FEDERAL COURT OF AUSTRALIA

Wilhelm v McKay [2007] FCA 367

PRACTICE AND PROCEDURE – application for leave to amend an application for an Order of Review pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 39B of the Judiciary Act 1903 (Cth) – consideration of leave to join a party to the Application for an Order of Review.

ADMINISTRATIVE LAW – consideration of whether a challenged decision is a decision of an administrative character made or required to be made under an enactment for the purposes of s 3(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) – consideration of whether a decision by an officer of the Australian Taxation Office to swear and apply for a search warrant pursuant to s 3E of the Crimes Act 1914 (Cth) is such a decision.

TAXATION – consideration of whether the Commissioner has the power to conduct an investigation of conduct on the part of a taxpayer having its expression in the commission of criminal offences under the Criminal Code Act 1995 (Cth) (‘Criminal Code’) in connection with a taxation matter. 

Judgment

Leave to amend and leave to join a party refused with costs. 

Legislation

Corporations Act 1989 (Cth)

Income Tax Assessment Act 1936 (Cth)

Crimes Act 1914 (Cth)

Administrative Decisions (Judicial Review) Act 1977 (Cth)

Judiciary Act 1903 (Cth)

Criminal Code Act 1995 (Cth)

Taxation Administration Act 1953 (Cth)

Australian Federal Police Act 1976 (Cth)

Federal Court Rules, Order 13, rule 2; Order 6, rule 8

Griffith University Act 1998 (Qld)

Judicial Review Act 1991 (Qld)

National Crime Authority Act 1984 (Cth)

Summary Offences Act 1953 (SA)

Income Tax Assessment Act 1997 (Cth)

Crimes (Taxation Offences) Act 1980 (Cth)

Authorities

Wilhelm v McKay [2005] FCA 792 - cited

Jilani v Wilhelm [2005] FCAFC 269; (2005 – 2006) 148 FCR 255 - quoted

Williams v Keelty (2000) 111 FCR 175 - quoted

R v Rogerson (1992) 174 CLR 268 - cited

Re Preston [1985] AC 835 - cited

Leggo Australia Pty Ltd v Paraggio (1994) 52 FCR 542 - quoted

Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 - cited

Queensland v JL Holdings Pty Ltd (1996 – 1997) 189 CLR 146 - quoted

Anisminic Ltd v Foreign Compensation Commission (1969) 2 AC - cited

Craig v South Australia (1995) 184 CLR 163 - cited

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 - quoted

Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 - cited

Griffith University v Tang (2005) 221 CLR 99 - quoted

Salerno v National Crime Authority (1997) 75 FCR 133 - cited

Electricity Supply Association of Australia Ltd v Australian Competition and Consumer Commission (2001) 113 FCA 230 - cited

Guss v Commissioner of Taxation (2006) FCAFC 88; (2006) 152 FCR 88 - cited

Hutchins v Deputy Commissioner of Taxation (1996) 136 ALR 153 - cited

Carmody v Mackellar (1997) 76 FCR 115 - quoted

Rogers v Moore (1992) 39 FCR 201 - quoted

Puglisi and Another v Australian Fisheries Management Authority and Others (1997) 148 ALR 393 - quoted

Price v Elder and Others (2000) 97 FCR 218 - quoted

Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 - cited

Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649 - cited

Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 116 ALR 535 - cited

OTTO HEINRICH WILHELM, MICHAEL PERRY DEMPSEY, MARKIT PTY LTD (ACN 062 893 707) AND URINDA PTY LTD (ACN 010 561 314) v WILLIAM JOSEPH MCKAY AND KELLIE NADINE JILANI

QUD154 OF 2004

GREENWOOD J

15 MARCH 2007

BRISBANE

THE COURT ORDERS THAT:

1.                  The Application for Leave to Amend the Application for an Order of Review in the terms set out in Annexure ‘SWS3’ to the affidavit of Scott William Sharry filed on behalf of the applicants on 29 May 2006 as further amended in terms of the proposed amended Application for an Order of Review handed by counsel for the applicants to the court on the hearing of the Notice of Motion for Leave to Amend filed 29 May 2006 is refused.

2.                  The Application for Leave to Join Phillip Richard Bell as a respondent to the Application for an Order of Review is refused.

3.                  The Notice of Motion filed 29 May 2006 is dismissed. 

4.                  The applicants are to pay the respondents’ costs of and incidental to the Notice of Motion filed 29 May 2006. 

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

REASONS FOR JUDGMENT

1                     The applicants, by notice of motion, seek leave to amend an Application for an Order of Review filed on 4 August 2004 (‘the primary Application’) in the terms set out in Annexure ‘SWS3’ to the affidavit of Scott William Sharry sworn on behalf of the applicants on 29 May 2006 as further amended in terms of the document handed to the court on the hearing of the application by counsel for the applicants. 

2                     The application for leave to amend is supported by a Statement of Facts and Contentions filed on behalf of the applicants. 

The Underlying Facts

3                     The relevant contended facts are these. 

4                     Clayton Utz Solicitors, acted for Markit Pty Ltd (‘Markit’) and Urinda Pty Ltd (‘Urinda’) in proceedings brought against those companies in the Supreme Court of Queensland by the Commissioner of Taxation (‘the Commissioner’) in which the Commissioner sought to recover a contended tax debt due to the Commonwealth of Australia (‘Commonwealth’).  The Commissioner had commenced proceedings to set aside Deeds of Company Arrangement entered into by Markit and Urinda.  Each company had entered into Voluntary Administration under Part 5.5 of the Corporations Act 1989 (Cth).  The Commissioner claimed that Markit and Urinda were liable for tax instalments in the form of group tax under Divisions 8 and 9 of Part VI of the Income Tax Assessment Act 1936 (Cth). 

5                     In addition, separate proceedings were commenced against Mr Dempsey (‘Dempsey’) and Mr Wilhelm (‘Wilhelm’) by which monies were claimed from them as directors of Markit and Urinda on the footing that each individual is personally liable in his capacity as a director of Markit and Urinda for the unpaid tax instalments of each company. 

6                     On 7 July 2004, Wilhelm, Dempsey, Markit, Urinda and the Commissioner on behalf of the Commonwealth, entered into a Deed of Settlement to resolve the Supreme Court proceedings and the claims against Wilhelm and Dempsey personally.  The material terms of the deed were that Markit and Urinda would pay the sum of $600,000 to the Commissioner by paying that sum to the Commissioner’s solicitors, Blake Dawson Waldron (‘BDW’), by 5.00pm on 8 July 2004 (clause 2(a)); upon receipt of the settlement sum the Commissioner would release all applicants from their liability for the unpaid liabilities of Markit and Urinda (clause 2(b)(iv)); upon receipt of the settlement sum, the Commissioner would, within 24 hours, instruct BDW to deliver to Clayton Utz Notices of Discontinuance of the Supreme Court proceedings and the proceedings against Wilhelm and Dempsey personally (clause 2(b)); and upon service of the Notices of Discontinuance, Wilhelm, Dempsey and Clayton Utz would be entitled to collect from BDW ‘all documents (originals and copies) as are held by [BDW] which are the property of Markit, Urinda, Dempsey or Wilhelm’ in relation to the proceedings against Markit, Urinda, Wilhelm and Dempsey (clause 2(c)).  The Deed nominated particular documents expressly falling within the entitlement for collection by Clayton Utz including minutes of meetings of the directors of Markit and Urinda of particular dates and a management agreement between Markit, Wilhelm and Dempsey dated 20 May 1995. 

7                     In the Supreme Court proceedings, the Commissioner, amongst other things, alleged that the documents or some of them were forgeries.

8                     At 11.30am on 7 July 2004, the applicants caused $600,000 to be transferred into the trust account of BDW on behalf of the Commissioner. 

9                     At approximately 4.55pm on 7 July 2004, Notices of Discontinuance duly executed were delivered to Clayton Utz.  Also on 7 July 2004, BDW delivered a letter of undertaking to the applicants’ solicitors containing an undertaking that the documents referred to in clause 2(c) of the Deed of Settlement remained in the possession of BDW.

