Land and Environment Court of New South Wales CITATION : AA Tremayne (Kirribilli) Private Hotel Pty Ltd v North Sydney Council [2007] NSWLEC 279 This decision has been amended. Please see the end of the judgment for a list of the amendments. APPLICANT AA Tremayne (Kirribilli) Private Hotel Pty Ltd PARTIES : RESPONDENT North Sydney Council FILE NUMBER(S) : 10791 of 2006 CORAM: Talbot J KEY ISSUES: Subpoena :- Whether document produced required to be produced having regard to secrecy of provisions of a taxation law. Interpretation Act 1987, s 21 (1); Land Tax Management Act 1956, s 10Q; LEGISLATION CITED: Land and Environment Court Act 1979, s 67; SEPP 10 – Retention of Low Cost Rental Accommodation; Taxation Administration Act 1996, ss 81, 82, 85. Chief Commissioner of Stamp Duties (NSW) v Green and Anor 95 ATC 4,001; Clyne v the Deputy Commissioner of Taxation (1983) 1 NSWLR 111; CASES CITED: Consolidated Press Holdings Limited v Federal Commissioner of Taxation (1995) 57 FCR 348; (1995) 129 ALR 443; Cowan v Stanhill Estates Pty Ltd [1996] VR 604 ; Javorsky v Commissioner of Taxation (2005) NSWSC 167; 216 ALR 619; Roberts v Hay [1992] Qd R 688. DATES OF HEARING: 17/05/07 DATE OF JUDGMENT: 22 May 2007 APPLICANT Dr Sorensen (Barrister) SOLICITORS LEGAL REPRESENTATIVES: Cutler Hughes & Harris RESPONDENT Ms Irish (Barrister) SOLICITORS DLA Phillips Fox JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Talbot J 22 May 2007 10791/2006 AA Tremayne (Kirribilli) Private Hotel Pty Limited v North Sydney Council JUDGMENT Application to set aside subpoena 1 Talbot J: The Respondent council has issued a subpoena to The Proper Officer, Office of State Revenue of NSW, requiring the production of the following documents:- 1 All documents constituting, recording or referring to any application (including any statutory declaration and supporting evidence) lodged by or on behalf of the AA Tremayne (Kirribilli) Private Hotel Pty Limited, or in respect of the property Lot 1 DP 115513, Lot 1 DP 847842 and Lot 1 DP 922733 known as 89 and/or 89A Carabella Street, Kirribilli in the State of NSW, under Section 10Q of the Land Tax Management Act 1956 or for an exemption from land tax or reduction in land value for the tax year commencing 1 January 1990 and succeeding tax years not beyond tax year 2000. 2 The Applicant in the Class 1 proceedings by Notice of Motion dated 20 April 2007 seeks an order that the subpoena be set aside. 3 The Chief Commissioner of State Revenue has instructed the State Crown Solicitor who has appeared on the hearing on the Notice of Motion. 4 Mr Twohill who appears for the Chief Commissioner, objects to the production of documents and relies on the submissions made by Dr Sorensen on behalf of the Applicant. 5 In a letter to the Respondent's solicitors of 2 May 2007 the Crown Solicitor advised that relying upon the provisions of s 85 and s 82(a) of the Taxation Administration Act 1996, (TAA) his client is not obliged to produce any documents in answer to the subpoena unless proof is provided that the Respondent has the consent of the person or persons to whom the information relates to the disclosure of the information. 6 Section 82 of the TAA, provides: - Permitted disclosures—to particular persons A tax officer may disclose information obtained under or in relation to the administration of a taxation law: (a) with the consent of the person to whom the information relates or at the request of a person acting on behalf of the person to whom the information relates, or (b) in connection with the administration or execution of the following laws (including for the purpose of any legal proceedings arising out of any of those laws or a report of any such proceedings): (i) a taxation law, (ii) the First Home Owner Grant Act 2000 or a corresponding law of another State or a Territory, (iii) the Unclaimed Money Act 1995 , (iv) a recognised revenue law, or (c) (Repealed) (d) in accordance with a requirement imposed, or authorisation conferred, by or under an Act, or 7 Paragraphs (e) to (l) identify persons to whom the information may be disclosed. Generally speaking the persons identified are creatures of statute such as the Australian Crime Commission, none of whom are relevant for present purposes although it is appropriate to identify the person referred to in paragraph (k)(ix), being the Head of the Department of the Public Service, the Chief Executive Officer of a declared authority (within the meaning of Part 6.4 of the Public Sector Employment and Management Act 2002), or the holder of a statutory office if the information relates to land, including its description, ownership and value, because Ms Irish in the course of her submissions on behalf of the Council makes reference to such a person. 