FEDERAL COURT OF AUSTRALIA Commissioner of Taxation v H [2010] FCA 480 Citation: Commissioner of Taxation v H [2010] FCA 480 Parties: COMMISSIONER OF TAXATION v H File number: NSD 211 of 2010 Judge: NICHOLAS J Date of judgment: 18 May 2010 Catchwords: PRACTICE AND PROCEDURE – application by a non-party to an appeal from the Administrative Appeals Tribunal for orders pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) replacing the name of the respondent with a pseudonym and restricting the publication of evidence identifying the non-party – Tribunal made findings adverse to the non-party – non-party was not a party to the proceedings before the Tribunal and was not given an opportunity to be heard by the Tribunal – disclosure of the non-party's identity in light of the Tribunal's adverse findings likely to cause substantial damage to the non-party's professional reputation – in the circumstances, disclosure of the non-party's identity would be prejudicial to the administration of justice – orders made pursuant to s 50 of the Act – ancillary orders made pursuant to s 23 of the Act. Legislation: Federal Court of Australia Act 1976 (Cth) ss 23, 50 Administrative Appeals Act 1975 (Cth) s 35(2) Income Tax Assessment Act 1936 (Cth) s 109Y Cases cited: Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 cited Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 cited Australian Broadcasting Commission v Parish (1980) 29 ALR 228 applied Hadid v Lenfest Communications Inc & Ors (1996) 70 FCR 403 cited Date of hearing: 7 May 2010 Date of last submissions: 10 May 2010 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 25 Solicitor for the Applicant: Djekovic Hearne & Walker Counsel for the Applicant FM Douglas QC and WAD Edwards Solicitor for the Appellant: Australian Government Solicitor Solicitor for the Respondent: Robert Richards & Associates IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 211 of 2010 BETWEEN: COMMISSIONER OF TAXATION Applicant AND: H Respondent JUDGE: NICHOLAS J DATE OF ORDER: 18 MAY 2010 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) (the Act), the name of the respondent to this proceeding be changed to "H". 2. Pursuant to s 50 of the Act, the contents of the affidavits read in evidence upon the hearing of the notice of motion not be published to any person other than the parties, their legal representatives or Court staff without the leave of the Court. 3. Pursuant to s 23 of the Act, the contents of all other documents on the Court file which identify either the respondent or Ms Smith by their true names not be published or disclosed to any person other than the parties, their legal representatives or Court staff without the leave of the Court. 4. Pursuant to s 23 of the Act, the contents of any transcript of the hearing of the notice of motion and all previous directions hearings in this proceeding which identify either the respondent or Ms Smith by their true names not be published or disclosed to any person other than the parties, their legal representatives or Court staff without the leave of the Court. 5. There be no order as to costs. 6. The notice of motion be stood over to the hearing of the substantive proceeding before the Full Court. 7. Each party have liberty to apply to Nicholas J on 3 days notice. 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 Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 211 of 2010 BETWEEN: COMMISSIONER OF TAXATION Applicant AND: H Respondent JUDGE: NICHOLAS J DATE: 18 May 2010 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application under s 50 of the Federal Court of Australia Act 1976 (Cth) (the Act) by a person to whom I shall refer to as "Ms Smith" seeking orders restricting publication of evidence and changing the name of the proceeding in which her application is made. Various ancillary orders are also sought. The application is made by notice of motion filed in an appeal from a decision of the Administrative Appeals Tribunal (the Tribunal) given on 3 February 2010 in the review of a decision of the Commissioner of Taxation (the Commissioner). The Chief Justice has determined that the appeal should be heard by a Full Court. 2 While I have referred in these reasons to the proceeding in which Ms Smith's application is made as an appeal, it is not an appeal in the strict sense but a proceeding commenced in the original jurisdiction of the Court: Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 581. 3 There is only one respondent to the appeal whom I shall refer to as "Mr Holmes". Ms Smith is not a party to the appeal and was not a party to the proceeding in the Tribunal. Mr Holmes and Ms Smith are not the real names of the people involved but were names used by the Tribunal in its revised reasons for decision published by the Tribunal after Ms Smith made an application for an order under s 35(2) of the Administrative Appeals Act 1975 (Cth). Each of them was, at relevant times, a director of a company controlled by Mr Holmes which I shall refer to as "Waffles". Again, Waffles is not the company's correct name but the name given to it by the Tribunal in its revised reasons for decision. As well as being a director of Waffles, Ms Smith was also its financial controller. She was also involved in a personal relationship with Mr Holmes. 4 It appears that on the basis of evidence given by Mr Holmes, the Tribunal found that Ms Smith acted dishonestly while a director and financial controller of Waffles and that she involved Waffles in transactions, and dealt with Waffles' funds, contrary to Mr Holmes' instructions and without proper authority. It was also found that she was knowingly involved in tax evasion including the preparation of false tax returns lodged on behalf of Waffles. Those findings were made by the Tribunal in the course of deciding whether Waffles was entitled to a reduction of the penalties imposed by the Commissioner. 5 The reasons for decision as first published by the Tribunal identified Ms Smith, Mr Holmes and Waffles by their real names. After she became aware of the decision, Ms Smith made an application to the Tribunal which resulted in the recall of its reasons which was then amended for the purpose of concealing Ms Smith's true identity. Neither Mr Holmes, Waffles or the Commissioner opposed that course. The Tribunal appears to have accepted that it was appropriate to take steps to conceal Ms Smith's true identity and that it was also necessary, in order to do so, to conceal the true identities of Mr Holmes and Waffles. 