10                  At approximately 8.15am on 8 July 2004, a principal of BDW, Mr Lindwall, advised Mr Nash, a principal of Clayton Utz, that the Australian Federal Police (‘AFP’) were, at that time, executing a search warrant at the offices of BDW and that Mr Lindwall anticipated that documents within the scope of the search warrant would be taken by the AFP and Mr Lindwall did not think he had any grounds for resisting the execution of the search warrant.  

11                  The search warrant was issued pursuant to s 3E of the Crimes Act 1914 (Cth) (‘the Crimes Act’).  The issuing officer was Mr William John McKay, a Brisbane Magistrate.  The warrant was executed on the morning of 8 July 2004 at the offices of BDW by Ms Kellie Jilani, the second respondent and another AFP officer.  Ms Jilani was assisted by a number of officers from the Australian Taxation Office (‘ATO’) in executing the warrant.  Various documents were seized and removed to AFP Headquarters in Brisbane.  Ms Jilani delivered up the documents seized in execution of the warrant to Mr Phillip Bell from the ATO’s Serious Non‑Compliance Unit. 

12                  On 13 July 2004, Clayton Utz wrote to the AFP requesting that prior to taking any action against or requesting any information from any of the applicants, the AFP contact Mr Nash or Mr Sharry of Clayton Utz. 

13                  On 14 July 2004, Clayton Utz received a letter from Ms Jilani acknowledging receipt of a letter of 13 July 2004.  In that letter, Ms Jilani said:

‘… the only interest the AFP had in your clients was in the execution of a Section 3E Crimes Act 1914 search warrant executed on behalf of the Australian Taxation Office’. 

            ‘… The AFP involvement in this matter has been completed at this time.  Accordingly, any advice or correspondence in relation to this matter should be directed to the Australian Taxation Office Case Officer Mr Phillip Bell. …’

14                  On 19 July 2004, Mr Sharry had a telephone conversation with Ms Jilani in relation to the letter of 14 July 2004.  In that conversation, Ms Jilani confirmed that ‘the seized documents were taken and handed to the ATO, and that the warrant had been obtained on behalf of the ATO, at their behest.’ [paragraph 11, Statement of Facts and Contentions].  The final sentence of paragraph 11 of the Statement of Facts and Contentions concludes, in relation to the discussion with Ms Jilani, ‘She also confirmed that the AFP had no interest in any of the applicants, at that time, and there was no ongoing investigation.’  At paragraphs 11 and 12 of the affidavit of Kellie Jilani sworn and filed 12 October 2004, Ms Jilani says that having handed the documents to Mr Phillip Bell and having received a receipt for the documents, Ms Jilani had ‘no further involvement with the investigation that gave rise to the issue and execution of the search warrant’.  At page 3 of the affidavit of Mr Scott Sharry sworn and filed 4 August 2004, Mr Sharry deposes to a part of a conversation with Ms Jilani in which he puts to Ms Jilani the proposition, ‘So there is no ongoing investigation by the Federal Police?’ and Ms Jilani replied, ‘I can confirm that the Australian Federal Police have no interest in your clients at this time and there is no ongoing investigation’.  It seems clear from Ms Jilani’s affidavit and the conversation deposed to by Mr Sharry that there was no ongoing investigation of the applicants’ conduct, at that time, by the AFP. 

15                  On 4 August 2004, the applicants filed an Application for an Order of Review seeking relief pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ‘A D J R Act’) or, in the alternative, relief pursuant to s 39B of the Judiciary Act 1903 (Cth) (the ‘Judiciary Act’). 

16                  In these proceedings, Ms Jilani swore her affidavit of 12 October 2004 in which she deposes to the chronology of events leading to the issue of the warrant by the issuing officer.  Ms Jilani deposes to the matters at [17]. 

17                  Ms Jilani has extensive experience in the execution of search warrants obtained pursuant to s 3E of the Crimes Act.  The AFP regularly executes search warrants on behalf of Commonwealth departments and agencies such as the ATO that are carrying out investigations into possible offences against Commonwealth legislation.  Shortly prior to 7 July 2004, Ms Jilani was contacted by an officer from the ATO’s Serious Non‑Compliance Unit and was requested to obtain and execute a search warrant.  Ms Jilani considered that request and satisfied herself that there were sufficient grounds to request a Magistrate to issue a search warrant in the terms of the warrant the subject of these proceedings.  Ms Jilani, having been satisfied of sufficient grounds, attended with an officer from the ATO before Magistrate McKay.  Ms Jilani says Mr McKay considered an application for a search warrant and issued the warrant.  Ms Jilani did not swear any information for the purposes of the issuing of the search warrant.  On 8 July 2004, Ms Jilani executed the warrant at the offices of BDW.  Ms Jilani called for the assistance of various officers from the ATO for the purpose of executing the warrant.  The seized documents were taken to AFP Headquarters and handed to Mr Phillip Bell.  Ms Jilani had no further involvement in the investigation that gave rise to the request for her involvement and the issue and execution of the search warrant. 

18                  Section 3E(1) of the Crimes Act provides that an issuing officer may issue a warrant to search premises if the officer is satisfied by information on oath that there are reasonable grounds for suspecting that there is, or there will be within the next 72 hours, any evidential material at the premises. 

19                  The warrant recites that Mr McKay was satisfied by information on oath that there were reasonable grounds for suspecting that evidential material was at the premises of BDW at 123 Eagle Street, Brisbane which satisfied three conditions.  The first condition describes the class of documents to be searched for under the warrant.  The second condition recites that the documents relate to Wilhelm, Dempsey, Markit and Urinda.  The third condition recites that the evidential material comprises documents as to which there are reasonable grounds for suspecting that the documents will provide evidence of the commission of two offences by Wilhelm and Dempsey, namely, a contravention of s 134.2(1) of the Criminal Code Act 1995 (Cth) (‘the Criminal Code’) in that each individual did by a deception dishonestly obtain a financial advantage from the Commissioner in the form of a reduction in the quantum of the tax debt due to the Commissioner by Markit and Urinda being companies of which each individual was a director. 

20                  The warrant authorised Ms Jilani to enter and search the premises of BDW and authorised Ms Jilani, as the executing officer, pursuant to s 3F(1) of the Crimes Act to search for evidential material that satisfied all of the three specified conditions.  The warrant also authorised Ms Jilani by virtue of s 3G of the Crimes Act to obtain such assistance as necessary and reasonable in the circumstances. 

21                  Mr Sharry deposes at paragraph 7 of his affidavit filed 29 May 2006 to the state of his knowledge at the date of commencement of the primary Application on 4 August 2004 of the role undertaken by Ms Jilani in connection with the swearing of information as to reasonable grounds for the purposes of s 3E of the Crimes Act.  Mr Sharry says:

‘7.        At the time of commencing these proceedings on behalf of the applicants I had assumed, on the basis of the material then available to me, that it had been Ms Jilani who had sworn the information necessary to obtain the warrant in issue in these proceedings.

8.         Until I read the Affidavit of Ms Jilani I had no idea that the Second Respondent would allege that she did not swear the Information to obtain the search warrant which is the subject of the Application for Review.’

22                  Upon reading Ms Jilani’s affidavit, Mr Sharry learnt that his assumption was misplaced.  On 15 October 2004, Clayton Utz sought production of a copy of the information on oath referred to by Ms Jilani in paragraph 7 of her affidavit. After some exchanges between the parties, the Australian Government Solicitor provided the applicants’ solicitors with a copy of an unsworn application dated 7 July 2004 with some masking of sections of the document, seeking the issue of the search warrant. 

