Deputy Commissioner of Taxation v Rettke, R.N. [1995] FCA 460

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CATCHWORDS

CONFIDENTIAL INFORMATION - Income tax return of third party for 1978-1979 year - whether copy annexed to affidavit filed by respondent in Federal Court proceedings was a confidential document - respondent, an employee of Australian Tax Office and an officer within s.16(2) Income Tax Assessment Act 1936 (Cth) not authorised to disclose to any person.

CONFIDENTIAL INFORMATION - Taxation return and information contained therein confidential information as between Deputy Commissioner of Taxation and taxpayer - personal and business affairs of giver of information obtained in the exercise of Commissioner's power to obtain such information for purpose of assessing tax -consideration of whether public interest in publication overrides interest in preserving confidentiality.

TAXATION LAW - No opinion expressed as to whether contravention of any provision of Income Tax Assessment Act 1936 (Cth) or Taxation Administration Act 1953 (Cth).

Income Tax Assessment Act 1936 (Cth) s.16(2), s.16(4)(g)

Taxation Administration Act 1953 (Cth) s.8XB, s.17B

Commonwealth of Australia v. John Fairfax & Sons Ltd. (1980) 147 CLR 39 at 50 - Appl.

Norwich Pharmacal Co. v. Custom and Excise Commissioners [1974] AC 133 - Appl.

Castrol Australia Pty. Ltd. v. Em Tech Association Pty. Ltd. (1980) 51 FLR 184 - Appl.

Smith Kline & French Laboratories (Aust.) Limited v. Secretary Department of Community Services and Health (1990) 22 FCR 73 - Appl.

Prince Albert v. Strange (1849) 1 Mac & G 24 at 45; 41 ER 1171 - Appl.

Lord Ashburton v. Pape [1913] 2 Ch. 469 - Appl.

Commissioner of Taxation v. Nestle Australia Ltd. (1986) 12 FCR 257 (FC) - Appl.

Attorney General (United Kingdom) v. Heinemann Publishers Australia Pty. Ltd. (1988) 165 CLR 30

Allied Mills Industries Pty. Ltd. v. Trade Practices Commission (1981) 55 FLR 125

A. v. Hayden (1984) 156 CLR 532

Deputy Commissioner of Taxation v. Rodney Noel Rettke

No. QG70 of 1995

Cooper J., Brisbane, 4 July 1995

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

No. QG70 of 1995

BETWEEN:

DEPUTY COMMISSIONER OF TAXATION

Applicant

AND:

RODNEY NOEL RETTKE

Respondent

JUDGE MAKING ORDER:Cooper J.

WHERE MADE: Brisbane

DATE OF ORDER: 4 July 1995

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. RODNEY NOEL RETTKE deliver up to the Deputy Commissioner of Taxation by 4.00 p.m. 6 July 1995 all copies of the 1978-1979 Taxation Return of N.L., A. and D. Land trading as N.L. Land and Co. in his possession power or control.

2. Other than :-

(a) in the performance of his duties as an officer within the meaning of that term as defined in s.16 of the Income Tax Assessment Act, or

(b) in proceedings pending in the Administrative Appeals Tribunal between RODNEY NOEL RETTKE and COMCARE if it be held to be relevant and admissible by the Tribunal,

RODNEY NOEL RETTKE by himself his servants or otherwise be restrained from disclosing to any person the contents of the 1978-1979 Taxation Return of N.L., A. and D. Land Trading as N.L. Land & Co.

3. The respondent pay the applicant's costs of and incidental to the application including reserved costs, if any, to be taxed if not agreed, such costs to include the costs of and incidental to the notice of motion filed 10 March 1995 in QG26 of 1994.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

No. QG70 of 1995

BETWEEN:

DEPUTY COMMISSIONER OF TAXATION

Applicant

AND:

RODNEY NOEL RETTKE

Respondent

CORAM: Cooper J.

PLACE: Brisbane

DATE: 4 July 1995

REASONS FOR JUDGMENT

The applicant is the Deputy Commissioner of Taxation. The respondent is a public servant employed in the Australian Tax Office ("A.T.O."). In litigation between the respondent and the Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees ("Comcare") (QG26 of 1994) the respondent filed an affidavit on 13 July 1994 to which was exhibited a copy of the tax file of N.L., A. and D. Land trading as NL Land and Co. ("the Land partnership") for the assessment of the 1978-1979 tax year. The affidavit of Mr. Rettke was served on the respondent Comcare by delivery of a copy at the office of the Australian Government Solicitor at Brisbane.

