Daniels v Cranston [2009] FCA 1412

FEDERAL COURT OF AUSTRALIA

Daniels v Cranston [2009] FCA 1412

GRAHAM DANIELS, PETER JOHN DANIELS and TALIAH DANIELS v MICHAEL CRANSTON and THE COMMISSIONER FOR TAXATION

SAD 140 of 2009

LANDER J

20 NOVEMBER 2009

ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION SAD 140 of 2009

BETWEEN: GRAHAM DANIELS

First Applicant

PETER JOHN DANIELS

Second Applicant

TALIAH DANIELS

Third Applicant

AND: MICHAEL CRANSTON

First Respondent

THE COMMISSIONER FOR TAXATION

Second Respondent

JUDGE: LANDER J

DATE OF ORDER: 20 NOVEMBER 2009

WHERE MADE: ADELAIDE

THE COURT ORDERS THAT:

1. The application for an interlocutory injunction be dismissed. 2. The applicants pay the respondents' costs of the interlocutory application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION SAD 140 of 2009

BETWEEN: GRAHAM DANIELS

First Applicant

PETER JOHN DANIELS

Second Applicant

TALIAH DANIELS

Third Applicant

AND: MICHAEL CRANSTON

First Respondent

THE COMMISSIONER FOR TAXATION

Second Respondent

JUDGE: LANDER J

DATE: 20 NOVEMBER 2009

PLACE: ADELAIDE

REASONS FOR JUDGMENT 1 This is an application for an interlocutory injunction seeking to restrain the respondents from carrying out an examination of the three applicants under s 264 of the Income Tax Assessment Act (the Income Tax Assessment Act). 2 On 15 May 2008 the home of the first applicant and the home of the second applicant were entered by officers of the respondents, purportedly pursuant to s 263 of the Income Tax Assessment Act. During that entry, the respondents took away from those premises a number of documents for the purpose of further examination. Whilst on the premises they also copied a number of documents. 3 On 20 and 21 August 2009 the respondents issued s 264 notices addressed to the three applicants for their examination on 21 September 2009 in the case of the third applicant, and 22 September 2009 in the case of the first and second applicants' examination. The applicants sought to have those examinations adjourned due to the unavailability of their counsel, Mr Abbott QC. After some correspondence was exchanged between the applicants' solicitor and the respondents, the respondents proposed because of Mr Abbott's unavailability that the interviews be conducted on 20 and 21 October 2009. 4 After being advised of that proposal, the applicants' solicitor wrote to the second respondent suggesting that the examinations be adjourned pending the resolution of this proceeding. This proceeding was commenced on 17 September 2009 by originating application accompanied by an affidavit of the first applicant. The original application sought injunctions directed to the first and second respondents in relation to the s 264 notices, and declarations that the conduct of the first and second respondents in entering the premises of the first and second applicants on 15 May 2008 was unlawful. The original originating application did not identify with any precision the relief which was sought, or the grounds upon which that relief should be given. 5 On 25 September 2009 the first respondent replied to the request made by the applicants' solicitor that the examinations be deferred until after the resolution of this proceeding. He said that: [W]e will not conduct interviews pursuant to section 264 of the Income Tax Assessment Act 1936 with Peter, Graham or Tahlia Daniels before the resolution of the matters before the Federal Court. 6 On 8 October 2009 the Australian Government Solicitor wrote to the applicants' solicitor addressing the issue which had been addressed in the letter of 25 September 2009. He wrote: The first respondent now intends to issue new notices pursuant to section 264 of the ITAA 1936 requiring your clients to attend and give evidence on the following dates: 4.1 Tahlia Daniels - 23 November 2009; 4.2 Peter John Daniels - 24 and 25 November 2009; and 4.3 Graham Daniels - 26 and 27 November 2009. 7 He enquired of the applicants' solicitor whether he could advise the Australian Government Solicitor by 4.00 pm on Tuesday, 13 October 2009 if the applicants and their legal representatives would be available to give evidence on those dates. He advised that if the applicants were not available on those dates, the applicants should give reasons in writing for their unavailability, and indicate the closest dates when they would be available. 8 On 12 October 2009 the applicant's solicitor replied by facsimile to that correspondence. He wrote: I refer to the above matter and to your letter of 8/10/2009. Mr Abbott QC is not available 23-27/11/2009 and is not available until the last week of January from the 25/1/2009. I have been unable to contact P and G Daniels and assume those dates would be available, the only reason they would not be is if Mr P Daniels or Mr G Daniels is overseas or the former has a pre arranged lecture commitment. 