6 The substantive orders sought by Ms Smith are as follows: 1. An order pursuant to section 50 of the Federal Court of Australia Act 1976 prohibiting publication to anyone other than the parties and Court staff of any evidence identifying [Ms Smith] in respect of proceedings NSD211 of 2010 (being an appeal from the decision of the Administrative Appeals Tribunal ("AAT") comprising the Hon B. Tamberlin QC, DP and Mr SE Frost, SM in Waffles Pty Ltd v Commissioner of Taxation [2010] AATA 78 dated 3 February 2010) ("the AAT Decision"), including (without limitation): (a) the AAT Decision (except in the form republished by the AAT on 18 March 2010); and (b) the Appeal books to be lodged by the Commissioner of Taxation in these proceedings. 2. An order pursuant to section 50 of the Federal Court of Australia Act 1976 prohibiting publication to anyone other than the parties and Court staff of the evidence in this application including (without limitation): (a) all affidavits filed in relation to the Notice of Motion; (b) all transcripts of the directions hearings on 25 March 2010, 14 April 2010 and the hearing before Nicholas J on 7 May 2010, and the date of this order. 3. An order pursuant to section 50 of the Federal Court of Australia Act 1976 that the name of these proceedings be changed to Commissioner of Taxation v Gregory Holmes. 7 Mr Holmes does not oppose the making of these orders though in his affidavit he has contested the correctness of many of the statements made by Ms Smith in her affidavit. There was no objection to either affidavit and neither deponent was cross-examined. 8 The attitude of the Commissioner is slightly different. The Commissioner opposed the making of the orders sought. At the first directions hearing, when the present application was first foreshadowed, the Commissioner's attitude was that he neither consented to nor opposed it. However, the Commissioner now submits that the situation has changed as a result of the publication of reasons for decision recently delivered in a proceeding between the Commissioner and Ms Smith. I will return to that matter later in these reasons. 9 Ms Smith's evidence establishes that she was not afforded any opportunity to be heard by the Tribunal before it made adverse findings against her. That evidence was not contradicted by Mr Holmes although, as I have mentioned, other parts of her evidence were disputed. But since neither Ms Smith nor Mr Holmes was cross-examined, I think I should accept her evidence. There is always a risk of collusion in an application of this kind where disputed versions of events are not really tested. However, the Commissioner did not suggest there was any collusion between Ms Smith and Mr Holmes. 10 Mr Douglas QC, who appeared for Ms Smith, argued that, as the Tribunal exercises the executive power of the Commonwealth, it is bound to comply with the rules of procedural fairness when it exercises its power to make findings in reasons for decision that are to be made public if such findings are likely to affect the rights, interests or legitimate expectations of persons in their individual capacity. This was said to follow from the decision of the High Court in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 where the High Court held that a person's interest in his or her reputation is one capable of attracting the protection of the rules of procedural fairness. That adverse findings were made against Ms Smith in circumstances where she was entitled to, but was not given, an opportunity to be heard before publication of the Tribunal's findings was said to have involved a breach of the rules of procedural fairness by the Tribunal. 11 Mr Douglas QC also submitted that publication of any material in this Court which might enable others to connect Ms Smith with the findings made by the Tribunal would cause her irreparable damage. Her evidence to that effect was not contested and, given the nature of the findings made against her, I accept that publication of information which might enable others to make that connection is likely to do substantial harm to her reputation. 12 Section 50(1) of the Act provides: The Court may, at any time during or after the hearing of a proceeding in the Court, make such order forbidding or restricting the publication of particular evidence, or the name of a party or witness, as appears to the Court to be necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth. 13 Section 23 of the Act provides: The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. 14 The Full Court decision in Australian Broadcasting Commission v Parish (1980) 29 ALR 228 is still the leading case on s 50 of the Act and is authority for a number of basic propositions concerning the operation of that provision. The first of these is that, as a matter of general principle, the Court must exercise its jurisdiction in open Court. This is sometimes referred to as the principle of open justice. However, s 50 of the Act allows for some encroachment upon that principle. The application of the section calls for a consideration of the prejudice to the administration of justice that would arise if no order was made weighed against the degree of the encroachment involved if an order was made. The degree of encroachment is an important factor to be weighed in the scales in deciding whether or not a s 50 order should be made. 15 Deane J made a number of observations which are relevant to the present application. His Honour said at 254: In considering an application for an order for confidentiality under s 50, the weight to be given to the prima facie desirability of the evidence in proceedings before the Federal Court being open to the public may vary according to whether the other party to the litigation opposes, or consents to, the making of the order sought. This is not only because an order under s 50 will affect the prima facie right of the litigant that the evidence in his particular case be open to public scrutiny. It is also because there is less likelihood of damage to public confidence in the administration of justice if an order for confidentiality is made in circumstances where the parties to the litigation are agreed that the order should be made, than if such an order is made in circumstances where the other party or parties protest against the relevant evidence being concealed from public scrutiny. And at 255-256 his Honour said: Damage and hardship to the individual from the working of legal processes can only be justified if they are warranted by countervailing benefit, or avoidance of prejudice, to the general administration of justice or by the legitimate claims and expectations of other individuals. When not so warranted, such damage or hardship is to the overall prejudice of the administration of justice. 