On 1 June 1995 I ordered in QG26 of 1994 :-

"UPON the Director of Legal Services Brisbane undertaking to hold and keep in safe custody an affidavit of RODNEY NOEL RETTKE filed 13 July 1994 together with annexures thereto and to deliver up the said affidavit and annexures to the said Court when required so to do or to produce the same to the Administrative Appeals Tribunal (AAT) in proceedings between
RODNEY NOEL RETTKE and COMCARE now pending before the AAT if RODNEY NOEL RETTKE shall obtain any necessary authority for the lawful use and disclosure of the annexures to the said affidavit and the information contained in the annexures.

THE COURT ORDERS THAT:

1. The affidavit and annexures together with copies thereof being document 7 on file QG26 of 1994 be delivered to the Director of Legal Services, Brisbane to be held by the said director in accordance with the undertaking given to the court for a period of five (5) years from today or earlier court order.

2. The costs of the notice of motion filed 10 March 1995 be reserved.

THE COURT DIRECTS THAT:

3. The notice of motion filed 1 June 1995 remain on the file without being listed or the service copies of the notice of motion being endorsed."

The applicant in these proceedings has sought the following orders :-

"1. A mandatory injunction requiring the Respondent to deliver to the Applicant all originals and copies of the 1978-79 Taxation Return of N.L., A and D Land trading as N.L. Land and Co. in his possession, power or control;

2. An injunction restraining the Respondent by himself his servants or agents from disclosing to any person the contents of the 1978-79 Taxation Return of N.L., A and D Land trading as N.L. Land and Co."

The application originally returned for interlocutory relief on 1 June 1995. Having regard to the orders made in QG26 of 1994 the application was adjourned over for final hearing until 22 June 1995.

The respondent gave evidence and was cross-examined. He denied having custody of the original file and maintained that he received a copy of the file unsolicited and without covering letter or any other feature to identify the sender or the immediate source of the document. The respondent admits that he copied the document for the purpose of exhibiting it to the affidavit filed by him in proceedings QG26 of 1994.

The applicant seeks injunctive relief on the basis that the tax return is a confidential document of the applicant which Mr. Rettke has not been authorised to disclose to any person and which it wishes to keep confidential to it or alternatively, seeks injunctive relief under s.17B of the Taxation Administration Act 1953 (Cth) to restrain conduct that constituted or would constitute a contravention of a taxation law that prohibits the communication, divulging or publication of information or the production of, or the publication of, the contents of a document.

The material establishes that in the ordinary course of affairs the relevant tax file would have been destroyed and no copy kept by the A.T.O. The file now cannot be found after search. This is consistent with the file being properly destroyed in accordance with the office procedure. Beyond being in possession of a copy of the material there is nothing upon which to base a finding that the respondent has in his custody, possession or power the original documents.

On 7 February, 1972 the respondent signed a document headed "COMMONWEALTH TAXATION OFFICE QUEENSLAND DECLARATIONS OF SECRECY". The document included the following declaration :-

" Income Tax Assessment Act 1936-1969

1. Being an officer within the meaning of Section 16 of the Income Tax Assessment Act 1936-1969, I will not, either directly or indirectly, except as permitted under the said Section and either while I am, or after I cease to be an officer make a record of, or divulge or communicate to any person
any information respecting the affairs of any other person, disclosed or obtained under the provisions of the Income Tax Assessment Act 1936-1969, or of any amendment thereof, or of any Act substituted therefor, or of any previous law of the Commonwealth relating to Income Tax."

Section 16(2) of the Income Tax Assessment Act 1936 (Cth) ("ITAA") provides :-

"16(2) [Prohibition against divulging information] Subject to this section, an officer shall not either directly or indirectly, except in the performance of any duty as an officer, and either while he is, or after he ceases to be an officer, make a record of, or divulge or communicate to any person any information respecting the affairs of another person acquired by the officer as mentioned in the definition of `officer' in subsection (1)."

On 28 March 1994 the respondent wrote to the applicant seeking an instrument of authorisation under s.16(4)(g) of the ITAA to disclose to Comcare for the purposes of the Commonwealth Employees' Rehabilitation and Compensation Act 1988 (Cth) "information concerning the income tax affairs of any taxpayer". The request was refused by the applicant by letter dated 31 March 1994.