9 On 13 October 2009 the Australian Government Solicitor wrote to the applicants' solicitor advising that the applicants would be required to attend and give evidence on the following dates: 4.1 Tahlia Daniels - 23 November 2009; 4.2 Peter John Daniels - 24 and 25 November 2009; and 4.3 Graham John Daniels - 26 and 27 November 2009. 10 There is no explanation for the change of attitude of the respondents in requiring the applicants to submit to a s 264 examination, after the respondents had previously advised that such an examination would not take place until this proceeding was disposed of. I was told by Ms Maharaj QC, who appeared for the respondents, that I should infer that the respondents had received advice from the Australian Government Solicitor some time after 25 September 2009 and before 13 October 2009, which caused the respondents to instruct the Australian Government Solicitor to advise the applicants that the respondents intended to proceed with the examinations. It is easy enough to infer that which Ms Maharaj suggested, that the respondent's change of heart was occasioned by advice given to the respondents by the Australian Government Solicitor. It is less easy to understand why the respondents, who are model litigants, would unilaterally discharge an undertaking which they had given to the applicants in the circumstances which occurred. 11 The question, of course, is whether or not that would give rise to any legal consequences but, legal consequences aside, it is difficult to understand the change of attitude, which is not deposed to by the respondents or by the Australian Government Solicitor, in the affidavits upon which the respondents relied in answer to this application. 12 On 23 October 2009 the respondents issued notices to the applicants under s 264 requiring the applicants to attend for examination on the dates which had been identified in the letter of 8 October 2009. 13 The applicants' solicitor has deposed, in an affidavit relied upon by the applicants for the purpose of this application, that Mr Abbott is unavailable until 25 January 2009 to attend any examination with the applicants. He has deposed that there are thousands of pages of documents which will need to be read by whoever attends on behalf of the applicants and that the costs of briefing new counsel would be prohibitive. He has also deposed that the first and third applicants booked a trip overseas, after they were informed on 25 September 2009 that the respondents would not conduct the s 264 interviews. 14 I am informed today by Mr Abbott from the bar table that the first and third applicants are in Singapore, and are intending to return sometime next week. He was unable to tell me when. The present application is to restrain the carrying out of the s 264 examinations next week. Mr Abbott argued that the letter of 25 September 2009 meant that the respondents were restrained from carrying out any examination until such time as this proceeding is disposed of. He argued that an estoppel arose by reason of the representation made in the letter of 25 September 2009. In the alternative, he argued that the letter of 25 September 2009 created a legitimate expectation on the part of the applicants that the examinations would not take place until this proceeding was disposed of. There are a number of factual difficulties standing in the way of that argument. 15 First, there is no evidence that the second applicant has in any way been disadvantaged by the representation made on 25 September 2009 and by the withdrawal of that representation. Indeed, Mr Abbott accepted that the second applicant is in Court today and is clearly in a position to be available next week, except for one thing to which I must refer relating to his legal representation. 16 Secondly, there is no evidence before me as to when the first and third applicants made arrangements to leave Australia. Particularly, there is no evidence as to whether those arrangements were made after 25 September 2009 and before 8 October 2009, or after 8 October 2009 when the first and third applicants knew that the respondents proposed to continue with the examinations. Nor is there any evidence as to whether those arrangements were made after 13 October 2009 when the Australian Government solicitor wrote to the applicants' solicitor advising that the applicants would be required for examination. 17 Lastly, there is no evidence before me as to why they needed to go to Singapore and if, in fact, they will not return prior to the scheduled examinations. 