FEDERAL COURT OF AUSTRALIA Petroulias v Commissioner of Taxation [2011] FCA 795 Citation: Petroulias v Commissioner of Taxation [2011] FCA 795 Appeal from: Application for leave to appeal: Petroulias v Commissioner of Taxation [2010] FCA 1464 Parties: NIKYTAS NICHOLAS PETROULIAS v COMMISSIONER OF TAXATION File number: QUD 11 of 2011 Judge: REEVES J Date of judgment: 18 July 2011 Catchwords: APPEAL AND NEW TRIAL – application for leave to appeal interlocutory judgment under s 24(1A) of the Federal Court of Australia Act 1976 (Cth) – consideration of principles governing leave to appeal – applicant must show that judgment sought to be appealed is attended with sufficient doubt and that substantial injustice will result if leave is refused – where decision is final in substance the threshold for the grant of leave is not high – leave should be granted where appeal is not devoid of merits, hopeless or unarguable – no detailed analysis or concluded views of issues required Held: judgment sought to be appealed is attended by sufficient doubt in that appeal is at least arguable – leave to appeal granted Legislation: Federal Court of Australia Act 1976 (Cth) s 24(1A) Income Tax Assessment Act 1936 (Cth) s 263 International Tax Agreements Act 1953 (Cth) Cases cited: Petroulias v Federal Commissioner of Taxation (2006) 65 ATR 76; [2006] FCA 1821 Currie v Deputy Commissioner of Taxation [2000] FCA 1964 Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 Bienstein v Bienstein (2003) 195 ALR 225; [2003] HCA 7 Wills v Australian Broadcasting Corporation (2009) 253 ALR 228; [2009] FCAFC 6 Paringa Mining & Exploration Co PLC v North Flinders Mines Ltd (No 2) (1988) 81 ALR 609 SZJDS v Minister for Immigration and Citizenship [2008] FCA 1093 Food Channel Network Pty Ltd v Television Food Network, GP [2009] FCA 1446 Driclad Pty Ltd v Commissioner of Taxation (1966) 121 CLR 45 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 3) (1998) 86 FCR 374 Convention between Australia and New Zealand for the avoidance of double taxation with respect to taxes on income and fringe benefits and the prevention of fiscal evasion Date of hearing: 19 May 2011 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 60 Counsel for the Applicant: The Applicant appeared in person Counsel for the Respondent: Mr J Hmelnitsky Solicitor for the Respondent: Australian Government Solicitor IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 11 of 2011 BETWEEN: NIKYTAS NICHOLAS PETROULIAS Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: REEVES J DATE OF ORDER: 18 July 2011 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The applicant be granted leave to appeal the judgment of Greenwood J delivered 23 December 2010. 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 QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 11 of 2011 BETWEEN: NIKYTAS NICHOLAS PETROULIAS Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: REEVES J DATE: 18 July 2011 PLACE: BRISBANE REASONS FOR JUDGMENT The application 1 This is an application for leave to appeal the judgment of Greenwood J delivered on 23 December 2010 ([2010] FCA 1464). In that decision, Greenwood J refused to grant Mr Petroulias, the applicant, an injunction to restrain the Commissioner of Taxation, the respondent, from accessing documents received by the Commissioner from the New Zealand Inland Revenue Department ("IRD"), until further order. 2 Since the judgment of Greenwood J was an interlocutory order, leave to appeal is required under s 24(1A) of the Federal Court of Australia Act 1976 (Cth). 3 To understand why Mr Petroulias sought this injunction and why he is now seeking leave to appeal the judgment refusing to grant it, it is necessary to set out some of the long and complex background to these proceedings. I will do that by borrowing liberally from the reasons for decision of Greenwood J. The Factual background 4 Mr Petroulias is a former First Assistant Commissioner of Taxation in Australia. He is also a qualified lawyer and he has chosen to act for himself in these proceedings. 5 Early in 2000, criminal proceedings were commenced against Mr Petroulias in New South Wales relating to his conduct as an Assistant Commissioner of Taxation and as an officer of the Australian Taxation Office ("ATO"). The present proceedings partly involve a large number of allegations Mr Petroulias has made about the motivation and conduct of the prosecutorial authorities, the Commissioner and various officers of the ATO in connection with those criminal proceedings. 6 In 2004, the ATO sought the assistance of the IRD under the Convention between Australia and New Zealand for the avoidance of double taxation with respect to taxes on income and fringe benefits and the prevention of fiscal evasion (the "Australia-New Zealand Double Tax Agreement") as a part of its investigation of Mr Petroulias' business activities in New Zealand. That investigation included a number of corporations associated with Mr Petroulias and other people, concerning their possible involvement in, what the New Zealand Court of Appeal subsequently described as, the "promotion of tax schemes affecting the tax bases of both Australia and New Zealand". 7 On 8 November 2006, officers of the ATO and the IRD carried out a series of simultaneous raids on premises in New Zealand and Australia. As a result of those raids, a large quantity of documents were seized, including electronic records and some computer hard disks. Although the raids involved a large number of premises in different cities and towns, those conducted at office premises in Queen Street, Auckland and at Motueka River Lodge, where Mr Petroulias was residing at the time, became particularly contentious. The IRD thought those premises were likely to contain books or documents relevant to its investigations arising out of the IRD's discussions with one Ms Chisnall concerning the activities of Avowal Administrative Attorneys Limited ("Avowal") and other companies. 8 On 18 December 2006, Mr Petroulias commenced proceedings in the Federal Court of Australia to challenge the conduct of the Commissioner in exercising his search and seizure powers under s 263 of the Income Tax Assessment Act 1936 (Cth) and the related steps taken by the Commissioner under the Australia-New Zealand Double Tax Agreement. In those proceedings (which I will refer to as the Australian proceedings), Mr Petroulias claimed interlocutory and final relief consisting of, among other things: a declaration that the seizure, copying and use of the documents in Australia in November 2006 was unlawful; a declaration that any request by the IRD under the International Tax Agreements Act 1953 (Cth) for the seizure and copying in New Zealand of documents in the possession or control of Mr Petroulias in November 2006 was unlawful; an order for the return of the documents seized in Australia and New Zealand to Mr Petroulias; and, an injunction restraining the ATO from receiving, or further receiving from the IRD any of the seized New Zealand documents. 