By letter dated 20 July 1994 the applicant sought the following information :-

"(1) Advise me in writing of any authorisation you may have received to deal with the affairs of the taxpayer whose return is annexed to the Affidavit filed in the Federal Court on 13 July 1994;

(2) Failing you advising of any such authorisation, you return all copies of that return and the Australian Taxation Office file material in your possession as well as any other material which you may have in your possession in respect of which you, as a Tax Officer, are obliged to observe secrecy;

(3) Advise in writing the details of any documents or information you may have provided to third persons in contravention of the Income Tax Assessment Act, the Taxation Administration Act or any other Taxation legislation, together with the names and addresses of the person or persons to whom you have provided those documents or that information;

(4) Your written undertaking that you have returned all such material and that you have no other documents or information in your possession;

(5) Your written acknowledgment that on the first return of your Application No. QG26 of 1994 that you will consent to the annexure to your Affidavit filed on 13 July 1994 in the Federal Court being sealed and returned to the Australian Taxation Office."

The respondent replied to the letter on 21 July 1994 :-

"I refer to your letter of 20.07.94 and the five demands contained therein.

Due to the seriousness of the matters involved and the complexity of the law involved, I am unable to comply with your deadline of 10.00 am on 21.07.94.

I am seeking advice on the matters involved and I will respond as soon as possible."

The information sought in the applicant's letter of 20 July 1994 was not supplied by the respondent at any later date.

On 15 May 1995 the applicant by its solicitor wrote to the respondent as follows :-

"Dear Mr Rettke

RODNEY NOEL RETTKE -V- COMCARE; FEDERAL COURT NO QG26 OF 1994

I refer to the current proceedings in relation to this matter.

It occurs to my client that given that you have produced a copy of the tax return of N.L., A and D Land as `Annexure' to your Affidavit filed in the Federal Court on 13 July 1984 [sic], there must be other copies of that document in your possession, power, custody or control. No doubt you kept a copy of the Affidavit complete with annexure, for yourself.

As you are well aware, the copying of the taxation return and its use by you
for matters other than for the purposes of the Income Tax Assessment Act is prohibited and unlawful. Therefore, my client requires you to forthwith deliver up to this office all copies of the tax return in question which are in your possession, power, custody or control. In this respect, not only the copies of the tax return which you have in your actual possession are required but also those which are within your power or control. That means, that my client requires you to deliver not only the documents in your possession or custody but also those over which you have a legal entitlement to possession. I also require you to forthwith advise this office of the number of copies of the taxation return which you made and their whereabouts.

We advise that the Deputy Commissioner of Taxation will maintain a copy of the taxation return in accordance with the undertaking offered in the Affidavit of Mr Thomas as filed in the Federal Court proceedings.

I require your compliance with my above demands by no later than 4.00pm, Monday 22 May 1995. If you fail to provide the copies my client will have no choice but to commence further proceedings seeking a mandatory injunction requiring you to deliver up those documents.

I also require your written undertaking that you have returned all such copies of the taxation return in your possession, power, custody or control. Your written response to this correspondence is required by no later than 4.00pm, Monday 22 May 1995.

Yours faithfully."

The respondent has not complied with the demand and in a telephone discussion with an officer of the Australian Government Solicitor on 29 May 1995 indicated that he would not be complying with the demand. In the telephone discussion the respondent asked the basis upon which the applicant was making the demands. On 31 May 1995 in another telephone conversation the respondent was told that the basis of the application was made clear in the documents he had received.

The applicant submits that employees of the A.T.O., including the respondent, are under duties of confidence with respect to information that is contained in
files held by the A.T.O. This duty, it is submitted, arises by virtue of s.16 of the ITAA and s.8XB of the Taxation Administration Act 1953 (Cth), the Declaration of Secrecy and the training of employees as to the secrecy of documents and the need to maintain secrecy.

The first question to be determined is whether the tax return of N.L. Land and Co. and the information which it contains is confidential information. Not all information required by government or departments of state in the performance of governmental or statutory functions is confidential information (Commonwealth of Australia v. John Fairfax & Sons Ltd. (1980) 147 CLR 39 at 50-52; Norwich Pharmacal Co. v. Custom and Excise Commissioners [1974] AC 133 at 189). However, where, as here, the information given to the Deputy Commissioner is of the personal and business affairs of the giver of the information obtained in the exercise of the Commissioner's power to obtain information as to the income and affairs of the taxpayer for the purpose of assessing the tax, if any, payable by the taxpayer, and the information is of such a character that the taxpayer would not expect it to be used for any other purpose other than for which it was given or disclosed to any person not connected with that purpose, the information is to be regarded as protected from disclosure. It is as between the taxpayer and the Deputy Commissioner confidential information (Norwich Pharmacal at 189; Castrol Australia Pty. Ltd. v. Em Tech Association Pty. Ltd. (1980) 51 FLR 184; Smith Kline & French Laboratories (Aust.) Limited v. Secretary Department of Community Services and Health (1990) 22 FCR 73 at 86-87).