The Application for an Order of Review

23                  On 4 August 2004, the applicants filed the primary application. 

24                  On 22 November 2004, the applicants sought leave to amend the primary application in accordance with a formulation of the decisions and conduct sought to be reviewed, reflected in a document described as Exhibit ‘SWS2’ to an affidavit of Mr Sharry.  The applicants also sought discovery of particular documents.  Those applications together with a Notice of Objection to Competency filed on behalf of Ms Jilani were heard by Cooper J on 17 December 2004.  Following his Honour’s untimely death, the parties agreed that the matters ought to be disposed of on the papers and Finkelstein J determined the various matters and published reasons in support of proposed orders on 15 June 2005 (Wilhelm v McKay [2005] FCA 792).  His Honour, perhaps unfortunately, in deciding the application on the papers did not have the benefit of reflection on the issues afforded by oral argument.  On 23 June 2005, the following orders were entered, namely, the applicants be given leave to amend the primary application in terms of the Exhibit ‘SWS2’ (Order 1); the second respondent (Ms Jilani) make discovery of nominated documents (Order 2); the second respondent’s objection to competency is dismissed (Order 3); the second respondent pay 85% of the applicants’ costs of the motion (Order 4); and leave be granted to appeal with a stay of the earlier orders pending appeal.  The second respondent caused a Notice of Appeal to be filed and on 20 December 2005, the Full Court allowed an appeal and set aside orders 1, 2 and 4 of the orders made by Finkelstein J (Jilani v Wilhelm [2005] FCAFC 269; (2005 – 2006) 148 FCR 255 per Dowsett, Jacobson and Greenwood JJ). 

25                  The applicants now seek leave to amend the primary application and further reformulate the decisions sought to be challenged. 

The Contended Decisions

26                  The decisions, as formulated, the applicants now seek to challenge are these. 

27                  First, the decision of Mr Phillip Bell to ‘swear and make an application for a search warrant’ on 7 July 2004 which must be taken to mean, as framed, a decision reached by Mr Bell comprising two components: an election to swear information for submission to the issuing officer as to the foundation facts giving rise to reasonable grounds for suspecting that there is or will be evidential material concerning the relevant matters at the premises of BDW; and, an election to apply for the issue of a search warrant. 

28                  The second decision is that of the issuing officer, Mr McKay SM, to issue a search warrant.

29                  The third decision is that of Ms Jilani to execute the search warrant at the premises of BDW, take possession of seized documents and deliver up those documents to the ATO. 

30                  The proposed formulation of the first decision abandons the previous contention, as originally filed, that Ms Jilani made a decision to swear information that she had reasonable grounds for suspecting that each of the applicants had committed offences as identified.  There simply was no basis for such a contention. 

31                  By the application for leave which was the subject of the decision of the Full Court, the applicants contended that the operative decisions to be challenged were a decision by Ms Jilani to apply for a search warrant in relation to the relevant offences and the decision of Mr McKay SM to issue the search warrant.  In the alternative, the applicants sought to challenge the conduct of Ms Jilani in applying for and executing the search warrant and in the further alternative, the conduct of Ms Jilani in taking possession of seized documents and delivering up those documents to the ATO. 

The Grounds of Review

32                  The grounds of review now advanced are these. 

33                  First,the decision of Mr Bell to swear and make the application and the decision of Mr McKay SM to issue the warrant, are said to involve ‘errors of law’ and are ‘contrary to law’.  The content of this ground comprises three propositions going to a contention of ‘no power’.  The first contention is that Mr Bell swore and made the application in circumstances where neither he nor any officer of the ATO had the power to investigate the alleged offences pursuant to the Criminal Code, the Taxation Administration Act 1953 (Cth) (‘the TAA’), the Australian Federal Police Act 1976 (Cth) (‘the AFP Act’) or the Crimes Act, or any other Commonwealth legislation.  The second contention is that a proper consideration of the relevant provisions of the TAA, the AFP Act and the Crimes Act is consistent with AFP members being the only persons authorised to investigate the alleged offences under the Criminal Code.  The third contention is that the provisions of the legislation previously mentioned are consistent with officers who are members of the AFP being authorised to execute search warrants obtained under the Crimes Act and investigate offences against the Criminal Code, and officers of the ATO not having any power to do so (Ground 1A, Particulars (a), (b) and (c)).

34                  The second ground of challenge is that Mr Bell’s decision to ‘swear and make application’ and Mr McKay SM’s decision to issue the search warrant, involved an ‘improper exercise of the power’ conferred by the Crimes Act.  The content of this ground also comprises three contentions.  First, the application made by Mr Bell based on the sworn information, was misleading of the issuing officer and omitted material facts, namely, any mention of the Deed of Settlement or any of its terms; the entitlement of the applicants to collect the documents upon payment of the settlement sum; and the payment of the settlement sum on 7 July 2004 (Ground 2, Particulars (aa)). 

35                  Secondly, the power conferred by the Crimes Act was improperly exercised because the power was exercised ‘unfairly’ and ‘involved a want of good faith’.  The applicants assemble a series of factual considerations which are said to lead to the conclusion that Mr Bell’s decision to rely upon the power, swear information and seek the warrant was unfair and involved a lack of good faith. 

36                  The conjunction of considerations supporting that conclusion are said to be these:  the Commissioner elected to settle the Supreme Court proceedings; the Commissioner entered into a Deed of Settlement on 7 July 2004 which conferred an entitlement upon Wilhelm and Dempsey and their solicitors to collect nominated documents on particular terms; the Commissioner accepted the settlement sum of $600,000 on 7 July 2004; the Commissioner’s solicitors, BDW, executed and delivered Notices of Discontinuance of the relevant proceedings to the applicants’ solicitors; the Commissioner’s solicitors on 7 July 2004 delivered a letter of undertaking that documents available for collection on the terms of the deed were still in the possession of BDW; by implication, there was no reason known to BDW that the documents would not be available for collection upon payment of the settlement monies and execution of the Notice of Discontinuance; the request by officers of the ATO on 7 July 2004 made to Ms Jilani that she provide assistance to obtain a search warrant with respect to the particular documents, execute the warrant and deliver up the documents to the ATO; the swearing and making of an application by Mr Bell for the issue of a search warrant in circumstances where Mr Bell failed to mention the Deed of Settlement and failed to mention the payment of a settlement sum to the Commissioner; and the obtaining of the seized documents by Mr Bell after the exercise of the powers contained in the search warrant (Ground 2, Particulars (ab)(i) –(viii)). 

37                  A further or third particular of the improper exercise of power ground is the contention that neither Mr Bell nor any other officer of the ATO had the power to investigate the alleged offences nor any power to execute a search warrant obtained under the Crimes Act (Particular (ac)).  Accordingly, the particulars of the ‘no power’ ground are relied upon as particulars of the improper exercise of power ground (Ground 2, Particulars (ac), by reference to Particulars, 1A(a)).

38                  The third ground of challenge is that the purported exercise of power constitutes an abuse of power.  The applicants rely upon the ‘no power’ particulars and the particulars supporting Grounds 2(aa), 2(ab) and 2(ac). 

39                  The fourth ground is that the purported exercise of power involved jurisdictional error.  The particulars are the same particulars supporting Grounds 1A(a) and 2(aa), 2(ab) and 2(ac). 

40                  Accordingly, the applicants have abandoned the ground that Ms Jilani swore false and misleading material and thus improperly asserted that she had reasonable grounds for suspecting the commission of the relevant offences (the old Ground 1(a)).  There was and remains no basis at all for making such a contention. 

41                  Ground 1A, the ‘no power’ ground, is a new ground although the applicants previously sought, unsuccessfully before the Full Court, to amend the application to contend that the person who swore the information so as to obtain a search warrant was not authorised to so swear for the purposes of s 3E of the Crimes Act (the previously proposed Ground 1(b)). 

42                  As to the improper exercise of power ground (Ground 2), the applicants have abandoned the contention that Ms Jilani (then thought to have been the moving party) was influenced by irrelevant considerations by acting on the request of ATO officers for purposes other than the investigation of the nominated offences or other than a purpose for which the power was conferred (the old Ground 2(a), (b) and (c)).  In the previous unsuccessful application for leave, the applicants sought to support Ground 2 on the footing that the person (Mr Bell as it turned out) who swore the information so as to obtain a search warrant did so for purposes other than the investigation of the nominated offences (the then proposed Ground 2(aa)).  The applicants however were not able to articulate the actual purpose which was said to influence the mind of the individual swearing the information. 

43                  The improper exercise of power ground is now supported on the contention that Mr Bell misled the issuing officer by failing to disclose material matters concerning the Deed of Settlement and its implementation [34] and that the power was exercised unfairly and in circumstances of a want of good faith for the reasons identified at [36].  The same circumstances support a contended abuse of power and jurisdictional error. 

