FEDERAL COURT OF AUSTRALIA Condon v Commissioner of Taxation [2000] FCA 1291 ADMINISTRATIVE LAW - appeal from decision of Administrative Appeals Tribunal affirming Commissioner's 'objection decisions' made on applicant's objections to taxation assessments – applicant's conviction on s 29D Crimes Act 1914 (Cth) offences later quashed - whether the respondent took account of the fact that the applicant had been charged with, or convicted of those offences, when issuing the amended assessments, or making his objection decision – whether the respondent disclosed this information to AAT in breach of s 85ZU(b)(i) Crimes Act 1914 (Cth) – whether the applicant was denied natural justice by AAT allowing the respondent to reformulate its Statement of Facts, Issues and Contentions WORDS AND PHRASES - disclosure Crimes Act 1914 (Cth) ss 85ZU, 85ZU(b)(i), 85ZU(b)(ii), 85ZT, 85ZZD Foster v Federal Commissioner of Taxation (1951) 82 CLR 606 applied Rich v Olzak [2000] VSC 191 cited Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 applied WAYNE LESLIE MATTHEW CONDON v COMMISSIONER OF TAXATION N 1283 OF 1999 HELY J 13 SEPTEMBER 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1283 OF 1999 BETWEEN: WAYNE LESLIE MATTHEW CONDON APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: HELY J DATE OF ORDER: 13 SEPTEMBER 2000 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application be dismissed with costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1283 OF 1999 BETWEEN: WAYNE LESLIE MATTHEW CONDON APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: HELY J DATE: 13 SEPTEMBER 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 During the 1989 and 1990 financial years, the applicant was employed as a Project Officer / Manager in connection with an unemployment training program conducted by the Skillshare Centre at Lake Macquarie. The program was funded by the Commonwealth Government. The applicant was responsible for cashing various cheques drawn on the account of his employer. He was charged with a number of counts of defrauding the Commonwealth (s 29D Crimes Act 1914 (Cth)) ("the Crimes Act"), and subsequently convicted. 2 An appeal to the Court of Criminal Appeal was successful, and the convictions were quashed. Although an order was made for a new trial, the Director of Public Prosecutions directed that a Bill of Indictment not be found, and the Registrar of the District Court was advised of the decision not to further prosecute. 3 As part of the investigation into the alleged offences, the prosecution engaged Professor Brian Booth, a senior university lecturer in accounting, to undertake an investigation of the application of funds by Skillshare during the 1989/1990 years. The prosecution's case was that the applicant had converted certain of those funds to his own use. 4 On 31 March 1994 Notices of Amended Assessment were issued in respect of the financial years in question. In a letter sent by the Australian Tax Office ("ATO") to the applicant on 18 October 1994, it is stated: "(ATO) was given full copies of the working papers of Mr Brian Booth of Newcastle University who had assisted the prosecution in their case. The amended assessments are based on the information provided by these working papers." 5 On 1 May 1994 objections were lodged in relation to the amended assessments. Pursuant to s 14ZY of the Taxation Administration Act 1953 (Cth) the Commissioner was required to decide whether to allow the objection, whether wholly or in part, or to disallow it. His decision in that respect is called an "objection decision" of which written notice was required to be given to the applicant. 6 On 7 January 1997 the Commissioner disallowed the objections and gave a document styled "Reasons for Decision" to the applicant (Ex 4). Under the heading "Background Information" reference was made to the fact that the applicant had been charged with, and convicted of, offences under s 29D of the Crimes Act, as well as to the decision of the Court of Criminal Appeal, and the direction of the Director of Public Prosecutions that a Bill of Indictment be not found. The document described the question at issue as being whether the monies from cheques drawn on the employer's account, and identified as having been cashed by the applicant or otherwise dealt with by him, created a liability to tax under s 25(1) of the Income Tax Assessment Act 1936 (Cth). Under the heading "Summary of Taxpayer's Contentions and Grounds of Objection" the following appears: "You have contended that, as the Commonwealth Director of Public Prosecutions has directed that charges under s 29D of the Crimes Act 1914 be no billed after the Court of Criminal Appeal, on 9 October, ordered a new trial, the Commissioner of Taxation must also accept those decisions and amend the assessments to exclude the income." 