Where the information has been improperly or surreptitiously obtained in
breach of trust, confidence or contract, equity will intervene to restrain the use or publication of such confidential information (Prince Albert v. Strange (1849) 1 Mac & G 24 at 45; 41 ER 1171 at 1179; Lord Ashburton v. Pape [1913] 2 Ch. 469 at 475; Commonwealth of Australia v. John Fairfax & Sons Ltd. at 50; Smith Kline & French Laboratories at 860).

In the instant case the respondent is a public servant employed in the A.T.O. He is aware that the file containing the tax return and other information relating to the business and personal affairs of N.L. Land and Co. is confidential information and he is aware of the purpose for which it came into the applicant's possession. If the respondent as an employee did not himself copy and take away the copy file, then its receipt by him unsolicited and unexplained in a context totally unrelated to the discharge of his functions as an officer of the A.T.O. exposes the respondent to being restrained from making disclosure or making use of the information contained in the copied file relating to the tax return or the taxpayer's personal or business affairs (Commonwealth of Australia v. John Fairfax & Sons Ltd. at 50-51).

In Commonwealth of Australia v. John Fairfax & Sons Ltd., Mason J. (as he then was) said (at 51-52) :-

"However, the plaintiff must show, not only that the information is confidential in quality and that it was imparted so as to import an obligation of confidence, but also that there will be `an unauthorised use of that information to the detriment of the party communicating it' (Coco v. A.N. Clark (Engineers) Ltd. [1969] R.P.C. 41, at p.47). The question then, when the executive government seeks the protection given by equity, is: What detriment does it need to show?

The equitable principle has been fashioned to protect the personal, private and proprietary interests of the citizen, not to protect the very different
interests of the executive government. It acts, or is supposed to act, not according to standards of private interest, but in the public interest. This is not to say that equity will not protect information in the hands of the government, but it is to say that when equity protects government information it will look at the matter through different spectacles.

It may be a sufficient detriment to the citizen that disclosure of information relating to his affairs will expose his actions to public discussion and criticism. But it can scarcely be a relevant detriment to the government that publication of material concerning its actions will merely expose it to public discussion and criticism. It is unacceptable in our democratic society that there should be a restraint on the publication of information relating to government when the only vice of that information is that it enables the public to discuss, review and criticize government action.

Accordingly, the court will determine the government's claim to confidentiality by reference to the public interest. Unless disclosure is likely to injure the public interest, it will not be protected.

The court will not prevent the publication of information which merely throws light on the past workings of government, even if it be not public property, so long as it does not prejudice the community in other respects. Then disclosure will itself serve the public interest in keeping the community informed and in promoting discussion of public affairs. If, however, it appears that disclosure will be inimical to the public interest because national security, relations with foreign countries or the ordinary business of government will be prejudiced, disclosure will be restrained. There will be cases in which the conflicting considerations will be finely balanced, where it is difficult to decide whether the public's interest in knowing and in expressing its opinion, outweighs the need to protect confidentiality."

The approach of Mason J. requiring consideration of whether the public interest in publication overrides the interest in preserving confidentiality was approved by the High Court in Attorney General (United Kingdom) v. Heinemann Publishers Australia Pty. Ltd. (1988) 165 CLR 30 at 44-45.

Although the information in the tax return is seventeen years old, one member of the partnership has objected to it being made public and wishes his private and business affairs, although past, to remain confidential. The applicant submits that there is
a substantial public benefit in maintaining the confidence of information supplied as part of the tax-gathering function and that the statutory provisions referred to above are for the purpose of and intended to maintain such confidentiality in the system. Conversely, it is submitted that the applicant suffers a detriment if confidentiality is breached and not restrained because it erodes confidence in taxpayers that personal and business information provided for taxation purposes will not be divulged to third parties or be used for any other purpose. (See Commissioner of Taxation v. Nestle Australia Ltd. (1986) 12 FCR 257 (FC) at 261).