9 On 19 December 2006, Mr Petroulias, represented by Mr O'Bryan SC, unsuccessfully applied for interlocutory orders before Dowsett J. The matters then in issue included the lawfulness of the seizure of the documents in both New Zealand and Australia. Mr Petroulias sought "interim and interlocutory relief to stop the Australian ATO from ever accessing any of the New Zealand material". Dowsett J delivered an ex tempore judgment (Petroulias v Federal Commissioner of Taxation (2006) 65 ATR 76; [2006] FCA 1821) in which, among other issues, he dealt with the claims of legal professional privilege raised by Mr Petroulias in relation to both the Australian documents and the New Zealand documents. In relation to the latter, Dowsett J said this (at [14]): As to the New Zealand documents, the matter is not so clear. Again, subject to one exception, the applicant does not assert that any of the documents is necessarily privileged. Further, the basis for the attack upon the seizure in New Zealand seems to be limited to preventing the Australian Commissioner from having access to the products of such seizure. No attempt has been made to rely upon privilege under New Zealand law. It is said that the Commissioner must have requested the New Zealand authorities to act and that such request may itself be a reviewable decision. No attempt has been made to persuade me to the view that there is a decision under an enactment which may be reviewed. (Emphasis added) 10 Dowsett J refused the application saying (at [17]): "For the moment I am not satisfied that there is a serious question to be tried, or a prima facie case demonstrated, in order to justify the grant of interim relief. In those circumstances, it is not necessary to address the question of balance of convenience". 11 It does not appear to be in dispute that, since December 2006, neither the interlocutory application, nor the primary proceeding, has been further pursued or, for that matter, discontinued. 12 At about the same time as he commenced the Australian proceedings, Mr Petroulias, Avowal and others (who I will jointly refer to hereafter as Mr Petroulias) commenced judicial review proceedings in New Zealand challenging the lawfulness of the search and seizure actions undertaken in New Zealand. There followed a series of decisions by the High Court of New Zealand and the Court of Appeal stretching from 2007 to 2010. The final decision was that of the New Zealand Supreme Court made on 16 August 2010 to dismiss an application for leave to appeal the decision of the New Zealand Court of Appeal. 13 During that process, Venning J of the High Court of New Zealand, having rejected Mr Petroulias' challenge to the search and seizure actions of the IRD, made orders to establish a procedure to allow the IRD access to the documents that had been seized in New Zealand. As a part of this procedure, the applicants, which included Mr Petroulias, were able to "raise any claim to privilege and/or tax advice non-disclosure" in relation to the documents. This procedure was able to continue notwithstanding the appeal process because an application by Mr Petroulias to stay the initial order of Venning J was refused. 14 As Greenwood J recorded in his reasons (at [32]) "[t]he relevant statutory provision governing legal professional privilege so far as it relates to documents seized by officers of the IRD is contained in s 20 of the [Taxation Administration Act (NZ)]". The operative parts of that section are set out in his Honour's reasons at [32]–[34]. In those paragraphs, Greenwood J noted, among other things, that the section allowed a New Zealand District Court judge to determine the validity of any claim to privilege and the privilege is effectively confined to a legal practitioner who is a barrister or solicitor of the New Zealand High Court, or a partner, director or shareholder of a firm, or an incorporated law firm: see the reasons at [34]. 15 The orders establishing this procedure were made in two stages: on 8 October 2009 and 21 December 2009. Between these dates, the applicants sought to clarify the entitlement to claim privilege in relation to the documents as contemplated by the orders made on 8 October 2009. As a result, the final orders made on 21 December 2009 were in these terms: 7[a][iii] The Commissioner is to provide the applicants on an ongoing basis, a schedule[s] of the prima facie open documents so that the applicants can identify the documents the Commissioner contends are prima facie open documents and that he intends to review and provide to the ATO for inspection. [iv] The applicants will have five working days (subject to any other extension of time agreed in writing on behalf of the Commissioner) from receipt of the schedule of prima facie open documents to raise any claim to privilege and/or tax advice non-disclosure in respect of any of the documents listed on the schedule of prima facie open documents, provided that any such claim to privilege must be sufficiently particularised to enable the Commissioner to consider the basis of the claim to privilege and the entity on whose behalf the privilege is claimed. [v] The Commissioner will not review and will not make available to the ATO any prima facie open documents until the expiry of the five working day period. Any documents that the applicants do not claim privilege for within the five working days will be confirmed as open documents. The Commissioner may then review all of those confirmed open documents as part of his investigation and may allow the ATO to view any confirmed open documents. [vi] The potentially privileged documents and any other documents for which privilege [is] claimed by the applicants will then be the subject of review by this Court. Pending resolution of the claims to privilege those documents will not be released to the Commissioner's investigators for review or to the ATO. [vii] The Commissioner is permitted to allow officers of the ATO to review the electronic information confirmed as open and the ATO is permitted to copy and remove such documents confirmed as open under the Australian New Zealand Double Tax Agreement and previous decision of this Court. [viii] In the event the Commissioner wishes to test the applicant's challenge to privilege in relation to the documents on the prima facie open list, I reserve leave for such an application to be made in advance of the review of the documents identified by the Commissioner's officers as potentially privileged documents. 