44                  It can be seen from this review of the decisions sought to be challenged and the grounds of challenge that no particularised grounds are advanced in relation to the third decision under challenge, namely, the decision of Ms Jilani to execute the warrant, take possession of seized documents and deliver up those documents to the ATO (newly proposed amended review decision number 3).  The request made of Ms Jilani to provide assistance, and the conduct of Ms Jilani in seizing documents and delivering those documents to Mr Bell, is relied upon as a particular of challenge to Mr Bell’s decision to swear and make application for the warrant and the decision of Mr McKay SM to issue the warrant. 

45                  The Amended Application for an Order of Review is set out, in full, in the schedule to these reasons.  The underlined sections reflect the proposed amendments and the deletions are shown with ‘strike-out’ lines. 

46                  The applicants contend that in formulating the now proposed amendments to the primary Application, the applicants have taken account of the observations of Finkelstein J (Wilhelm v McKay (supra – [24])) and the Full Court (Jilani v Wilhelm (supra – [24])).  The Full Court in determining the appeal from the orders and judgment of Finkelstein J reached the following conclusions. 

The Judgment of the Full Court in Jilani v Wilhelm

47                  In dealing with the contention reflected in the proposed Ground 1(b) that the person who swore the information was not authorised to do so pursuant to s 3E of the Crimes Act, the Full Court observed that the essence of the applicants’ contention was that that person was not authorised because the information was not sworn by a member of the AFP and secondly, the ATO’s investigation of the tax affairs of Wilhelm, Dempsey, Markit and Urinda was over and thus no authority or power subsisted to call in aid the AFP to issue a warrant.  The Full Court concluded that s 3E of the Crimes Act does not confine applications to individuals who are members of the AFP (Jilani v Wilhelm at 269 [72]; Williams v Keelty (2000) 111 FCR 175 at [128], per Hely J.  As to the contention that the ATO’s authority to swear an information in support of a search warrant was exhausted by execution and operation of the Deed of Settlement, the Full Court observed that Finkelstein J was willing to draw such an inference from the applicants’ entitlement to collect the documents in accordance with clause 2(c) of the deed.  The Full Court concluded, however, that nothing in the Deed of Settlement could give rise to an inference that the ATO investigation had come to an end.  Moreover, even if the investigation had come to an end, nothing could be inferred from the terms of the Deed of Settlement that it was not open to the Commissioner to resume or continue the investigation made to that point.  Nothing in the Deed of Settlement was capable of supporting an allegation that the investigation had been irrevocably terminated (Jilani v Wilhelm at 269 [75]). 

48                  Moreover, the Full Court characterised the Deed of Settlement as a compromise of the civil claims for recovery of the unpaid tax instalments and observed at [76]:

‘There was not, nor could there be, any suggestion that the payment of $600,000 for the compromise of the civil claims released Mr Dempsey and Mr Wilhelm from the possibility of criminal prosecution:  R v Rogerson (1992) 174 CLR 268 at 275 – 276.  Yet the suggestion in ground 1(b), albeit not expressly made, that the payment of the settlement sum and the entitlement to collect the documents, brought to an end the possibility of an investigation into the possible criminal consequences of the applicants’ conduct is an essential premise underlying the obligation.  In our view, it is unsupportable and should not have been allowed to stand.’

49                  In dealing with the contention reflected in the proposed Ground 2(aa) of improper purpose, the applicants contended that the person who swore the information and requested the issue of the warrant did so for an improper purpose, that is, a purpose other than the investigation of the relevant offences.  Senior Counsel for the applicants, Mr Hack SC, frankly conceded before the Full Court that he was not in a position to state the contended improper purpose.  The applicants asserted that a statutory purpose for the use of the power is identifiable and it was arguable that the power was not used for the statutory purpose.  Nevertheless, Mr Hack SC conceded firstly that he could not state the purpose and secondly, the logic underlying the unparticularised allegation of improper purpose was an inference said to flow from the Deed of Settlement that the ATO did not intend to further investigate the alleged commission of criminal offences (Jilani v Wilhelm at 270 [80]).  At [81] and [82] the Full Court said this:

‘81.      It follows that in our opinion the discretion to permit the amendment to raise ground 2(aa) miscarried.  In our view this conclusion flows not merely because of the inability of the applicants to particularise the allegation and state the purpose but as a result of the rejection of the logic which underlies the amendment;

82.       We would add that in any event, the lack of particulars and the applicants’ inability to state the alleged purpose is a sufficient objection to the grant of leave to amend.  In Murchison v Keating (1984) 1 FCR 341 at 344 – 345, Toohey J referred to the need to provide some particularity of an assertion of the grounds put forward for review under the ADJR Act.’

50                  The Full Court expressed concern about the inability of the applicants to particularise the allegation of improper purpose and noted that although improper purpose might be established by inference and is thus a question of fact, there must be something in the application from which the court can conclude that ‘there is a real basis for complaint’ [86]. 

51                  At [87], the Full Court said this:

‘Where improper purpose is alleged, it will usually be necessary to state that purpose.  However in some circumstances it may be sufficient to allege that demonstrated absence of a proper purpose leads to the inference of an improper purpose.  That was the approach adopted by the applicants in this case.  In effect they asserted that the only possible proper purpose (conduct of investigation) was excluded by the available inference that the investigation had been completed.  However, we have concluded that such an inference was not available.  Thus it is not possible to exclude proper purpose.’

52                  In dealing with the previous contention of ‘want of power’, the Full Court noted that the first limb was based upon the notion of an exhaustion of power based on the Deed of Settlement and the second limb was based upon questions of construction of the TAA, the AFP Act and other potential Commonwealth legislation.  Finkelstein J observed that Ms Jilani’s advisers had not analysed the applicable legislation, and thus determined that the construction question ought to go to trial.  The Full Court observed, however, that implicit in the applicants’ contentions of improper purpose in the proposed amended Ground 2(aa) and the original Ground 2(a) was the concession that the ATO did have power to investigate offences under the Criminal Code but the contention was that the power had been exercised for a purpose other than the investigation of the nominated offences. 

53                  Although Finkelstein J concluded that the want of power issue going to the conduct of the investigation, calling in aid the AFP in connection with the issue of the warrant and the provision of documents seized on execution of the warrant to the AFP, ought to go to trial, the Full Court noted [95] that these issues were not expressly raised in the terms of the original or the amended application and thus did not fall for consideration in the Application for Leave to Amend.

54                  At [10] (Wilhelm v McKay (supra)), Finkelstein J considered the possibility of a challenge to the ‘decisions to obtain and issue the warrant’ on the ground of bad faith or unfairness and after dealing with the notion that the investigation had come to an end by 7 July 2004 as a matter of inference arising out of the Deed, said this:

‘10.      There is, I suppose, another possibility.  It is that the ATO only agreed to give back the documents to achieve a settlement of the actions but it always intended to arrange for the search warrant to avoid handing over the documents.  What effect this would have on the terms of settlement is not a matter that will arise on this application.  But, if this is what really happened, it may be the basis of a challenge to the decisions to obtain and issue the warrant on the ground of bad faith or unfairness as suggested in In Re Preston [1985] AC 835.  See also Leggo Australia Pty Ltd v Paraggio (1994) 52 FCR 542’. 

55                  The Full Court observed that his Honour’s observation to that effect could not stand in the face of well established principle that ‘allegations of fraud must be made specifically; see Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 285’.  The Full Court further said this at [100] and [101]: 

‘100.    In the absence of any allegation in the application of want of good faith, we do not see how the matter could proceed to trial on that issue. 

101.     In any event, it is one thing to assert trickery or misrepresentation in relation to the execution of the Deed of Settlement.  It is quite another to suggest that the exercise of the power to seek the issue of a search warrant in aid of the power to investigate possible criminal offences is similarly tainted.’