8 Section 85 of the TAA provides the following: - Further restrictions on disclosure (1) A person who is or was a tax officer is not required to disclose or produce in any court any information obtained under or in relation to the administration of a taxation law except: (a) if it is necessary to do so for the purposes of the administration or execution of a taxation law, or (b) if the requirement is made for the purposes of enabling a person who is specified for the time being to be an authorised recipient to exercise a function conferred or imposed on the person by law. (2) In this section: authorised recipient means a person to whom information may be disclosed under section 82. The Applicant's submissions 9 Firstly, Dr Sorensen submits that s 82 in terms allows the exercise of a discretion to disclose information generally in accordance with paragraphs (a) to (d) or to the particular persons specified in (e) to (l), whereas s 85, except where subsection (1)(a) or (b), applies is a bar to the production of a document to a Court pursuant to a subpoena. The connection between s 85(1)(b) and s 82 is only for the purpose of identifying the category of persons who are to be enabled to exercise a function conferred or imposed on them. Accordingly, s 82 operates wholly on the basis of creating a discretion. Section 85 negates the force of a subpoena requiring the tax officer to disclose or produce any information in any Court. 10 Moreover, Dr Sorensen says that as the production is not for the purpose of the administration or execution of a taxation law, s 85(1)(a) has no operation. Similarly, no person specified as an authorised recipient under s 82 is seeking the production and accordingly, s 85(1)(b) has no application. 11 As a general submission Dr Sorensen makes the point that s 82 is dealing with production to persons and that s 85 is a distinct provision relating to a Court, which is not a person. (See s 21(1) of the Interpretation Act 1987). 12 Dr Sorensen refers to a number of cases where secrecy provisions in respect of the administration of taxation laws have been considered. Although not identical in every case, but nevertheless similar, the Courts have inclined to the view that a relevant tax officer is relieved of the ordinary obligation to disclose information or produce documents to a Court in answer to a subpoena unless for the purpose of carrying into effect the provisions of the subject legislation. (Roberts v Hay [1992] Qd R 688, Chief Commissioner of Stamp Duties (NSW) v Green and Anor 95 ATC 4,001, Javorsky v Commissioner of Taxation (2005) NSWSC 167; 216 ALR 619, Clyne v the Deputy Commissioner of Taxation (1983) 1 NSWLR 111 at 117). 13 To support what otherwise might be regarded in other circumstances as draconian provisions the applicant relies upon the observations made by Lockhart J (as he then was) in Consolidated Press Holdings Limited v Federal Commissioner of Taxation (1995) 57 FCR 348; (1995) 129 ALR 443 at 446 as follows: - (The Act) "is designed to ensure that officers of the Australian Taxation Office maintain secrecy regarding the affairs of taxpayers. The section reflects the intent of the parliament to balance two competing areas of public interest: on the one hand the interests of taxpayers in having the privacy of their financial information respected, and on the other hand the facilitation of the administration of governmental business. Taxpayers are responsible for reporting their income and outgoings. It is essential if the confidence of taxpayers is to be maintained that private information concerning their finances and affairs will not be disclosed except in the special circumstances mentioned in the various subsections…" 14 It is contended that the observations by Lockhart J are apposite to the application and construction of the provisions of Division 3 of Part 9 of the TAA. 15 There is no evidence in the present case to show that any production required by the Respondent is necessary for the purpose of the administration or execution of "any taxation law". Moreover, this Court is clearly not an "authorised recipient" for the purposes of s 85, and is not a specified person falling within any of paragraphs (e) to (l) of s 82. In any event the Court is not a "person" for the purposes of the s 85: Cowan v Stanhill Estates Pty Ltd [1996] VR 604; Clyne, and Roberts v Hay. The Council's arguments 16 Ms Irish has explained that the reference to s 10Q in the Schedule to the subpoena is relevant to the present proceedings as that section provides an exemption from taxation under the Land Tax Management Act 1956, where the land is used or occupied primarily for a boarding house for low income persons as therein defined. 