S 353-10 notice seeking particulars about documents related to privilege claim – improper or not?
TBA member Khai-Yin Lim discusses the Full Federal Court’s recent decision in CUB Australia Holding Pty Ltd v Commissioner of Taxation regarding whether the Commissioner’s purpose in seeking particulars about documents over which CUB claimed privilege was improper. A PDF copy of this article is available to download below.
In CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCAFC 171, the Full Court held that the Commissioner’s purpose (or substantial purpose) in seeking particulars about documents over which CUB claimed legal professional privilege (LPP), was not improper.
The particulars sought by the Commissioner in a notice pursuant to s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth) (Notice) were:
the title of the document;
the name of the person who authored the document;
the name of each person to whom the document was communicated; and
where the document was an email, the subject of the email, and for each person who received the email, whether the email was sent directly to the person or copied to the person.
By the originating application, CUB sought judicial review of the decision of the Commissioner that CUB be required to give him information pursuant to the Notice. In its first three grounds, CUB challenged the validity of the Notice on the basis that the Commissioner’s purpose (or substantial purpose) in seeking the information was to determine the validity of CUB’s LPP claims.[1] The Commissioner’s position was that he was seeking information which would enable him to form a view as to whether or not to challenge CUB’s LPP claims.
The primary judge found that:
CUB’s factual contention that in issuing the Notice, the Commissioner’s primary or substantial purpose was to determine the validity of CUB’s LPP claims, was not established;[2]
the Commissioner’s purpose (or substantial purpose) in issuing the Notice was to obtain information that he considered necessary to determine whether to accept or challenge CUB’s LPP claims;[3]
the Commissioner considered that the documents which were responsive to his previous notice issued in 2018 in connection with an audit, remained relevant to the statutory functions he was still carrying on;[4]
therefore, the Notice was issued for the purpose of the administration of the taxation law.[5]
The Full Court unanimously held that the primary judge was correct and dismissed the appeal.
Ground 1 – Before the Full Court, CUB argued that a substantial improper purpose among multiple purposes was sufficient to vitiate the purported exercise of statutory power.[6] However, the Full Court stated that because the primary judge found there was only one purpose (or only one substantial purpose), it was unnecessary to consider that there was some other improper substantial collateral purpose.[7]
Ground 2 – CUB contended that when all material was taken into account, the totality of the evidence disclosed at least a substantial collateral purpose of the Commissioner in issuing the Notice, was to determine the validity of the LPP claims. However, the Full Court stated that:
taken as a whole, the history revealed the Commissioner attempts to accumulate additional information about CUB’s LPP claims;[8]
if provided, the particulars could never be sufficient alone to enable the Commissioner to determine the validity of CUB’s LPP claims;[9]
the cover letter accompanying the Notice which expressly stated that the Commissioner required the particulars ‘in order to make an informed decision as to whether an alternative dispute resolution process would be an appropriate method of resolving any disputed claims’, was consistent with the Commissioner’s case;[10]
the Notice, the cover letter accompanying the Notice, and the Statement of Reasons for issuing the Notice pursuant to s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (s 13 reasons), were given greater weight by the primary judge in ascertaining the Commissioner’s purpose than the earlier correspondence, which was a preference that was open to the primary judge and was the eminently sensible and preferable course;[11]
the Assistant Commissioner was not cross-examined on his evidence in his affidavit including his affirmed statement that the s 13 reasons accurately recorded his reasons for issuing the Notice.[12]
By Khai-Yin Lim, Barrister and Chartered Tax Adviser
Liability limited by a scheme approved under Professional Standards Legislation
Lim - CUB Australia Holding Pty Ltd v Commissioner of Taxation
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[1] The fourth ground on which CUB sought judicial review of the decision of the Commissioner, was that the titles of the documents were themselves privileged, and accordingly CUB was not required to produce that information. This fourth ground requires a determination to be made, on a case by case basis, of whether the titles of the relevant documents were covered by LPP. As there were 4,431 documents in issue if each email in an email chain is counted as a separate document, the parties agreed that it was sensible for the first three grounds to be tried separately and in advance of the fourth ground. [2] [2021] FCA 43; [80], [93]. [3] [2021] FCA 43; [80], [84], [92]. [4] [2021] FCA 43; [10], [96], [98]. [5] [2021] FCA 43; [10], [99]. [6] CUB relied on the principles set out by the High Court in Thompson v Randwick Municipal Council (1950) 81 CLR 87 (at 106) as affirmed in Minister for Public Works & Local Government v Duggan (1951) 83 CLR 424 (at 445-446), and in Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board (1982) 41 ALR 467 (at 468-469). [7] [2021] FCAFC 171; [24], [25]. [8] [2021] FCAFC 171; [48]. [9] [2021] FCAFC 171; [32], [49], [55]. The Full Court agreed with the primary judge that access to the documents themselves would likely be required to determine the validity of the LPP claims: CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCA 43; [85]. [10] [2021] FCAFC 171; [49], [56]. Similarly, the primary judge stated that if the Commissioner’s purpose was to himself determine the validity of the LPP claims, there would be no need for an alternative dispute resolution process to resolve disputed claims as they would already have been resolved by the Commissioner: CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCA 43; [87]. [11] [2021] FCAFC 171; [54]. The primary judge stated the covering letter, the terms and effect of the Notice, the s 13 reasons, and other parts of the communications between the parties, indicated that the Commissioner sought the further particulars in order to decide whether to accept or challenge the LPP claims: CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCA 43; [86]-[90]. [12] [2021] FCAFC 171; [57]-[59]; see also CUB Australia Holding Pty Ltd v Commissioner of Taxation [2021] FCA 43; [96]-[97].