56                  At paragraphs [3] and [4] of the amended application before Finkelstein J, the applicants sought to review the ‘conduct’ of Ms Jilani in applying for and executing the warrant and in delivering up the documents to officers of the ATO.  The Full Court concluded that the proposed amendments addressing the conduct of Ms Jilani failed to recognise that ‘conduct’ for the purposes of s 6 of the A D J R Act focuses upon procedural questions whereas the complaint of the applicants was that the process of decision‑making itself was flawed and erroneous.  Secondly, the conduct in question was not conduct for the purpose of making a decision within the meaning of the Act. 

Considerations

57                  The applicants seek leave to amend the primary Application (Order 13, rule 2) and leave to join Mr Bell as a third respondent (Order 6, rule 8).  The court exercises a wide discretion in determining whether leave to amend the primary Application ought to be granted.  Order 13, rule 2 provides that ‘all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in the proceeding, or of avoiding multiplicity of proceedings’.  In exercising the discretion, the court must determine whether the applicants are seeking to litigate an issue which is ‘fairly arguable’ recognising that the ultimate aim of the court in quelling any controversy is to secure the attainment of justice between the parties to the controversy (Queensland v JL Holdings Pty Ltd (1996 – 1997) 189 CLR 146 at 154 per Dawson, Gaudron and McHugh JJ).  Further, the fact that the proposed amendment may possibly be met by a substantive defence on the part of the respondents does not, of itself, suggest any reason for refusing an amendment.  In circumstances where a party seeks to introduce a substantial additional ground of challenge to the decisions of the respondents, the applicants should be permitted to argue such a ground provided the ground is ‘arguable’.  In the exercise of the discretion, the applicants ought not to be shut out of raising an arguable contention.  Similarly, in determining whether Mr Bell ought to be joined as a third respondent in the proceeding, the question is whether the applicants have demonstrated that they have an arguable case against Mr Bell in the terms formulated in the proposed amendment.  If so, Mr Bell will be joined as a necessary party to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon (Order 6, rule 8(1)(b)).  The question then is whether the applicants have demonstrated an arguable case in relation to the proposed amendments and the joinder of Mr Bell. 

The Decision of Mr Bell to Swear and Make Application

58                  The applicants challenge this decision on grounds of statutory administrative review and pursuant to s 39B of the Judiciary Act.  As to the A D J R Act, Ground 1A relies upon error of law (s 5(1)(f)); Ground 2, an improper exercise of power (s 5(1)(e)); Ground 3, an abuse of power (s 5(2)(j)); and Ground 4, jurisdictional error (s 5(1)(c)).  As to the principles at common law upon which the Court will exercise supervisory review of  administrative decisions of the Executive, administrative tribunals or officers of the Commonwealth, for the purposes of exercising a jurisdiction under s 39B of the Judiciary Act: see Anisminic Ltd v Foreign Compensation Commission (1969) 2 AC at 171, per Lord Reid, approved in Craig v South Australia (1995) 184 CLR 163 at 179; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 366 and 367 per Deane J; and Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 489 [25].  The applicants contend for three ‘decisions’ susceptible of review. 

59                  The respondents contend that the decision of Mr Bell, so formulated, is not a decision to which the A D J R Act applies because Mr Bell did not reach a ‘decision of an administrative character, made, proposed to be made or required to be made under an enactment’ (s 3(1) A D J R Act). 

60                  In Griffith University v Tang (2005) 221 CLR 99, the question for determination was whether a decision of Griffith University to exclude Ms Tang from a doctoral candidature program conducted by the University was a decision made under the Griffith University Act 1998 (Qld), in the context of proceedings under the Judicial Review Act 1991 (Qld). Their Honours, Gleeson CJ, and in a separate joint judgment, Gummow, Callinan and Heydon JJ, concluded that it was not.  In the joint judgment, their Honours observed that there is conceptual risk in analysing the elements of ‘decision’, ‘of an administrative character’ and made ‘under an enactment’ separately because notions inherent in each necessarily inform the other collectively.  In particular, the question of whether a decision in question is a ‘decision of an administrative character’ informs whether the decision is one made ‘under an enactment’. 

61                  Mindful of the important cautionary observations of their Honours in the joint judgment in Griffith University v Tang concerning the risks necessarily inherent in a disjunctive consideration of each element comprising the expression ‘a decision of an administrative character made or acquired to be made under an enactment’, it nevertheless remains important to consider whether Mr Bell has reached a ‘decision of an administrative character’.  In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, Mason CJ with whom Brennan and Deane JJ agreed considered that a decision must reflect something in the nature of a resolution or determination of matters the subject of inquiry or dispute and those matters ought to reflect a question of substance.  At pages 335 – 337, Mason CJ said this:

‘The fact that the AD (JR) Act is a remedial statute providing for a review of administrative action rather than some form of appeal from decisions disposing of issues between parties indicates that no narrow view should be taken of the word “decision”.

Nonetheless, other considerations point to the word having a relatively limited field of operation. 

First, the reference in the definition in s 3(1) to “a decision of an administrative character made … under an enactment” indicates the reviewable decision is a decision which a statute requires or authorises rather than merely a step taken in the course of reasoning on the way to the making of the ultimate decision. 

Secondly, the examples of decision listed in the extended definition contained in s 3(2) are also indicative of a decision having the character or quality of finality, an outcome reflecting something in the nature of a determination of an application, inquiry or dispute or, in the words of Deane J, “a determination effectively resolving an actual substantive issue”. 

Thirdly, s 3(3), in extending the concept of “decision” to include “the making of a report or recommendation before a decision is made in the exercise of a power”, to that extent qualifies the characteristic of finality.  Such a provision would have been unnecessary had the Parliament intended that “decision”’ comprehend every decision, or every substantive decision, made in the course of reaching a conclusive determination.

Finally, s 3(5) suggests that acts done preparatory to the making of a “decision” are not to be regarded as constituting “decisions” for, if they were, there would be little, if any, point in providing for judicial review of “conduct” as well as of a “decision”. 

… a “decision” is one for which provision is made by or under a statute.  That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration.  A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment. 

Another essential quality of a reviewable decision is that it be a substantive determination.  With the exception of s 3(2)(g), the incidences of decision mentioned in s 3(2) are all substantive in character.  Moreover, the provisions in sub‑ss(1), (2), (3) and (5) of s 3 point to a substantive determination.  In this context the reference in s 3(2)(g) to “doing or refusing to do any other act or thing (emphasis added) should be read as referring to the exercise or refusal to exercise a substantive power. 

If “decision” were to embrace procedural determinations, then there would be little scope for review of “conduct”, a concept which appears to be essentially procedural in character’.

62                  It seems to me that what follows from these observations is that the challenged decision‑maker must be shown to have reached an operative resolution or determination as the emanation of a deliberative process, having the character or quality of finality.  This view is consistent with the approach adopted, on this question, in Salerno v National Crime Authority (1997) 75 FCR 133 at 138 per von Doussa, Drummond and Mansfield JJ.   See also Electricity Supply Association of Australia Ltd v Australian Competition and Consumer Commission (2001) 113 FCA 230, per Finn J at [65] and [66].  I adhere to the views I expressed in reviewing the authorities in Guss v Commissioner of Taxation (2006) FCAFC 88; (2006) 152 FCR 88 at [70] to [101]. 

63                  The decision of Mr Bell to swear and apply for the search warrant before Mr McKay SM does not reflect the character or quality of an operative decision in terms of the formulation of Mason CJ in Australian Broadcasting Tribunal v Bond.  The phrase ‘of an administrative character’ necessarily informs the notion of the ‘decision’ and in addressing that question their Honours Gummow, Callinan and Heydon in the joint judgment in Griffith University v Tang said this at [79] and [80]:

’[79]   The decisions so required or authorised must be “of an administrative character”.  This element of the decision casts some light on the force to be given by the phrase “under an enactment”.  What is it, in the course of administration, that flows from or arises out of the decision taken so as to give that significance which has merited the legislative conferral of a right of judicial review upon those aggrieved? 

[80]    The answer in general terms is the affecting of legal rights and obligations.  Do legal rights or duties owe in an immediate sense their existence to the decision, or depend upon the presence of the decision for their enforcement?  [R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154].  To adapt what was said by Lehane J in [Australian National University v Lewins (1996) 68 FCR 87 at 103], does the decision in question derive from the enactment the capacity to affect legal rights and obligations?  Are legal rights and obligations affected not under the general law but by virtue of the statute?  [General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 at 169].’