16 To go back in time, in December 2007, as a consequence of the criminal proceedings mentioned above (at [5]), Mr Petroulias was found guilty by a jury in the New South Wales Supreme Court on two charges. In June 2008, he was sentenced to a term of imprisonment, of which he was required to serve at least two years. The significance of this is that in December 2009 and January 2010 when the matters mentioned immediately above occurred, Mr Petroulias was in prison in New South Wales. 17 On 20 January 2010, in accordance with Order 7(a)(iii) above, officers of the IRD provided a detailed report identifying the documents it considered to be open and not subject to any question of privilege. In all, about 30,000 documents were identified. The applicants, which included Mr Petroulias, did not make any claim of legal professional privilege in relation to any of the documents set out in that report as they were entitled to do under Order 7[a][iv] above. In accordance with Order 7[a][v] above, the documents in the report were then characterised as open documents for the purposes of the orders of 21 December 2009. 18 Later in 2010, a series of letters passed between Frenkel Partners, lawyers, acting on behalf of Mr Petroulias, and the Australian Government Solicitor ("AGS"), who was acting for the ATO. Those letters were before Greenwood J. The relevant parts of them, for present purposes, are set out hereunder. 19 On 15 June 2010, Frenkel Partners wrote to the AGS and stated, among other things, that: 1. Mr Petroulias has instructed us to write to you on his behalf and on behalf of "Avowal Administrative Attorneys Limited" (Avowal) and "Professional Admin Service Centres Pty Ltd" (PAC) in relation to access to documents belonging to him and these entities in November 2006 by the Australian Taxation Office (ATO) and the New Zealand Inland Revenue Department (IRD), which has been the subject of litigation. 2. We are instructed as follows: (a) … (b) … (c) that the ATO, on behalf of the Commissioner of Taxation, has undertaken not to take possession of documents from New Zealand until the appeal process has been exhausted/completed; (d) that Mr Petroulias, Avowal and PAC will not be asserting legal professional privilege in New Zealand for any legal professional privilege that may apply in New Zealand, given: i) that the New Zealand Courts are not equipped to assess foreign (Australian) privilege claims; ii) that Mr Petroulias has been unable to attend and practically make any privilege claims in New Zealand because of his incarceration; iii) the fact that there is little, if any, privilege that arises in New Zealand with New Zealand lawyers and that the privilege claims will relate to Australian lawyers who are in Australia and can be called if necessary to substantiate any challenge. 3. We are instructed that Mr Petroulias, Avowal and PAC reserve their rights to claim privilege at the first opportunity when the documents in question arrive in Australia, before your client accesses those documents and commences to review them. … 5. Accordingly, could you please confirm: (a) that Mr Petroulias, Avowal and PAC will be given the first opportunity to claim privilege before any review of the documents in question is undertaken; (b) that your client will not receive those documents until the Supreme Court proceedings in New Zealand have been completed; (c) whether you have instructions to receive service of the High Court proceedings identified above. 20 The AGS responded on 30 June 2010. Significantly, it did not quibble with the assertion contained in paragraph 2(c) of the letter of 15 June 2010 "that the ATO … [had] undertaken not to take possession" of the documents, nor did it provide the confirmations sought in para 5 of that letter. As will appear below (see at [27]), this is despite the fact that the ATO had apparently already taken possession of the documents on 22 February 2010. However, the AGS did raise a query about the basis upon which Mr Petroulias claimed to act for Avowal and Professional Admin Service Centres Pty Ltd ("PASC"). Then, in response to the matters affecting Mr Petroulias personally, it stated: It is not clear to which documents you refer, and we request further particularisation in this respect. We note that it would appear that where documents have been provided to third parties without assertion of privilege, such privilege would be waived. Any claim would need to particularise why there was no such waiver. With regard to the documents held in New Zealand, we note that the orders of Venning J on 8 May 2009 and 22 May 2009 in the matters of Avowal and others including Mr Petroulias in the High Court of New Zealand provided that once an affidavit had been filed as anticipated therein, there would be no hindrance to documents being provided to the Commissioner. As the New Zealand Inland Revenue Department were authorised by those orders to provide such information to the Commissioner, and by the filing of the affidavit the Commissioner is authorised to receive such information, it would appear that further claims would be inconsistent with those orders. 21 On 20 July 2010, Frenkel Partners responded to the AGS' letter of 30 June 2010. Paragraph 2 of that letter appears to respond to the queries the AGS raised about Mr Petroulias' standing to act for Avowal and PASC. It stated: We are instructed that in relation to the entities "Avowal Administrative Attorneys Limited" (Avowal) and "Professional Admin Service Centres Pty Ltd" (PAC): (a) Mr Petroulias is the 100% shareholder of Avowal; is the assignee of its causes of action; and has power of attorney to conduct all necessary proceedings. In its corporate law, the sole shareholder can bring proceedings in the company's name in any event. (b) Mr Petroulias is the 100% shareholder of PAC; is the assignee of its causes of action; and has power of attorney to conduct all necessary proceedings. 