On 19 January 1986, Mews advised Cook in the course of a @iscussion at the Australian Taxation Office, that he would tell him later whether he could make the information compiled in the file available to him on an informal basis. Cook was referred to John Chandler of Parker & Parker, solicitors for the applicant, and on 21 January was informed by Mr Chandler that he had instructions from senior counsel not to volunteer the file to the Taxation Office. In June 1986 Mr Antony S1iopis, a partner in the firm, took over the conduct of the applicant's appeal. He already had the conduct of litigation on behalf of Bond Corporation Ltd and its directors against the Western Mail Newspaper for defamation arising out of articles dealing with events relating to the transaction upon which the assessment is based. He received from Mr Chandler a collection of papers which comprise copies of numerous documents from the files of the companies, Rowdore Pty Ltd, Arkindale Pty Ltd, Bond Corporation Ltd and Bond Corporation Holdings Pty Ltd, relating to the transaction. In addition, there were documents obtained by Chandler under a freedom of information request directed to the Commissioner of Taxation. When the applicant filed his affidavit of discovery on 19 October 1987 he discovered, according to Mr Siopis, only documents within his sole custody, power and control and did not poe " en ee eet discover the company documents. Paragraph 5 of the applicant's list of documents was in the following terms:- "This party was a director along with three other persons of Rowdore Pty Ltd until October 1980 and is and was at all material times a director of Bond Corporation Pty Ltd. While performing duties pursuant to these offices, this party handled documents relevant to the issues herein. These documents are now under the control of other directors or this party and other directors jointly. This party has been instructed by his solicitors and verily believes that in the circumstances these documents do not properly fall to be listed herein. However, this party has instructed his solicitors to request that those who exercise possession, power or custody over the said documents release the relevant documents to the solicitors in order that they may be produced to the respondent." Mr Siopis explained in his affidavit that the reference to this direction to the applicant's solicitors was inserted "because Mr Oates has always been keen to get the matter to trial as soon as possible and instructed us to co-operate with the respondent as far as possible in the production to him of the company documents, notwithstanding they were in strict terms not discoverable by him. We subsequently obtained the consent of the companies to produce the documents". In accordance with these instructions, Siopis said he had made it known that his instructions were to co-operate in relation to the production of the documents without the need of a subpoena and to seek to obtain from the companies such documents as were relevant. os 7" a ee ee Se 6. On 27 June 1988 he received a call from Mr Windsor of the Australian Government Solicitor's office, indicating that Mr Windsor and junior counsel would be going to Melbourne the following week to see senior counsel in connection with the appeal and requesting that copies of the company documents be forwarded so that they might be shown to senior counsel. Mr Siopis then forwarded to Mr Windsor what he describes in his affidavit as "copies of the documents requested". He says that to the best of his knowledge and belief he forwarded all the relevant company documents in their possession. Because of the urgency of the request he did not ensure that a list was made of the documents sent. Mr Cook says he examined the bundle of documents and that the documents so made available did not appear on the list lodged by the applicant and verified by affidavit on 19 October 1987. They formed, he said, only some of the documents referred to in his affidavit. Ido not take that as clear evidence that the documents formed only some of the documents contained in the two files. Siopis was unable to refer Cook's affidavit to Mews who is out of the country, but was able to say that at all material times Mews had not been the applicant's tax accountant, but was the tax accountant for Mr Alan Bond and Mr Peter Mitchell. Chandler had informed Siopis that Mews forwarded a lever arch file, evidently that referred to in Cook's affidavit, and containing documents obtained from the files of the several companies already mentioned. After receiving the file Chandler had disassembled it and incorporated the documents' contained therein into the collection of documents which Siopis subsequently , 7 Tew ee ~T7 en ef 7. obtained from him. Siopis says, therefore, that the position is that all such documents as were previously in Mews' file which are relevant have, to the best of his knowledge and belief, already been forwarded to the respondent. No explanation was given in evidence for the length of time it has taken the respondent to seek specific discovery, it having had the affidavit of discovery since 19 October last year. However, counsel for the Commissioner has informed me from the bar table without objection, that there have been a number of discussions which, it was hoped, would lead to informal disclosure of the full range of documents and that those discussions not having resulted in a satisfactory outcome so far as the respondent is concerned, this motion was brought. The relief that is sought has, notwithstanding the existence of informal discussions been brought after a long delay. At this stage the width of the order sought by the respondent is based, not upon a concern that particular identifiable classes of documents have not been discovered, but that there may be documents within the classes for which discovery is sought that have not been discovered. The respondent has participated in a process of informal discovery and it is not satisfied with what it has been given. If the respondent is in a position at some stage to indicate that there are particular documents or classes of documents which are in fact missing and which it would expect to have been discovered by the applicant then, of course, it can bring a further motion in respect of such documents or classes. At this stage I am not prepared to remedy an alleged general ne ee bee 8. defect in the affidavit of discovery given by the applicant, having regard to what has passed between the parties up to date. The respondent has received what, on the unchallenged evidence of Mr Siopis, is all the documents that had comprised the now disassembled file. I think it is up to the respondent, if it feels that there is some particular class of document which has not been disclosed and which ought to have been disclosed, to identify it on the basis of an examination of those documents which have been made available to it and not on the basis of some rather generally expressed belief that not everything that was in the files has been shown. That, I should observe, would require me to draw the inference that everything in the files was relevant and discoverable in the hands of the applicant. The motion is dismissed without prejudice to the respondent's right, if the position should arise, and provided it is done promptly, to bring a further application if there are particular documents whose existence can be inferred whether individually or by class that have not been discovered. I certify that this and the preceding seven (7) pages are a true copy of the Ex tempore Reasons of rJudgment of his Honour Justice French. Associate: bl p "Ra, Date: {7 a oO 9. Counsel for the Applicant: Mr A.V. McCarthy Solicitors for the Applicant: Parker & Parker Counsel for the Respondent: Mr R.E. Birmingham Solicitors for the Respondent: Australian Government Solicitor Date of Hearing: 17 August 1988 Date of Judgment: 17 August 1988 — Saat suetunsiadeniaanendeitentnatbenn' neat abintot Laie "7