18 I do know that if they travelled together that they must have left on or after 16 November 2009 because the first applicant was in Court on 16 November 2009 instructing Mr Cummins, his solicitor, in relation to the application for hearing today. He must have therefore left after 16 November 2009 knowing that the examinations were scheduled for next week and realising that an application would be made today to set aside the notices. He therefore must have left Australia knowing that it was uncertain as to whether or not the examinations would take place. I am therefore not satisfied on the facts that the first and third applicants have suffered any detriment by the withdrawal of the representation made on 25 September 2009, and for that reason would refuse the application. 19 In any event, I am not persuaded by Mr Abbott's argument that the applicants were entitled to rely upon any legitimate expectation or estoppel for the purpose of this application. In Minister for Immigration and Multicultural and Indigenous Affairs; Ex Parte Lam (2003) 214 CLR 1, McHugh and Gummow JJ said at [66]-[67]: The doctrine of "legitimate expectation" has been developed in England so as to extend to an expectation that the benefit in question will be provided or, if already conferred, will not be withdrawn or that a threatened disadvantage or disability will not be imposed. This gives the doctrine a substantive, as distinct from procedural, operation. The earlier English decisions with respect to "legitimate expectations" were discussed by Mason CJ in Attorney-General (NSW) v Quin and by McHugh J in Minister for Immigration and Ethnic Affairs v Teoh. In Quin, Mason CJ observed: "In the cases in this Court in which a legitimate expectation has been held entitled to protection, protection has taken the form of procedural protection, by insisting that the decision-maker apply the rules of natural justice. In none of the cases was the individual held to be entitled to substantive protection in the form of an order requiring the decision-maker to exercise his or her discretion in a particular way. The prevailing view in this Court has been, as Stephen J observed in Salemi [v MacKellar [No 2]], that: '[t]he rules of natural justice are "in a broad sense a procedural matter"', echoing the words of Dixon CJ and Webb J in Commissioner of Police v Tanos." That remains the position in this Court and nothing in this judgment should be taken as encouragement to disturb it by adoption of recent developments in English law with respect to substantive benefits or outcomes. (Footnotes omitted.) 20 Callinan J said at [148]: Whatever may be the current utility or status of the doctrine of "legitimate expectation", I agree with McHugh and Gummow JJ, for the reasons that their Honours give, that on no view can it give rise to substantive rights rather than to procedural rights. It is also unnecessary in this case, to attempt to resolve any remaining controversy whether a right to natural justice is conditioned entirely by the common law, or by the language of the relevant statute, or a combination of them. 21 The letter written by the respondents on 25 September 2009 gave an unconditional assurance to the applicants that the examination would not take place pending the disposal of this proceeding. If that unconditional assurance were to be withdrawn, it had to be withdrawn in circumstances where the applicants were accorded procedural fairness. In my opinion, the letter of 13 October 2009 did accord the applicants procedural fairness because first, while it withdrew the undertaking, it inquired of the applicants as to their particular availability on particular dates. The applicants, at the time the letter was written, were apparently all able to be examined at that time. 22 I have not overlooked the other reason given by the applicants for their non-availability for examination in November 2009, that being the unavailability of their counsel. The unavailability of their counsel, in my opinion, was not such that the respondents were bound to pick a date later than 25 January 2010 for the purpose of the examinations. Indeed, the respondents had already withdrawn the previous s 264 notices because of the unavailability of Mr Abbott. The respondents could have, in my opinion, at that stage continued with the examinations in September 2009. It seems to me that nothing was done between 25 September 2009 and 13 October 2009 which denied the applicants procedural fairness, and any expectation they had that they would not be examined pending the disposal of this proceeding was addressed in the letter of the Australian Government Solicitor of 8 October 2009. In my opinion, the application for the injunction restraining the examinations scheduled for next week ought to be dismissed. 23 There will be an order that the applicants pay the respondents' costs of the interlocutory application. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.