22 Then, para 3(b) appears to set out the particularisation of the documents requested in the AGS' letter of 30 June 2010 (see at [20] above) as follows: The particularisation you seek is any and all documents whatsoever coming from New Zealand in respect of which privilege has been claimed. The legal validity of such raids is still under challenge. The proceedings as to the validity of the raids say nothing about privilege. 23 In para 4, Frenkel Partners again raised the question of the undertaking given by the ATO not to seek to take possession of any documents until the appeal process in New Zealand was complete. Paragraph 4 was in these terms: We understand that the ATO has filed affidavits in the New Zealand proceedings to the effect that it will not seek to receive any documents until the New Zealand appeal proceedings are completed. We understand that these proceedings are not currently completed – an appeal to the New Zealand Supreme Court is still to be determined. Your letter of the 30th of June omits comment on this issue, which is raised in our letter dated 15 June. 24 As to the AGS' statements about the procedure established by Venning J, Frenkel Partners' 20 July 2010 letter included the following statements: 5. Your letter confuses the effect of Justice Venning's orders as to the interim position whilst the substantive validity proceedings are being determined. The effect of Justice Venning's order was to allow the IRD to pass documents seized to the ATO – subject to the affidavit which stated that the ATO would unwind any actions taken in respect of that information if the appeal was successful. These orders had no impact whatsoever on whether or not the documents might be subject to a claim to privilege. This was a separate matter to be determined by the Court, either in New Zealand if the privilege was one in respect of which the New Zealand Court had jurisdiction or elsewhere if the privilege was one that could be asserted in another jurisdiction. 6. You would no doubt also be aware of the orders of Harrison J. The effect of these orders is that the privilege "proceedings" in New Zealand have only been discontinued – not determined. These proceedings could by law only consider section 20 privilege under the New Zealand Tax Administration Act. That is the only privilege that applies in the tax context in New Zealand and it only applies to New Zealand practitioners. It could never have had anything to say about privilege relating to Australian practitioners. The orders of Harrison J could not affect any claim to common law privilege or to litigation privilege that might need to be determined in Australia. These other forms of privilege were part of the blanket claim asserted by Peter Speakman, partner of Kensington Swan Lawyers, and have never been waived. 7. It is plain that privilege is that of the clients of the practitioners who had electronic documents stored on the computer systems and in hard copy form in the Avowal offices and it is only those clients who can waive privilege if they choose to do so. If there is any dispute about privilege it is for the Australian courts to determine this and not the AGS. 8. If your client adopts a position that there will be no opportunity for the claim of privilege to be made at common law over communication with Australian practitioners, then please give us adequate notice of this so that we may have the opportunity to obtain instructions about commencing injunctive proceedings. 25 The AGS took more than four months to respond to this letter of 20 July 2010. In the meantime, on 16 August 2010, the New Zealand Supreme Court dismissed the application by Avowal and Mr Petroulias for leave to appeal the judgment of the New Zealand Court of Appeal of 11 May 2010. The AGS' response of 26 November 2010 recorded this fact and stated: Therefore, the ATO understands that all litigation in New Zealand relating either to the judicial review challenge to the validity of the search and seizure or to claims for legal professional privilege is now at an end. 26 The letter then disclosed that the ATO had already taken possession of the documents, at least in electronic form. It said: The ATO presently holds one computer disk which it received from the New Zealand Inland Revenue Department (IRD) pursuant to the Australia-New Zealand Double Taxation Agreement. 27 Later in the letter, the AGS added: These documents were provided by the IRD to the ATO on 22 February 2010 pursuant to the Australia-New Zealand Double Taxation Agreement. 28 And, the letter then went on to describe the documents as follows: The computer disc (sic) currently held by the ATO contains approximately 30,000 documents obtained from the following sites: 1. Avowal Office Queen Street, Auckland; 2. Motueka River Lodge; and 3. Tait Street, Ruby Bay, Nelson. The documents on the disk are those documents previously reviewed by ATO officers in December 2009 and referred to in [the] report prepared by the IRD and provided to the applicants in the New Zealand proceedings on 20 January 2010. We enclose a copy of that report, for your assistance. 29 The letter had earlier set out the circumstances in which the documents were provided by the IRD to the ATO as follows: However, no documents had been physically exchanged with the ATO before the judgment of 21 December 2009. An exchange was being prepared at that time (pursuant to the earlier minute), but once the 21 December 2009 judgment was delivered, these documents were recovered and withheld in New Zealand. The High Court ordered that these documents were not to be made available to the ATO until the expiry of five working days after the receipt of the list of documents by the applicants. Pursuant to the judgment of Venning J on 21 December 2009, the IRD provided a detailed report to the applicants on 20 January 2010 identifying the documents considered to be "open" and therefore not privileged. 30 The final three paragraphs of the AGS' letter dealt with the "non-open" documents. About them, it said this: We are instructed that further documents are currently being prepared by the IRD to be sent to the ATO. We understand that your client wishes to make claims for legal professional privilege in relation to these documents i.e. the "non-open" documents. We confirm that there will be an opportunity for any claim of privilege to be made prior to inspection by the ATO of these documents. 31 It will be noted that this letter did not advance any explanation as to how the ATO had taken possession of the documents on 22 February 2010, when it had apparently given the undertaking described in each of the letters from Frenkel Partners (see at [19] and [23] above) and not denied by the AGS, that it would not do so until the appeal process in New Zealand was complete. 