64                  In Salerno v NCA, for example, the decision of the National Crime Authority to raid the appellant’s home as part of a special investigation under the National Crime Authority Act 1984 (Cth) (‘NCA Act’) by using a general warrant issued under a provision of the Summary Offences Act 1953(SA) as the basis of the power to enter, search and seize certain property (rather than acting in reliance upon a warrant issued under s 22 of the NCA Act, materially affected the legal rights of the appellant to quiet enjoyment.  Thus, the determination to enter, search and seize constituted ‘a decision of administrative character’.  See also ESAA v ACCC (supra) [67] – [70].

65                  There is no material affect upon the legal rights of the applicants in the decision by Mr Bell, as formulated by the applicants.

66                   Moreover, the decision by Mr Bell is not one made ‘under an enactment’.  The applicants contend that Mr Bell’s decision is made under an enactment on the footing that firstly, s 3E of the Crimes Act is the source of the power which requires information on oath before the issuing officer can issue a search warrant and secondly, the decision by Mr Bell to swear and apply for the warrant in itself has a legal affect upon the applicants.  As to the second matter, the legal rights of the applicants are affected by the decision of Mr McKay SM to issue the warrant and not the decision by Mr Bell to swear and apply for the warrant.  As to the first matter, s 3E does not expressly or impliedly require or authorise the decision made by Mr Bell to swear and apply for the warrant.  Plainly enough, the section requires Mr McKay SM to be satisfied by information on oath that there are reasonable grounds for suspecting that evidential material either was or would be within 72 hours at the nominated premises in connection with the contended offences.  However, the challenged decision on the part of Mr Bell is not one required to be made or authorised in the relevant sense by s 3E of the Crimes Act. 

67                  Section 3E of the Crimes Act informs an applicant that an issuing officer will be required to reach a state of satisfaction as to a reasonable ground for suspicion about the relevant matters supported by information on oath.  At [89], Gummow, Callinan and Heydon JJ observed:

‘The determination of whether a decision is “made … under an enactment” involves two criteria:  first, the decision must be expressly or impliedly required or authorised by the enactment; and, secondly, the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense the decision must derive from the enactment.  A decision will only be “made … under an enactment” if both these criteria are met.  It should be emphasised that this construction of the statutory definition does not require the relevant decision to affect or alter existing rights or obligations, and it will be sufficient that the enactment requires or authorises decisions from which new rights or obligations arise.  Similarly, it is not necessary that the relevantly affected legal rights owe their existence to the enactment in question.  Affection of rights or obligations derived from the general law or statute will suffice’.

68                  See also on the issue of impliedly required decisions, Hutchins v Deputy Commissioner of Taxation (1996) 136 ALR 153 per Black CJ at 156.

69                  Although it is clear that a decision to issue the warrant is susceptible of review for the purposes of the A D J R Act as the decision is expressly authorised by s 3E of the Crimes Act and affects legal rights and obligations of the applicants, the steps taken by Mr Bell neither find their express authority in the section nor materially affect the rights and obligations of the applicants.

70                  Accordingly, the decision of Mr Bell is not susceptible of review for the purposes of the A D J R Act. 

Grounds of Review

Ground 1A

71                  The applicants challenge the decision of Mr Bell and implicitly (Grounds 3 and 4) the execution of the warrant by Ms Jilani on the ground that no officer of the ATO had the power to investigate the alleged offences and thus no power to properly swear and apply for the warrant in aid of such an investigation or, in the case of Ms Jilani, execute a warrant issued in such circumstances.  The particulars of ground 1A(a) are also relied upon as particulars of grounds 2, 3, and 4 to the challenged decisions.  Since each ground seeks to raise an arguable case that officers of the ATO had no power to investigate the alleged offences, I will address the no power contention after considering the ground 2.

Ground 2(aa)

72                  Ground 2(aa) relies upon an improper exercise of power by Mr Bell in failing to disclose the Deed of Settlement; the entitlement to collection of the documents and payment of the settlement sum, in swearing and making application for the warrant.  The non‑disclosure is said to be a misrepresentation and thus misleading. 

73                  The question to be addressed by Mr Bell was whether information was available to him which caused him to believe reasonable grounds existed for suspecting evidential material was at the premises of BDW as to the commission of the alleged offences.  The question Mr McKay SM had to address was whether he could be satisfied by information on oath that reasonable grounds subsisted for suspecting that evidential material was at the relevant premises that would afford evidence as to the commission of the alleged offences.  The non‑disclosure of the settlement of the Commissioner’s claims for recovery of a contended debt due to the Commonwealth and the Commissioner’s claim of liability on the part of the directors coupled with the payment of the settlement sum and the clause 2(c) entitlement to collection of some or all of that evidential material, was not relevant to the question Mr Bell or Mr McKay SM had to address (or any of the three conditions recited in the warrant), unless a term of the deed either expressly or by implication bound the Commissioner to give effect to a general discharge of Wilhelm, Dempsey, Markit and Urinda from all claims of any kind including the investigation by the ATO of conduct giving rise to the alleged offences or the possibility of criminal prosecution. 

74                  It is not contended that the deed expressly brought about that result.  The civil claim for recovery of the contended tax debt could never, by implication, so constrain the Commissioner.  Thus, Ground 2(aa) can not sustain a ground of ‘improper exercise of power’. 

Ground 2(ab)

75                  Ground 2(ab) relies upon unfairness and want of good faith in Mr Bell’s decision to swear and apply for the warrant in circumstances where, it is said, the Supreme Court proceedings had been settled, terms performed and inferences were open, particularly, an inference arising out of the BDW letter of undertaking, taken in context, that no reason subsisted to believe that the documents would not be available for collection.  Although the applicants contend for want of good faith and thus an ‘improper purpose’, the proposed amendment does not precisely formulate the improper purpose adopted by Mr Bell.  If Mr Bell was not acting in good faith, what bad faith motivated him?  Is not Mr Bell entitled to have that purpose identified, particularised and put to him both in terms of the contention itself and in the context of an application to join him as a party to answer the case sought to be made against him.  The failure to state the bad faith purpose continues to reflect the concession Mr Hack SC made in the course of the earlier appeal that he could not identify the improper purpose [49 of these reasons].  However, the applicants seek to raise an arguable case of improper purpose by firstly asserting lack of good faith and secondly by particularising seven events in connection with the Deed of Settlement and performance of its terms so as to contextually support an inference that no good purpose was served in the exercise of the power to seek, by swearing and making application to Mr McKay SM, a search warrant. 

76                  The conjunction of events in connection with the Deed of Settlement do not support an exclusion of any good faith purpose and thus establish an arguable case of improper purpose by want of good faith or unfairness.  One conclusion open on the Statement of Facts and Contentions is that the Commissioner settled the important civil question of recovery of a contended tax debt due to the Commonwealth and as a result of the resolution of those matters on terms providing for the collection of documents, officers of the ATO seeking to further examine the conduct of the applicants had to determine whether any and if so what documents falling under the terms of the settlement reasonably afforded evidence of the commission of particular offences and whether information sworn by an officer might provide an issuing officer under the Crimes Act with reasonable grounds for suspecting that such documents existed; that they related to Wilhelm, Dempsey, Markit and Urinda; and that they afforded evidence of the commission of the alleged offences. 

77                  I am not satisfied that Particular (ab) supports an arguable case of improper exercise of power on the ground contended.