7 Under the heading "Reasons for Decision" the Commissioner stated that the decision of the Court of Criminal Appeal, and the subsequent direction of the Director of Public Prosecutions are not relevant to the Commissioner of Taxation's decision to include amounts as assessable income. Reasons were given for that contention, and the objection was disallowed on the basis that the applicant had not discharged the burden of proving that the assessment was excessive, as required by the provisions of par 14ZZK(b)(i) of the Taxation Administration Act. 8 On 11 February 1997 an application for review of the objection decision was made to the Administrative Appeals Tribunal ("AAT"). A copy of the document styled "Reasons for Decision" was attached to that application. The question: "Why do you want this decision reviewed?" was answered as follows: "This decision flies in the face of [the] Criminal Court of Appeal decision on 6/10/95. The matters the Tax Office rely upon are not factual or truthful." 9 Notice of the application for review of the decision was given to ATO (Ex 5) coupled with a reminder of the provisions of s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"). Under s 14ZZF of the Taxation Administration Act, s 37 of the AAT Act applies in relation to an application for review of a reviewable objection decision as if: "(a) the requirement in subsection (1) of that section to lodge with the Tribunal such numbers of copies as is prescribed of statements or other documents were instead a requirement to lodge with the Tribunal such numbers of copies as is prescribed of: (i) a statement giving the reasons for the decision; and ... (v) every other document that is in the Commissioner's possession or under the Commissioner's control and is considered by the Commissioner to be necessary to the review of the objection decision concerned; ..." 10 On 8 April 1997 the respondent lodged a document styled "Statement of Findings on Material Questions of Fact, Evidence and Reasons for the Decision" with AAT, pursuant to par 37(1)(a) of the AAT Act. That document referred to the fact that the applicant had been charged with and convicted of the offences under s 29D of the Crimes Act. 11 The respondent lodged an undated document with AAT styled "Respondent's Amended Statement of Facts, Issues and Contentions". The preamble to the document indicated that the applicant was put to proof of all the facts on which he sought to rely, and that the Commissioner reserved the right to assert further facts and to identify additional issues and to make further contentions beyond those contained in the document. It is sufficient for present purposes to say that the facts alleged in the document were confined to alleged appropriations by the applicant to his own use of monies intended to be applied for the Skillshare programs. 12 Paragraphs 23 and 24 of the document are as follows: "23. The Australian Federal Police conducted an investigation into the applicant's involvement with Charlestown/Windale Skillshare, as a result of the investigation charges were laid under s 29D of the Crimes Act 1914. 24. The applicant was convicted of defrauding the Commonwealth. An appeal by the applicant was upheld as it was found that the jury had been misdirected in the original trial. The Director of Public Prosecutions, following that decision has directed that a Bill of Indictment not be found and accordingly the Registrar of the District Court of NSW was advised of the decision not to further prosecute." 13 On 18 November 1997 AAT issued a summons to produce documents addressed to the Assistant Commissioner of the Australian Federal Police. The summons required production to the Tribunal of the following books or documents: · originals and/or copies of all bank statements relating to the applicant Wayne L Condon in relation to accounts held by him or on his behalf for the Charlestown Skillshare; · originals and/or copies of all cheques made out to Wayne L Condon or associated persons or entities paid from accounts held for or on behalf of Charlestown Skillshare; · originals or copies of any other documents pertaining to the obtaining by Wayne L Condon of monies from Charlestown Skillshare. 14 Whilst I do not have any transcript of proceedings in the AAT in 1997, it is apparent from documents which I do have, that the applicant objected to the inspection of documents called for by the summons, and that his objection was in some way based upon s 85ZU of the Crimes Act 1914 (Cth). 15 Section 85ZT of the Crimes Act relevantly provides that where a person's conviction of a Commonwealth offence has been quashed, the person is not required to disclose to any person, for any purpose, the fact that the person has been charged with, or convicted of, the offence. Section 85ZU relevantly provides that where, under s 85ZT, it is lawful for a person not to disclose the fact that he or she was charged with, or convicted of, an offence: ... (b) anyone else who knows, or could reasonably be expected to know, that s 85ZT applies to the person in relation to the offence shall not: (i) without the person's consent, disclose the fact that person was charged with, or convicted of, the offence to any other person, or to a Commonwealth authority or State authority, where it is lawful for the first-mentioned person not to disclose it to that other person or that