32 In the concluding paragraphs of its letter of 26 November 2010, the AGS gave notice on behalf of the ATO that: In the circumstances, the ATO considers that it has the right to use the open documents it has received from the IRD and intends to do so at 10.00 a.m. on 9 December 2010. 33 This notice obviously led to the urgent application of 8 December 2010 for an interlocutory injunction before Greenwood J, which is the subject of this application for leave to appeal. 34 Mr Petroulias actually commenced these proceedings a little over a week before his solicitors received the AGS' letter of 26 November 2010. He did that on 17 November 2010. In his originating application, he sought some 14 declarations and other orders. Those are set out in full in the reasons of Greenwood J at [1]. Among the declarations sought were the following: 2. …, a declaration that the decision to conduct the raid and the decision to conduct the raid jointly with the New Zealand Inland Revenue Commissioner was invalid and beyond the power of the Defendant; 3. a declaration that any information provided or received between the Defendant and the New Zealand Inland Revenue Commissioner for the purposes of the joint operation or as a result of [it] was unlawful and that such information is to be returned to the Applicant; 4. a declaration … that, failing to provide the Applicant and relevant parties an opportunity to claim legal professional privilege makes the receipt, retention and use of information received from New Zealand unlawful and that such information is to be returned to the Applicant; 5. a declaration … that, failing to provide the Applicant and relevant parties an opportunity to claim legal professional privilege makes the receipt, retention and use of information received from New Zealand no longer a "lawful violation of privilege" by a "cursory examination" and renders the same unlawful and that such information is to be returned to the Applicant. 6. a declaration … that, there has been a change of intervening purpose since the raid such that the receipt of information where such information includes the use of that information for the purposes of a criminal investigation in Operation Winkenby (sic), unlawful and that such information is to be returned to the Applicant; 35 He also sought interlocutory relief, including an order restraining the Commissioner from "using information obtained from: (i) the New Zealand Inland Revenue Department". Of course, not surprisingly, this relief, both final and interlocutory, was not specifically directed to the matters that were subsequently raised in the AGS' letter of 26 November 2010. The grounds relied upon before Greenwood J 36 Before Greenwood J, Mr Petroulias advanced four grounds for the grant of the injunction he sought. In summary, they were: (a) the procedure established by Venning J in New Zealand to determine any claims of legal professional privilege was not relevant to whether one or more of the "open documents" might independently be subject to a claim of legal professional privilege according to Australian law: see at [18]. Mr Petroulias therefore claimed that he should be given the opportunity to pursue such claims to legal professional privilege as existed in Australia and the injunction should issue to prevent the ATO accessing the documents while he did so; (b) the documents were seized pursuant to a "joint enterprise" between the ATO and the IRD for the purpose of a foreign revenue authority and the seizure was therefore unlawful: see at [21]; (c) the IRD gave the documents to the ATO in contravention of the prohibition contained in Article 26(2)(b) of the Australia-New Zealand Double Tax Agreement: see at [22]; and (d) even if the seizure of the documents by the IRD and their delivery to the ATO was lawful, an "intervening change of purpose" occurred, viz the criminal investigations against Mr Petroulias, which amounted to an abuse of the Commissioner's powers: see at [23]. 37 It will be noted that these grounds broadly correspond with the final relief sought in paras 2 to 6 of the originating application in these proceedings (see at [32] above). Ground (a) broadly corresponds with the declarations sought in paras 4 and 5, grounds (b) and (c) broadly correspond with the declarations sought in paras 2 and 3 and ground (d) broadly corresponds with the declaration sought in para 6. The decision of Greenwood J 38 As to the first ground, in summary, Greenwood J concluded, as follows: (a) There may be an asymmetry between the laws of New Zealand and Australia relating to legal professional privilege: see at [55]–[57]. (b) However, where Mr Petroulias, as a former First Assistant Commissioner of Taxation, knew of the importance of making any claims to legal professional privilege that may exist in the documents and also knew that officers of the ATO would look at the documents not subject to any privilege claim, and with that knowledge elected to stand by and take no steps to make any claim to privilege in the documents, his conduct was consistent with a waiver of any privilege that might otherwise exist in the documents in New Zealand as a part of the procedure established by the orders of Venning J: see at [61] and [72]. (c) Further, Mr Petroulias had the opportunity to pursue any claim to legal professional privilege that may arise under Australian law in the 2006 Australian proceedings before Dowsett J and he subsequently elected to abandon those proceedings: [62]–[72]. (d) In any event, the evidence did not demonstrate Mr Petroulias had standing to assert any claim of legal professional privilege on behalf of the other entities involved and none of them was a party to these proceedings: see [10]–[16] and [72]). 39 As to the second ground, in summary, Greenwood J concluded, as follows: (a) The decision of Currie v Deputy Commissioner of Taxation [2000] FCA 1964 was distinguishable on the facts from the present case and was rejected on the same ground when it was raised by Mr Petroulias in the Court of Appeal: see [79]–[81] and [93]. (b) Furthermore, the documents were seized by the IRD as a part of its investigations of tax schemes affecting the taxation base in New Zealand and in Currie, Finkelstein J had expressly rejected the notion that information properly obtained in this way could not be shared with New Zealand authorities: see at [80]–[82]. 