Whether or not there is a public interest defence under Australian law, which was doubted by Gummow J. in Smith Kline & French Laboratories at 111, the public interest in the exposure of fraud and criminality is a matter to be taken into account when balancing the public interest in maintaining confidentiality against the public interest in exposing fraud, corruption or criminality. Examples of such a weighing may be found in decisions such as Allied Mills Industries Pty. Ltd. v. Trade Practices Commission (1981) 55 FLR 125 at 149 ff.; A. v. Hayden (1984) 156 CLR 532 at 545-546, 556, 563, 572-573).

In his written submission the respondent says in part :-

"... My duties and obligations as an employee are to the A.T.O. not to any individual and refusing to be party to, and exposure of fraud and misconduct are part of my duties as an officer.

.....

... The public interest in the integrity and equity of the taxation system far outweighs the public interest in the privacy of any one individual particularly where the information can be compulsorily obtained. Refer Cross on Evidence at 27180 & note 3 cases.

Furthermore protection from disclosure & maintenance of secrecy and privacy of the beneficiary of fraud on the taxation system would be extremely damaging to the public interest and not in the public interest as claimed by the applicant."

The respondent has filed no material which would disclose fraud or misconduct on the part of any past or present officer of the A.T.O. or on the part of the taxpayer whose return is the subject of the relief sought or any other taxpayer. The bare statement of the respondent is insufficient to free him of his obligations of confidentiality as an officer of the A.T.O. or to allow him to use confidential information in breach of the confidence upon which it was provided. In A. v. Hayden, Gibbs CJ. said (at 546) :-

"It is clear that a person who owes a duty to maintain confidentiality will not be allowed to escape from his obligation simply because he alleges that crimes have been committed and that it is in the public interest that he should disclose information relating to them. He bears the burden of establishing the facts upon which he relies to relieve him of the obligation. That seems clear on principle and I have seen no authority that suggests the contrary."

There is no reason in principle why a third party recipient of confidential information who wishes to use it on public interest grounds ought not also discharge such an onus. The respondent has not discharged that onus and additionally as an officer of the A.T.O. owes a duty to maintain confidentiality.

The respondent has not made out a basis to properly retain in his possession or power copies of the taxation return which I find he retains. Nor am I satisfied that in his ongoing dispute with the applicant, the respondent would not divulge the information contained in the tax return if he considered it was in his interests to do so.

In these circumstances, the applicant is entitled to injunctive relief. However, the form of the relief should reflect, in my view, that there may be some occasion in the discharge of his duties as an officer of the A.T.O. where disclosure of the information may be proper. Additionally, in the proceedings pending in the Administrative Appeals Tribunal against Comcare the public interest in the due administration of justice may, if the documents or information are necessary, relevant and admissible to the respondent making out his case against Comcare, outweigh the maintenance of confidentiality in relation to business and personal affairs, particularly as they are now seventeen years old. It is not possible to now decide whether or not anything in the copy file is relevant or admissible in those proceedings and whether and to what extent confidentiality beyond the proceedings in the Administrative Appeals Tribunal can be maintained by appropriate order of the Tribunal. My previous order maintains the ability of the respondent to procure production of a copy file before the Tribunal. The respondent's ability to give oral evidence or evidence by affidavit if relevant can be preserved by the form of orders.

In the view that I have taken it is unnecessary to express my opinion as to whether or not a contravention of any provision of the ITAA or the Taxation Administration Act 1953 (Cth) has occurred or is threatened.

The respondent has always been on notice that he was at risk of costs if he retained possession of the documents and refused to undertake to keep the contents confidential.

Therefore THE COURT ORDERS THAT:

2. Other than :-

(a) in the performance of his duties as an officer within the meaning of that term as defined in s.16 of the Income Tax Assessment Act, or

(b) in proceedings pending in the Administrative Appeals Tribunal between RODNEY NOEL RETTKE and COMCARE if it be held to be relevant and admissible by the Tribunal,

RODNEY NOEL RETTKE by himself his servants or otherwise be restrained from disclosing to any person the contents of the 1978-1979 Taxation Return of N.L., A. and D. Land Trading as N.L. Land & Co.

I certify that this and the preceding twelve (12) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper.

Date: 4 July 1995

Associate

Counsel for the Applicant: Mr. R. Derrington

Solicitors for the Applicant: Australian Government Solicitor

Respondent in Person: Mr. N. Rettke

Date of Hearing: 22 June 1995

Place of Hearing: Brisbane

Date of Judgment: 4 July 1995

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