17 Accordingly, information and documents held by the Office of State Revenue could be "information obtained under or in relation to the administration of the taxation law", within the meaning of ss 81, 82 and 85 of the TAA. However, she says s 82 is permissive and is to be read in conjunction with and in the light of s 85. Ms Irish also submits that s 82 is not expressed to be subject to s 85 and the provisions of the later do not override the provisions of the former. The effect of s 82(a), (b) and (d) is merely to supplement the list of persons appearing subsequently in s 82. It is also pointed out by Ms Irish, that the exemption created by s 85(1)(b) is not confined to the exercise of a function under a taxation law. According to Ms Irish, reading s 82(d) and 67 of the Land and Environment Court Act 1979 together, imposes the obligation to produce the documents in answer to a subpoena and the Court can reaffirm that obligation on the return of the subpoena. The provision on disclosure in s 81 is relaxed by the effect of s 85(1). 18 During oral submissions Ms Irish made reference to a facultative interpretation of ss 82 and 85 that would allow the Court to require production of the documents under s 82(k)(ix) carried through to s 85(1)(b) on the basis that the Director General of the Department of Urban Affairs and Planning is a concurring authority for the purposes of SEPP 10 – Retention of Low Cost Rental Accommodation (Amendment No. 6). Ms Irish did not elaborate on this argument or prove that the Director General fell within (ix). This omission presumably is understandable given that the Director General is not seeking to require the Office of State Revenue to produce the documents to enable the Director General to exercise a function conferred or imposed by law. 19 Ms Irish seeks to distinguish the various authorities relied upon by Dr Sorensen, and supported by Mr Twohill, on the basis that none of the cases are directly in point or deal with the particular legislative regime under consideration and that the observations relied upon in most cases are obiter dicta. Whether a production is required 20 The argument put by Dr Sorensen on behalf of the applicant and indorsed by the State Crown Solicitor is to be preferred. 21 Section 81 of the TAA sets the policy of non-disclosure except as expressly permitted otherwise in Part 9, Division 3. 22 Section 85 in terms expressly refers to production in any Court where the information has been obtained under or in relation to the administration of a taxation law. Although Ms Irish sought to persuade me that there could be documents provided to the Commissioner by the taxpayer on a voluntary basis in order to investigate or seek a ruling on whether the applicant was entitled to an exception under s 10Q, there is no evidence that is the case. Moreover, I am unable to comprehend how any such information would not be "information obtained under or in relation to the administration of a taxation law". Prima facie, that is, the very purpose for which the information would be provided. 23 Section 82 is to be construed in the context of providing information for particular purposes or to nominated persons or authorities although the information can be otherwise disclosed with the consent of the person referred to in s 82(a). There is no consent. I regard s 82 it as a separate provision to s 85 providing no assistance for present purposes. 24 Section 85 imposes a specific prohibition on disclosure in any Court except within the narrow confines of the two exceptions in 1(a) and (b). The only relationship between s 85 and s 82 is by way of reference for the purpose of identifying the persons who may require production of the documents in a Court, as the definition at the end of s 85 shows. Not only does s 85(1)(b) limit the class of persons to which it applies, its operation is also confined to circumstances where the requirement to disclose or produce the information is for the purpose of enabling the specified person to exercise a function conferred or imposed on the person by law. Those requirements are not satisfied. Notwithstanding the effects of the Land and Environment Court Act 1979 (LEC Act), and the powers, which the Court has to compel production of documents s 85 operates to overcome the force of those provisions. 25 For the above reasons I am not satisfied that the Court can compel the Office of State Revenue (NSW) to produce the documents nominated in paragraph 1 of the Schedule to the subpoena. It is not necessary to set the subpoena aside as it appears to have been issued regularly because I am not persuaded that the information required following an amendment made by the council during the course of the hearing is irrelevant in terms of production in answer to a subpoena or that its terms are too wide. 26 These reasons are given following the making of formal findings to the above effect at the conclusion of the hearing on the Notice of Motion. 27 Costs are reserved pending written submissions on that issue. 31/05/2007 - Applicant's solicitors name - Paragraph(s) cover sheet DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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