40 As to the third ground, in summary, Greenwood J concluded, as follows: (a) The supply of the information and documents by the IRD to the ATO was consistent with the Australia-New Zealand Double Tax Agreement: see at [83]–[93]. (b) Nothing in the Australia-New Zealand Double Tax Agreement prevented the IRD from voluntarily providing information to the ATO: see at [95]–[99]. 41 As to the fourth ground, in summary, Greenwood J concluded, as follows: (a) There was no evidence to support the contention that an intervening or supervening purpose, viz conducting criminal investigations, had occurred after the supply of the documents by the IRD to the ATO: see at [100]–[102]. The principles on the grant of leave to appeal 42 The basic principles that govern the grant of leave to appeal are well-established. In this application, Mr Petroulias must show that the decision of Greenwood J is attended with sufficient doubt to warrant the grant of leave. Furthermore, he must show that substantial injustice will result if he is refused leave to appeal: see Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398–399 and Bienstein v Bienstein (2003) 195 ALR 225; [2003] HCA 7 at [29]. 43 On the question of substantial injustice, it can be seen from the summary of the decision of Greenwood J above that his Honour has effectively made final rulings on the relief sought in paras 2 to 6 of Mr Petroulias' originating application (see at [37] above). It follows that, while his Honour's decision is interlocutory in form, it is final in substance. In such circumstances, the threshold for a grant of leave is not high: see Wills v Australian Broadcasting Corporation (2009) 253 ALR 228; [2009] FCAFC 6 at [31] per Rares J, with whom North and Emmett JJ agreed. It is not treated with the same exclusory caution as an interlocutory order involving the exercise of discretion on a point of practice or procedure: see Paringa Mining & Exploration Co PLC v North Flinders Mines Ltd (No 2) (1988) 81 ALR 609 at 613, per Mason CJ, Brennan and Gaudron JJ. 44 As to the standard to be applied in assessing whether there is sufficient doubt, in SZJDS v Minister for Immigration and Citizenship [2008] FCA 1093 at [21]–[30], I considered the various authorities on that question and concluded that: "unless the appeal is shown to have no reasonable prospects in the sense that it is devoid of merits or will clearly fail, or is hopeless or unarguable, leave should be granted". While that case involved an application for leave to file an appeal out of time, I consider the same principles apply in relation to an application for leave to appeal of the present kind. 45 Further, as to the level of scrutiny required of the decision sought to be appealed, in Food Channel Network Pty Ltd v Television Food Network, GP [2009] FCA 1446 at [26], I concluded that: [A] court should be careful to avoid converting a leave application of this kind into a preliminary hearing of the appeal. I should therefore avoid making any detailed analysis of the issues raised, or expressing any concluded views on them. I consider my assessment of the issues should be more akin to the "rough and ready" approach suggested by Brennan CJ and McHugh J in Jackamarra v Krakouer (1998) 195 CLR 516 at [9]. 46 Accordingly, I intend to take the same approach to the standard to be applied and the level of scrutiny involved in considering Mr Petroulias' application for leave to appeal. The doubt relied upon for leave to appeal 47 In support of this application, Mr Petroulias has put forward a draft notice of appeal. It is in the following terms: 1. The Court erred in finding that there was no serious question to be tried in relation to the applicant's claim for legal professional privilege in Australia. 2. The Court erred in deciding at an interlocutory stage the issue of waiver by the applicant of his fundamental Australian law rights based on inferences to be drawn from conduct. 3. The Court erred in finding (at para [61]) that the applicant had "elected to stand back" and "t[ook] no step to assert privilege on any ground" in circumstances where (i) the only privilege capable of being determined in New Zealand was New Zealand practitioner privilege (ii) the New Zealand Court process involved an express undertaking by the respondent not to take action in relation to the documents then in New Zealand until the appeals process in New Zealand was completed in August 2010 and (iii) in fact the applicant had claimed by correspondence privilege before that date. 4. The Court should have found that the issue of waiver was a serious issue to be tried because: a. The Court found that there was a serious question whether the principles relating to privilege under New Zealand law were not the same as the principles under Australia (sic) law and the New Zealand court had jurisdiction only to deal with New Zealand practitioner claims (at para [56]); b. The Court received unchallenged evidence that the applicant had not intended to waive his fundamental right to privilege under Australia (sic) law by taking proceedings in New Zealand under New Zealand law; c. The applicant had acted immediately the respondent notified him in December 2010 that it would be accessing the documents in his possession. 5. The Court erred (at paras [58] – [61]) in deciding that the applicant's knowledge that the respondent would obtain possession of the relevant documents from the New Zealand authorities once New Zealand privilege claimed was determined amounted to a waiver or displacement of his rights under Australian law in favour of the respondent. The Court did not in its reasons for decision take into account the principle originating from Ashburton v Pape, which authority was referred to it in supplementary written submissions, that equity can intervene to preserve confidentiality of privileged documents lost at law through possession being obtained by a third party. 6. The Court erred in not finding that notwithstanding the lawfulness for the New Zealand IRD to obtain information for both New Zealand and Australian tax purposes in New Zealand law (being broader than Australian law); that it is unlawful for the ATO to receive the benefit information which is the product of an ultra vires joint enterprise because it involved the ATO acting beyond its powers under Australian law where part of its purpose for entering into the joint information gathering enterprise includes an impermissible purpose of obtaining information to assist a foreign revenue authority. 