16 Section 50 provides that the Court may make an order "… at any time during or after the hearing of a proceeding in the Court …". So far as the publication of evidence is concerned, it is clear that s 50 is not confined to evidence called at the hearing of the substantive proceeding. An interlocutory hearing, including a directions hearing, is a "hearing of a proceeding" within the meaning of s 50: Hadid v Lenfest Communications Inc & Ors (1996) 70 FCR 403 at 407 per Hill J. It follows that the Court has power under s 50 to forbid or restrict the publication of evidence given at the hearing of the present application and the previous directions hearings which took place in the proceeding. 17 However, it is doubtful whether the power conferred by s 50 extends to the making of such an order in respect of evidence that is or might be called at a further hearing that has not yet commenced. The language of s 50 does not appear to leave much room for the section to operate in such circumstances. 18 The position in relation to the name of a party or a witness may be different. There are occasions when the Court has made orders forbidding or restricting the publication of names of parties and witnesses at a directions hearing which occurred long before the substantive proceeding was heard. As Hill J has pointed out in Hadid at 407 "[t]he power to suppress the name or names of parties and witnesses conferred by s 50 would be somewhat hollow if restricted to the period during and after the trial and not capable of exercise at the earliest possible time." It seems to me that it is open to the Court to make an order suppressing the name or names of parties or witnesses under s 50 at the hearing of an application for such an order which order will, if made, operate until such time as it is discharged or varied. 19 So far as the publication of documents which are not yet in evidence is concerned, the better view is that the relevant order, if otherwise appropriate, should be made pursuant to s 23 of the Act. The question whether a s 50 order should be made in respect of such documents if and when they are introduced into evidence at the hearing of the appeal will be for the Full Court to decide. 20 I therefore propose to stand over Ms Smith's notice of motion for further consideration by the Full Court during or after the hearing of the appeal. Each of the orders I am about to make is interlocutory and will operate until further order including, of course, any order of the Full Court which hears the appeal. 21 I am satisfied that the orders I propose to make are appropriate having regard to the following matters: (a) I accept that the adverse findings made against Ms Smith occurred in circumstances where Ms Smith was denied an opportunity to be heard. It is not necessary for me to determine whether the Tribunal was bound to afford her an opportunity to be heard before making findings against her. (b) I also accept that publication of any evidence, documents or record of proceedings before me which might enable Ms Smith's true identity to be ascertained and made public is likely to cause substantial harm to her reputation. (c) The appeal brought by the Commissioner raises a question concerning the proper construction of s 109Y of the Income Tax Assessment Act 1936 (Cth). The parts of the Tribunal's reasons for decision which refer to Ms Smith do not appear to be relevant to any issue in the appeal. (d) Mr Holmes does not oppose a s 50 order being made. The Commissioner opposes a s 50 order being made. 22 In my opinion it would be prejudicial to the administration of justice for Ms Smith's true identity to be made public given that the findings made against her were made in circumstances where she was not afforded the opportunity to answer the evidence given in relation to her before the Tribunal. The argument against the making of a s 50 order raised by the Commissioner was that it was no longer appropriate because Ms Smith had been identified by her true name in the reasons for decision of another Judge of this Court in a proceeding between Ms Smith and the Commissioner. Having considered this argument, I do not think it has any substance. No findings were made in Ms Smith's proceeding similar to those made by the Tribunal. 23 The orders I propose to make are these: 1. Order pursuant to s 50 of the Act that the name of the respondent to this proceeding be changed to "H". 2. Order pursuant to s 50 of the Act that the contents of the affidavits read in evidence upon the hearing of the notice of motion not be published to any person other than the parties, their legal representatives or Court staff without the leave of the Court. 3. Order pursuant to s 23 of the Act that the contents of all other documents on the Court file which identify either the respondent or Ms Smith by their true names not be published or disclosed to any person other than the parties, their legal representatives or Court staff without the leave of the Court. 4. Order pursuant to s 23 of the Act that the contents of any transcript of the hearing of the notice of motion and all previous directions hearings in this proceeding which identify either the respondent or Ms Smith by their true names not be published or disclosed to any person other than the parties, their legal representatives or Court staff without the leave of the Court. 5. Order that there be no order as to costs. 24 As is apparent from order 1, I think it desirable that the public know that the name given to the respondent in this proceeding is not his true name. That is made clear if he is simply referred to as "H". 25 As is apparent from order 5, I think it is appropriate that each party should bear its own costs of the notice of motion. I will also grant each party liberty to apply to me on 3 day's notice in relation to any matter arising out of my reasons or orders. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas. Associate: Dated: 18 May 2010