FEDERAL COURT OF AUSTRALIA Binetter v Deputy Commissioner of Taxation (No 2) [2012] FCA 655 Citation: Binetter v Deputy Commissioner of Taxation (No 2) [2012] FCA 655 Parties: MARGARET BINETTER v DEPUTY COMMISSIONER OF TAXATION File number: NSD 420 of 2012 Judge: ROBERTSON J Date of judgment: 19 June 2012 Catchwords: PRACTICE AND PROCEDURE – judicial review of notice under Income Tax Assessment Act 1936 (Cth) s 264 – admissibility of expert evidence – report by independent accountant – evidence going to meaning of notice and reasonableness of time for compliance – relevance – whether probative value of report substantially outweighed by danger of undue waste of time Legislation: Evidence Act 1995 (Cth) s 135 Income Tax Assessment Act 1936 (Cth) s 264 Cases cited: Fieldhouse v Commissioner of Taxation (1989) 25 FCR 187 followed Hart v Commissioner of Taxation (2005) 148 FCR 198 distinguished Date of hearing: 19 June 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 14 Counsel for the Applicant: Ms RL Seiden with Mr P Bruckner Solicitor for the Applicant: Signet Lawyers Pty Ltd Counsel for the Respondent: Mr MA Wigney SC Solicitor for the Respondent: Australian Government Solicitor IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 420 of 2012 BETWEEN: MARGARET BINETTER Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent JUDGE: ROBERTSON J DATE OF ORDER: 19 JUNE 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The tender of the affidavit of Mr MacLean is rejected. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 420 of 2012 BETWEEN: MARGARET BINETTER Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent JUDGE: ROBERTSON J DATE: 19 JUNE 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant seeks to read, in this judicial review proceeding for review of a notice issued under s 264 of the Income Tax Assessment Act 1936 (Cth), a report in the form of an affidavit of Peter W MacLean, dated 30 April 2012. It is said on behalf of the applicant that this report and this evidence is relevant to the proceedings by reference, primarily, to the course taken in Hart v Commissioner of Taxation (2005) 148 FCR 198. 2 The notice in that case was addressed to a principal of Cleary Hoare and it was accepted by the Commissioner, as one can see from [10] of the judgment of Greenwood J, that an affidavit of a Mr Festa, another principal of that firm, was admissible to the extent it went to the objective assessment of whether the time for compliance allowed by the notice was a reasonable time. 3 The reasoning of Greenwood J, relied on by the applicant before me, is first that the present affidavit goes to the question of whether a reasonable person in the position of the addressee can fairly comply with the notice. The second ground on which this material is put is the question of how long it will take to comply with the notice. 4 What Mr MacLean was asked to do appears in paragraph 3 on page 9 of the affidavit, and that was to give his opinion on what was required by the notice and whether he considered there was sufficient description in the notice from his perspective as an accountant. And he was also asked to address the adequacy of the period of time to comply, which, I note, is not precisely the same issue as how long from now it would take to comply, but I accept that they are related. 5 In my opinion, it is not going to assist me in determining any of the issues that I have to determine to know what an independent accountant, from the perspective of an accountant, might have to say about what, in my view, are ordinary English words in the notice, and no contention is put that the words have a technical meaning. 6 Also I note not only is Mr MacLean not the recipient of the notice but it does not appear that he is the applicant's accountant. So in that sense, there is a difficulty in approaching the present questions by reference to assumptions which he is asked to make, which may well not be the assumptions from the point of view of the knowledge of the person who is the applicant. I regard that as a fundamental difficulty in the admissibility of this material. Mr MacLean's position is quite unlike that of the deponent in Hart (above). 7 I should also say, in passing, that I regard it as an added difficulty, as a matter of form, that Mr MacLean was provided with and asked to take into account, and his report proceeds by reference to, the applicant's preliminary outline of submissions dated 19 March 2012 that had been made on an interlocutory application in these proceedings. It seems to me an appropriate course would be to find out first, if necessary, from that document what the assumptions were and then ask the proposed independent witness to make those assumptions. I regard it as a difficulty going to the independence of the alleged independent expert to provide that expert with material by way of submissions rather than factual material or material by way of assumptions. 8 In my view there are both formal difficulties with the report, and difficulties from the perspective that Mr MacLean is asked to make assumptions, which assumptions are to some extent unproved but which, even if proved, do not put him in the position of a reasonable person in the position of the addressee of the notice as articulated by Hill J in Fieldhouse v Commissioner of Taxation (1989) 25 FCR 187 and as referred to by Greenwood J in Hart (above), to which counsel for the applicant took me. So in my view, the report of Mr MacLean is irrelevant. 9 If I am wrong in that, then any probative value the report has is, in my opinion, substantially outweighed by the danger that it might cause or result in an undue waste of time within s 135 of the Evidence Act 1995 (Cth). 10 I should separately address, briefly, the issue of whether the material may be relevant to how long it may take to comply with the notice. Again, in my view, it is not relevant or, if it is marginally relevant, s 135 would apply because the opinions Mr MacLean expresses in relation to the issue of the length of time that it might take to comply are so bound up in the assumptions that he makes about the meaning of the notice. And furthermore, it is a theoretical exercise, as I have said, because there are no adequate or separately identified specific facts or assumptions other than those that I have referred to, stemming from Mr MacLean's construction of the notice, which could found any sensible conclusion in reliance on his affidavit as to how long it would take to comply with the notice. 11 I refer, in particular, to those paragraphs where Mr MacLean does attempt, on the basis that I have identified, to address the question of time for compliance. 12 Other objections were taken on behalf of the respondent; that is beyond relevance, beyond the basis of the unproven facts and assumptions and beyond the s 135 contention. There is force in the submission, on behalf of the respondent that the reasoning in the report is not sufficient to show that the opinions are based on Mr MacLean's specialised knowledge. 13 Finally I note that the only point in the single spaced 21 pages and 103 paragraphs of the applicant's written submissions at which Mr MacLean's report is referred to is in paragraph 103 which seeks an order that the Court determine the period of time to comply with the notice "taking into account the matters in paragraph (sic) of the Preliminary Outline of Submissions at [49]-[76], referred to in the report of Mr Peter MacLean dated 30 April 2012 at [7.2]." That paragraph of the report read as follows: 7.2 In my opinion the wording of this [s 264] request would cover a very wide range of information. Reference is made to paragraphs 67 and 68 of the Applicant's Preliminary Outline of Submissions dated 19 March 2012 which raises issues regarding the potential width of the ATO's request and sets out some of the details in addition to those listed by the ATO that might be covered by such a request. 14 For these reasons I reject the tender of the affidavit of Mr MacLean. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson. Associate: Dated: 26 June 2012