7. The Court erred in para [89] distinguishing the authority in John Currie in relation to the ATO's joint enterprise with the (sic) New Zealand. 8. The Court erred in not finding that notwithstanding that the lawfulness for the New Zealand IRD to provide to the ATO information obtained by New Zealand under New Zealand law, it is unlawful for ATO to receive information which is the product of a joint enterprise to obtain information which is beyond the authority of the ATO to obtain in Australia. 9. The Court should have found that the balance of convenience favoured the injunction being granted and should have granted the injunction. 48 On 19 May 2011, Mr Petroulias was given leave to amend his draft notice of appeal to add two further grounds as follows: 10. The Court erred in finding, at para [72], that the applicant had standing sufficient to waive the privilege of Avowal or the Motueka River Lodge even if the applicant had the subsequent authority to seek to protect their privilege. 11. The Court erred, at para [102], in not considering the authority of Deputy Commissioner of Taxation v Hugo John De Vonk (1995) FCA 1735, which it was bound to apply. 49 Mr Petroulias' written and oral submissions in support of the application were essentially the same as those that he advanced before Greenwood J. However, he did emphasise the following matters to support his claim that there was sufficient doubt about the decision of Greenwood J on the first ground, ie that relating to the legal professional privilege issue: (a) whether he waived the right to claim legal professional privilege under Australian law was a question of fact which should have been left to the trial judge; (b) Greenwood J relied on the fact that the documents were made available to the ATO when that meant no more than that the ATO would, upon receipt of the documents, apply its guidelines in assessing any claims to privilege under Australian law. The relevant parts of those guidelines are set out in the paragraphs below; (c) the New Zealand courts had no jurisdiction to deal with any claim to legal professional privilege under Australian law and the New Zealand procedure established by Venning J was never intended to do so; (d) a waiver cannot arise from the act of a person complying with a court order; and (e) by pursuing the appeals in the New Zealand court system, he was not abandoning his right to claim privilege under Australian law. Moreover, the 2006 Australian proceedings were superseded by the New Zealand court proceedings and, in particular, the undertaking that was given by the ATO during the course of those proceedings. The 2006 Australian proceedings did not therefore involve any abandonment of his rights to claim privilege under Australian law. 50 Mr Petroulias also made a number of written and oral submissions in support of his claim that there was sufficient doubt about each of the other three grounds he advanced before Greenwood J and which were rejected by his Honour. Again, they were in much the same terms as those he put to Greenwood J, so it is not necessary to summarise them here. 51 Excerpts from the Commissioners Access Guidelines ("ATO guidelines") (referred to in [49(b)] above) were annexed to one of Mr Petroulias' affidavits that he filed in support of his application before Greenwood J. Those excerpts included the following statements: 6.1.4 The Tax Office recognises that decisions such as Daniels Corporation International Pty Ltd & Anor v Australian Competition and Consumer Commission indicate that the access and information-gathering powers are subject to claims for LPP. Also, the High Court has held that LPP is not abrogated by the Commissioner's access and notice powers. 6.1.5 The Tax Office policy is that its access and information-gathering powers do not override LPP. If a communication is subject to LPP, the Tax Office is not entitled to use its statutory powers to obtain it or to informally request it. Conversely, if a communication is not privileged, the Tax Office is entitled to do so. … 6.6.12 Access and information-gathering principle (iii) states that a consultative approach to obtaining information should be the norm. As a general rule you should give notice of access to the custodian, except if it is considered that the security of documents might be endangered. Even in those exceptional circumstances when you take access without prior notice you are still required to give an adequate opportunity for privilege to be claimed. Similarly, you should generally consult the recipient before using the notice powers. This may result in negotiation to resolve LPP issues before a notice is sent. 6.6.13 This consultative approach also means you should whenever appropriate attempt to resolve disagreements through negotiation. 52 Mr Petroulias also relied upon the guidelines agreed between the Commissioner and the Law Council of Australia "in relation to the exercise of the access powers provided under taxation legislation at lawyers' premises in circumstances where a claim of legal professional privilege is made". He also annexed excerpts from that document to his affidavit, including the following: Where Tax Office access to documents is required and the lawyer believes some of the documents to be privileged, the taxation officer will allow the lawyer sufficient time in which to examine the documents and, if necessary, to seek advice on them. In the normal course of events, where prior notice has been given to the lawyer, it is envisaged that the lawyer will have sought instructions from the client and have examined the document(s) prior to access being sought. Where more time is appropriate, the lawyer should undertake the examination within a period agreed to be the lawyer and the taxation officer and ensure the security of the documents. The Tax Office reserves its right in these circumstances to be present while the lawyer examines the documents. However, documents may not be viewed by the taxation officer. In respect of all documents identified by the lawyer and/or identified by the taxation officer in discussions with the lawyer as potentially within the access request, the taxation officer shall, before proceeding to inspect and copy the documents, ask the lawyer if he/she wishes to claim legal professional privilege on behalf of the client in respect of any of the documents. If a claim of legal professional privilege is then asserted in relation to any of those documents sought to be inspected, the lawyer shall indicate to the