authority; or (ii) in those circumstances, or for that purpose, take account of the fact that the person was charged with, or convicted of, the offence. The definition of "Commonwealth authority" is such that it includes the AAT. 16 On 16 December 1997 Senior Member Block directed that documents falling within the first two dot points of the summons should be made available to the respondent. In relation to documents falling within the third dot point, a court official was to inspect the documents and to mask out any reference to a charge or conviction and to furnish a photostat of the masked document to the respondent. It is not immediately apparent why documents falling within the third dot point would refer to either the charge or conviction, but the procedure devised by the Senior Member was calculated to ensure that, if there were any such documents the reference to the charge or conviction was blocked out before a copy of the document was supplied to the respondent. 17 The matter proceeded before Senior Member Bloch for five hearing days in July 1998. The applicant gave evidence, and was cross-examined. The cross-examination was not restricted to the disbursement of funds intended for use in connection with the Skillshare program. On the fifth day, (13 July 1998) the applicant sought an adjournment because he contended that issues had arisen for which he was not prepared. The Senior Member made it plain that he was not prepared to prevent counsel for the respondent from cross-examining him on his tax returns even though the subject matter of the cross-examination was not specifically raised by the Statement of Facts, Issues and Contentions. However, he granted the applicant an adjournment to allow him to prepare himself, as the applicant had indicated that he may wish to file further statements and call for further witnesses with regard to a number of the issues which had arisen. 18 On 21 September 1998 the respondent lodged an Amended Statement of Facts, Issues and Contentions for the 1989 year of income, which raised matters beyond the appropriation of monies with respect to the Skillshare program. On 15 October 1998 the respondent lodged an Amended Statement of Facts, Issues and Contentions for the year ending 30 June 1990 which also raised matters beyond the appropriation of monies in relation to the Skillshare program. The applicant filed responses to those documents. On 31 August 1999 the respondent lodged documents styled "Respondent's Statement as to the Issues Remaining in the 1989 Proceedings" and "Respondent's Statement as to the Issues Remaining in the 1990 Proceedings". The issues documents reflected some narrowing of the ambit of the dispute having regard to concessions made by both parties in the meantime. 19 The matter resumed before Senior Member Block on 6 September 1999, and proceeded for a number of days thereafter. There was a gap of about fifteen months between the two phases of the hearing. On 7 October 1999 Mr Block gave his decision affirming the objection decisions under review except that the additional tax for incorrect return in respect of each of the years was reduced from 50 per cent to 30 per cent. The Senior Member's reasons for decision refer to statements made by the applicant's barrister in what he called the "other proceedings", but my attention has not been directed to any statement in the reasons that the applicant was either charged with, or convicted of, the offences under s 29D of the Crimes Act, nor has it been contended that Senior Member Block took account of the fact that the applicant was charged with, or convicted of, those offences. 20 The applicant appeals to this Court pursuant to s 44 of the AAT Act. That section provides for an appeal, on a question of law, from any decision of the Tribunal. The Notice of Appeal (Amended) identifies four alleged questions of law, two of which relate to s 85ZU of the Crimes Act. crimes act Section 85ZU 21 As the appellant appeared in person, it is expedient to consider the various stages of the assessment, objection and appeal process which might be affected by the provisions of s 85ZU. Section 85ZU(b) applies to "anyone else who knows, or could reasonably be expected to know that s 85ZT applied to the applicant". The respondent satisfies that description. The respondent was thus precluded by s 85ZU(b)(ii) from taking account of the fact that the applicant had been charged with, or convicted of, the s 29D offences for the purpose of issuing the amended assessments or making his objection decision. There is no evidence before me that the respondent took account of the fact of charge or conviction for either of those purposes. There is no warrant for a conclusion that the respondent treated either the fact of charge or of conviction as an operative fact in its decision-making processes. The fact that the respondent relied upon the working papers of Mr Booth in issuing its amended assessment and, perhaps, in making its objection decision is beside the point. 