78                  The applicants also say that not only is the non‑disclosure of the Deed of Settlement related events misleading, the failure to disclose these material matters is the expression of want of good faith and unfairness because Mr Bell, by omission, propagated half truths and  engaged in a misrepresentation and thus a breach of duty.  The duty is not said to be a general duty of disclosure but a duty inherent in the notion of acting in good faith.  The submission of the applicants derives from the observation of Hely J in Williams v Keelty and Others (2001) 111 FCR 175 at 225 [238] that a warrant might be set aside ‘for fraud or misrepresentation.  For this purpose a statement which is a half-truth and thus misleading, would be treated as a misrepresentation.’   In Williams v Keelty, the applicants contended that ASIC ought to have disclosed the pendency of Supreme Court proceedings, the nature of the proceedings, and that the proceedings involved transactions which overlapped with the extent of the search authorised by the warrant.  His Honour noted that consistent with Leggo Distribution Pty Ltd v Paraggio (1994) 52 FCR 542, whether a duty of disclosure arises is a question of statutory construction; no analogous obligation of full disclosure derived from the principles Courts of Equity apply, in considering and granting applications for ex parte injunctions, has any application; and no duty of disclosure as contended arose in ASIC in making application for a warrant under s 3E of the Crimes Act.  (see:  Leggo v Paraggio per Beaumont and Whitlam JJ at p 555 and Hill J at p 569 C-G;  Carmody v Mackellar (1997) 76 FCR 115 at 146 – 149, per Black CJ, Lindgren and Sackville JJ).  The important disclosure is the ‘disclosure to the issuing justice of matters relevant to the power to issue the warrant’ (Rogers v Moore (1992) 39 FCR 201 at 217 per French J).  It is well established that a failure to disclose a particular fact to the issuing officer will not invalidate a warrant unless ‘the failure was such as to warrant a conclusion that the decision to grant the warrant was induced by fraud.’ (Puglisi and Another v Australian Fisheries Management Authority and Others (1997) 148 ALR 393 at 400 per Hill J, noting the ratio of Leggo as expressed in the joint judgment).   In Leggo, Hill J put the same principle in terms of ‘an absence of good faith’ at p 569. 

79                  In Price v Elder and Others (2000) 97 FCR 218, the appellants contended that an applicant for a warrant under s 3E of the Crimes Act is under a duty to disclose to the issuing officer anything known to the applicant relevant to the question of the commission of an offence including exculpatory material and any material that might give rise to a line of inquiry to such material.  The Full Court, Black CJ, Sackville and Emmett JJ, refused to depart from the principles established in Leggo v Paraggio and reasserted that a warrant issued as a result of fraud or misrepresentation on the part of an applicant is liable to be set aside; and an applicant for a warrant must act in good faith.  Adopting the previous formulation, the Full Court said at [12], ‘a statement that is a half-truth, and thus misleading, may be treated as a misrepresentation such as to affect the validity of a warrant issued on the basis of that misrepresentation.’

80                  If the fundament of the duty is a duty to act in good faith and avoid making half-truths giving rise to a misrepresentation, the difficulty for the applicants is that they are unable to identify precisely what misrepresentation occurred.  It can not be, by omission, a misstatement by a failure to state that the Commissioner was bound not to further consider or investigate the quality of the conduct of the applicants to determine whether the relevant offences might have occurred.  Nor can it be a misstatement by a failure to state that the applicants had been released from the possibility of criminal proceedings.  None of the matters identified in Particular (ab) are relevant to the question the Magistrate had to ask himself and, in consequence, the decision the Magistrate had to make in the exercise of the discretion. 

81                  The position would, of course, be different as to the duty, if the applicants had demonstrated that the proposed amendment raised an arguable case that in swearing and applying for the search warrant, Mr Bell had misled Mr McKay SM by misrepresenting material facts going to the question of whether Mr McKay SM could be satisfied by information on oath that there were reasonable grounds for suspecting that evidential material was located at the premises of BDW which met the three conditions recited in the warrant.  Whilst the applicants conceded that there is no ‘general, in the sense of abstract, duty of disclosure’, they say the non‑disclosure of the Deed related events is an operative misrepresentation.  However, there must be necessarily some fact or circumstance demonstrated in the misrepresentation which goes to a matter relevant to the state of satisfaction Mr McKay SM had to reach about the elements he had to consider in reaching that state of satisfaction. 

82                  It seems to me that inherent in the references to the deed for the purposes of Ground 2 is the contention that by reason of the settlement arrangements, the applicants thought that they were securing a good discharge not only from any future claim of the Commissioner in respect of a contended tax liability but from any investigation of possible criminal offences in connection with contended conduct designed to secure a reduction in the true tax debt owed to the Commissioner, and thus an extinguishment of any step by any officer of the ATO to seek a warrant to preserve evidential material in aid of an investigation by the ATO.

83                  In other words, the applicants seek to preserve the notion that the deed and its terms necessarily mean that no investigation was on foot or could resume and that performance of the deed released Wilhelm and Dempsey from the possibility of criminal prosecution.  These contentions are inconsistent with the decision of the Full Court. 

84                  If the real point the applicants seek to make by Particulars (aa) and (ab) is that the arrangements per se struck between the Commissioner and the applicants and, in particular, the provision of the deed which entitled the applicants’ solicitors to collect some or all of the documents comprising some of the evidential material, were themselves relevant in the exercise of the discretion by Mr McKay SM and the exercise of the discretion miscarried by reason of the non-disclosure, the applicants must demonstrate the connection between the arrangements, the non-disclosure, and the exercise of the discretion. 

85                  They have not done so. 

86                  Similarly, it cannot be contended that there is unfairness in failing to disclose the nominated matters if the connecting factors are not identified.  Since an obligation of disclosure of the arrangements cannot be established based upon any construct or inference derived from the Deed of Settlement itself nor any contended commitment on the part of the Commissioner not to properly analyse the conduct of the applicants in connection with any possible tax-related activity that might find expression in the commission of criminal offences, how can it be said to be ‘unfair’ as an improper exercise of power, not to disclose the arrangements. 

No Power in Officers of the ATO to Investigate the Alleged Offences

87                  The applicants contend that Mr Bell’s decision involved an error of law or is contrary to law because no officer of the ATO had the power to investigate the alleged offences pursuant to any Commonwealth law including the Criminal Code, the TAA, the AFP Act, or the Crimes Act.  In consequence, it is said, the swearing and the making of an application for a search warrant in aid of the investigation also fails as contrary to law.  The contention for the purposes of the ADJR Act is more properly understood as a challenge that Mr Bell ‘did not have jurisdiction to make the decision’ (s 5(1)(c)) and jurisdictional error, s 39B of the Judiciary Act.

88                  The Commissioner by s 8 of the Income Tax Assessment Act 1936 (Cth) (‘ITAA 36’) has the general administration of ‘this Act’ which is defined to include the Income Tax Assessment Act 1997 (Cth) (‘ITAA 97’); Part IVC of the TAA so far as that Part relates to the ITAA 97 or Schedule 1 to the TAA; and Schedule 1 to the TAA. 

89                  Because for many years the taxation law of the Commonwealth was widely criticised as being too complex and too difficult for taxpayers to understand, a simplification process was adopted so as to rewrite in plain English the ITAA 36.  The notion was that the simplification team would progressively rewrite modules of the ITAA 36.  The result of the simplification process is ITAA 97 which has rewritten and replaced parts of ITAA 36.  There are also Income Tax Regulations 1936 made pursuant to the ITAA 36 (s 266) and Income Tax Assessment Regulations 1997 made pursuant to s 909-1 of the ITAA 97.  The ITAA 97 commenced operation on 1 July 1997.  Both Acts have concurrent operation and s 1-3(2) of the ITAA 97 provides that if the ITAA 36 expresses an idea in a particular form of words and the same idea is expressed by different words in the ITAA 97, the ideas are not to be taken to be different because of the form of words adopted.  The concurrent operation of both Acts and the preservation of the ideas derived from the ITAA 36 is in part an intended attempt to preserve the operation of judicial decisions on the provisions of the ITAA 36 written in plain English form in the ITAA 97. 

90                  For present purposes, I propose to refer predominantly to the ITAA 36 with references where relevant to ITAA 97. 