taxation officer an adequate description of the document(s) and in whose name the claim is made, and indicate the grounds upon which the claim is made, at least in general terms. The more specific the grounds indicated, the better placed the taxation officer will be to determine whether or not to concede the claim. In the Circumstances there is sufficient doubt 53 On the first ground (see at [36] and [49] above), in essence, Mr Petroulias is saying that he should have been given an opportunity to claim legal professional privilege in relation to the New Zealand documents under Australian law and he should have been granted an injunction by Greenwood J to allow him to do that. It is clear from his solicitors' letters that he claimed that legal professional privilege in the documents under Australian law from at least 15 June 2010. While this might be thought to be late in the piece, I consider it is significant that his solicitors twice pointed to an undertaking apparently given by the ATO in the New Zealand court proceedings that it would not take possession of the documents until the New Zealand court proceedings were completed: see at [19] and [23] above. The AGS did not deny that such an undertaking had been given in either of its letters in response of 30 June 2010 and 26 November 2010. Indeed, it implicitly acknowledged that the ATO was under some such obligation by giving the notice it did in its letter of 26 November 2010. In these circumstances, I consider it is arguable that an inference should be drawn that such an undertaking was given by the ATO. If so, I consider it must be arguable that Mr Petroulias' conduct in standing by and not making a claim to privilege under the procedure established by Venning J did not amount to a waiver of any claim to legal professional privilege in the documents under Australian law. Furthermore, I consider these arguments may be, at least arguably, supported by the consultative approach portrayed in the ATO guidelines on the treatment of claims to legal professional privilege: see at [51] and [52] above. 54 I also consider it must be arguable that the procedure established by Venning J did not allow Mr Petroulias to claim legal professional privilege in the documents under Australian law, but instead only allowed him to claim the more limited professional privilege available under the relevant New Zealand statute: see at [14] above. Even if that is not so, I consider it must be arguable that the New Zealand courts had no jurisdiction to determine any claim to legal professional privilege under Australian law, if Mr Petroulias had made one. 55 While it is true that Mr Petroulias only made a very limited claim to legal professional privilege in the New Zealand documents in the 2006 Australian proceedings, those proceedings occurred very early in the history of this matter and I consider it must be at least arguable, as Mr Petroulias does, that the Australian proceedings were overtaken by the New Zealand court proceedings and Mr Petroulias did not thereby abandon his rights to claim legal professional privilege in the documents under Australian law by not pursuing the Australian proceedings, at least until such time as the New Zealand court proceedings were completed. 56 Finally, I consider the question whether Mr Petroulias had standing to claim privilege for the other entities is, at least arguably, irrelevant for present purposes. That is so because the ATO does not seem to dispute that Mr Petroulias, personally, could claim legal professional privilege in the "open documents" under the procedure established by Venning J and, but for his apparent waiver, would have been able to do so. Moreover, it is apparent from the concluding paragraphs of the AGS' letter of 26 November 2010 that the ATO is willing to afford him the opportunity to claim legal professional privilege in the "non-open" documents. If that is so, it must be at least arguable that the ATO would have afforded him the same opportunity in relation to the "open documents" but for its claim that he had waived any claim to privilege. Conclusion 57 For these reasons, I consider there is sufficient doubt about the judgment of Greenwood J on the first ground, ie relating to Mr Petroulias' opportunity to claim legal professional privilege in the documents under Australian law, to justify him being granted leave to appeal the decision to the Full Court. In doing so, I reiterate the lower threshold that applies where the practical effect of that judgment was to finally determine Mr Petroulias' claim to relief on this first ground. I also reiterate that my conclusions that the matters above are arguable should not be taken as expressing any views, one way or the other, on the ultimate success of those arguments. 58 As to the other three grounds relied upon by Mr Petroulias (see at [36(b)]–[36(d)] above), those three grounds all go to the legality of the seizure of the documents and involve relatively narrow legal issues. It follows that it is possible for Mr Petroulias to fail on all these three grounds and yet still succeed on the first ground going to his legal professional privilege claim in the documents. In saying this, I acknowledge that the legality of the seizure of the documents has now been examined by every available level of the New Zealand judicial system and Mr Petroulias is now effectively seeking to pursue similar challenges in the Australian judicial system. Nonetheless, having decided Mr Petroulias should be granted leave to appeal on the first ground, I do not consider it is appropriate for me, as a single judge determining a leave application, to dictate what issues may, or may not, be put to, or considered by, the Full Court in that appeal. I am confirmed in this view by decisions that make it clear that appeals lie against judgments not against reasons: see Driclad Pty Ltd v Commissioner of Taxation (1966) 121 CLR 45 at 64 and Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 3) (1998) 86 FCR 374 at 378. 59 Finally, since Greenwood J did not have to consider any balance of convenience issues, I do not have to do so either. Of course, that issue is very likely to arise in Mr Petroulias' related and, as yet undetermined application, for an injunction pending the hearing of his appeal to the Full Court. 60 For these reasons, I will order that Mr Petroulias be granted leave to appeal the judgment of Greenwood J delivered on 23 December 2010. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. Associate: Dated: 18 July 2011