22 The next stage in the process is that on 7 January 1997 reasons for decision on the objections were furnished to the applicant. These reasons adverted to the fact that the applicant had been charged with, or convicted, of the offences under s 29D. It is clear, however, that s 85ZU(b)(i) is directed at a disclosure to some person other than the applicant. Hence the furnishing to the applicant of those reasons for decision could not give rise to a contravention of s 85ZU(b)(i). 23 Then, reasons for decision were furnished by the respondent to AAT. Those reasons specifically referred to the fact that the applicant was charged with, and convicted of, offences under s 29D. If that amounted to a "disclosure" of those matters, and if it were without the applicant's consent, then a contravention of s 85ZU would be established. 24 Foster v Federal Commissioner of Taxation (1951) 82 CLR 606 at 615 confirms that there is a difference between "disclosing" a fact and stating a fact. Disclosure consists in the statement of a fact by way of disclosure so as to reveal or make apparent something which was previously unknown to the person to whom the statement is made. AAT had already been told by the applicant of the fact that he had been charged with, and convicted of, the s 29D offences because he attached to his application the reasons for decision given by ATO in that respect. Further, the applicant set up the decision of the Court of Criminal Appeal as being a reason why the objection decision was erroneous. That necessarily imports a consent to that decision being made available to AAT, which in turn necessarily imports a consent to the disclosure to AAT of the fact of charge or conviction. However misguided, the case which the applicant was seeking to put before AAT was that the Commissioner's objection decision was flawed because of the decision of the Court of Criminal Appeal. 25 Thus there was no "disclosure" to AAT of the fact of conviction or charge, and the applicant, by the terms of his application, impliedly consented to the inclusion in the T documents [see Tax Administration Act s 14ZZF(1)(a)(v)] of a copy of the Court of appeal decision, which disclosed the fact of conviction and charge. Accordingly, there is no contravention of s 85ZU(b)(i) in this respect. 26 Neither the summons for the production of documents issued to the Assistant Commissioner of the Australian Federal Police, nor the production of documents pursuant to that summons, is capable of constituting a contravention of s 85ZU(b)(i). The summons did not require the Australian Federal Police to disclose either the fact of charge or conviction. The directions made by the Senior Member ensured that the response to the summons would not produce that result. 27 Grounds 1 and 2 in the Notice of Appeal (Amended) are thus not made out. 28 Even if it be assumed that there was a contravention of s 85ZU at some stage of the administrative process, it does not follow that the decision of AAT in some way involved an error of law. For example, a breach by the Commissioner of s 85ZU would not necessarily be indicative of error on the part of AAT, which has its own independent function to perform. Further, the remedy for a contravention of s 85ZU is by way of complaint to the Privacy Commissioner, who is equipped with the range of remedies listed in s 85ZZD: see Rich v Olzac [2000] VSC 191. 29 Given my conclusion that the applicant's claim fails at the threshold, it is not necessary for me to decide what the legal position would have been if failure to comply with s 85ZU had been established. I prefer not to embark upon a determination of that question, because the applicant was unrepresented and is not legally trained, and was not in a position to respond to the legal arguments put by the respondent in that respect. new issues in denial of natural justice 30 The respondent is entitled to rely on grounds not stated in the objection or in the Commissioner's decision on the objection to support the assessment before the Tribunal: Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614, 621. 31 There is no substance in the contention that AAT had denied the applicant natural justice. In adjourning the proceedings in 1998, and in allowing the respondent an opportunity of reformulating its Statement of Facts, Issues and Contentions, so that the applicant would have an opportunity of dealing with them, the Tribunal was affording the applicant natural justice rather than denying it. ms honeysett 32 The applicant complains that in some way Senior Member Block erred in his assessment of the credibility of this witness. Precisely what the error is does not appear from an examination of the decision of the Senior Member, or from the Amended Notice of Appeal, or from the oral submissions of the applicant in support of his Amended Notice of Appeal. No error of law has been exposed. 33 The application should be dismissed with costs. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely. Associate: Dated: 13 September 2000 The applicant appeared in person Counsel for the Respondent: Mr K Conner Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 6 September 2000 Date of Judgment: 13 September 2000