91                  The ITAA 36 establishes a regime administered by the Commissioner pursuant to which taxpayers (persons ‘deriving income or deriving profits or gains of a capital nature’ (s 6(1)) have a liability to taxation (Part III).  That liability is based upon assessments made by the Commissioner arising out of information, returns, documents and responses submitted to the ATO by taxpayers that must correctly identify as a matter of self assessment (s 169A, ITAA 36; determination power in the Commissioner s 169A(3), ITAA 36; and the power to amend assessments; s 170, ITAA 36), in the case of a resident, the gross income derived directly or indirectly from all sources whether in or out of Australia (s 25(1)(a)), and in the case of a non-resident, the gross income derived directly or indirectly from all sources in Australia (s 25(1)(b)), which is not exempt income, an amount to which s 26AC or s 26AD applies (categories of retirement payments) or eligible termination payments under Subdivision AA of Division 2 of Part 3.

92                  The tax base upon which tax is levied is the ‘taxable income’ (s 4 – 15(1) ITAA 97) being the ‘assessable income’ (that is, ‘ordinary income’ plus ‘statutory income’; ITAA 97 s 6-5 and s 6-10; excluding ‘exempt income’, s 6-20, ITAA 97) minus deductions.

93                  The ITAA 36 extensively deals with classes of income and its derivation (Division 2, Part III), the general approach to deductions and the regime for the treatment of a wide and detailed range of expenditures, allowances, losses, depreciation and entitlements on the part of taxpayer entities (whether individuals, companies, trustees, or otherwise) (Division 3, Part III).  The ITAA 36 further addresses the liability of taxpayers to tax by addressing in detail the treatment of specific categories of transactions, classes and sources of deductions, and the particular treatment applicable to classes of taxpayers (for example, partnerships, trust income, non-resident trusts, unit trusts, public trading trusts, private companies, distributions through interposed entities) and industry-specific treatment, such as the mining and petroleum industries, the transportation industry, and the Australian film industry, and others.  These are simply a few illustrative examples of the very detailed and comprehensive sources of subject matter dealt with by Part III in establishing, in part, the framework for determining a taxpayer’s liability to tax.  See generally Chapters 2 and 3 of the ITAA 97. 

94                  Part IV of the ITAA 36 deals with the obligation of taxpayers to lodge annual returns identifying ‘a return of income, or of profits or gains of capital nature, or of both income and such profits or gains’ (s 6(1)).  Sections 204 and 204(1)(A) of the ITAA 36 determine when the amount of tax is ‘due and payable’.  Income tax (as defined) when due and payable is a debt due to the Commonwealth and payable to the Commissioner as prescribed, (s 208(1)). 

95                  Part VI of the ITAA 36 provides for the recovery of tax. 

96                  The ITAA 36 expressly confers a range of powers on the Commissioner for the purposes of the administration of the Act inclusive of other tax legislation [88].  Section 263 of the ITAA 36 provides that the Commissioner or any officer authorised by him shall, at all times, have full and free access to all buildings, places, books, documents and other papers for any of the purposes of the Act, and for that purpose, may make extracts from or copies of any such books, documents, or papers.  Section 264 provides that the Commissioner may by notice in writing require any person, whether a taxpayer or not to furnish the Commissioner with such information as he may require, and to attend and give evidence before him or before any officer authorised by the Commissioner, concerning that person or any other person’s income or assessment, and for that purpose may require such a person to produce all books, documents, and other papers whatever in his custody or under his control relating to that matter. 

97                  Section 264A provides that where the Commissioner has reason to believe that information relevant to the assessment of a taxpayer is within the knowledge of a person outside Australia or recorded in a document outside Australia, or kept electronically outside Australia, the Commissioner may by notice in writing served on the taxpayer request the production to the Commissioner of such information or documents or the production of a copy of documents.

98                  Other sections of the ITAA 36 adopt and apply s 264 for the purposes of the Division with which they fall.  For example, s 220AAZB of Subdivision G of Division 1AAA of Part VI provides:

‘Section 264 applies, for the purposes of this Division as if the reference in paragraph (1)(b) of that Section to a person’s income or assessment were a reference to a matter relevant to the administration or operation of this Division.’

99                  Part IVA confers powers on the Commissioner to form ‘opinions’ concerning a ‘scheme’ (as defined) to reduce income tax which a taxpayer has entered into or carried out for the purpose of obtaining a tax benefit (s 177, particularly s 177D and 177F; Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168) and a power to make determinations (s 177F) to include amounts in the assessable income of the taxpayer or disallow deductions, among other determinations.  These expressly conferred powers (among other express powers) enable, properly exercised, the Commissioner to examine and investigate sources of information, facts, and circumstances that enable conclusions to be reached as to whether a taxpayer has complied with the tax law; whether the Commissioner’s assessment of the tax payable by the taxpayer properly and accurately reflects the amount of the taxpayers liability to taxation under Part III of the ITAA 36; and whether a basis subsists for forming opinions, making determinations or exercising discretions as to any relevant matter for the purposes of the ITAA 36, the ITAA 97 or the TAA.

100               In addition to expressly conferred powers, the Commissioner is charged with the general administration of the tax law.  Apart from s 8 of the ITAA 36, s 3A of the TAA confers the general administration of the TAA on the Commissioner.  The Commissioner must each year provide a report to the Minister on the working of each Act (inclusively defined) – s 14 ITAA 36; s 3B TAA.  Each Act imposes general secrecy requirements upon ATO officers concerning information acquired by that officer or information obtained under the provisions of the legislation (for example, s 16(2) ITAA 36, subject to exclusions).  One such exclusion is disclosure of information for the purposes of or in connection with the prosecution of a tax related offence against an Act administered by the Commissioner or an offence against the Crimes (Taxation Offences) Act 1980 (Cth) or the Crimes Act. 

101               The secrecy provision in the TAA, subject to permitted disclosures, applies to an officer, who, by reason of employment, or in the exercise of powers or functions, acquires or obtains information for the purposes of the Act.  The Commissioner’s report to the Minister must set out in relation to each general category of offence, information disclosed to a defined ‘law enforcement agency’ including the Australian Crime Commission.  Section 3D(1) of the TAA provides that ‘notwithstanding anything in a taxation secrecy provision, the Commissioner may communicate information to the Chief Executive Officer of the ACC for the purposes of a tax-related investigation.’  Similarly, the limitation contained in s 3D(11) of the TAA does not prevent disclosure of information in connection with the prosecution of a person for a taxation offence (s 3D(16)).  Section 3E(1) of the TAA provides that the Commissioner may disclose information acquired by the Commissioner under a tax law, to an authorised law enforcement agency officer if the Commissioner is satisfied that the information is relevant to ‘establishing whether a serious offence has been, or is being committed’.  Nothing prohibits a law enforcement agency officer, put broadly, dealing with the information for the purpose of a possible prosecution of a person for a tax-related offence (s 3E(4)). 

102               A ‘tax-related offence’ means (s 3E(11):

‘(a)      An offence against:

            (i)         A tax law; or

            (ii)        The Crimes (Taxation Offences) Act (1980)

(b)               An offence against the Crimes Act 1914 or the Criminal Code relating to a law referred to in paragraph (a); or

(c)               An offence against s 134.1, 134.2, 135.1, 135.2, or 135.4 of the Criminal Code being an offence that relates to a liability to the Commonwealth arising under, or by virtue of a tax law.’

and a ‘taxation law’ includes the TAA and any Act of which the Commissioner has general administration. 

103               For the purposes of s 3E(11), a ‘tax law’ is defined to mean:

‘(a)      A taxation law;

 (b)      Any other Act of which the Commissioner has the general administration;

 (c)       A repealed Act of which the Commissioner had the general administration; or

 (d)      Regulations under an Act referred to in paragraph (b) or (c).’

104               Part III of the TAA deals with prosecutions and offences. 

105               Division 2 provides for a series of offences.  Section 8C of Subdivision A renders a person guilty of an offence who refuses or fails when and as required under or pursuant to a taxation law to do a series of things.  Similarly, a failure to answer questions is an offence under s 8D.  Subdivision B of Part III provides for other offences relating to statements, records, and certain other conduct.  Section 8J is an interpretation provision.  To the extent that the sections use the term ‘relevant offence’ in Subdivision B, that term includes a reference to an offence against subs 8K(1), (1B), 8L(1), (1A), or ss 8N, 8Q, 8T, or 8U, an offence against the Crimes (Taxation Offences) Act 1980 (Cth) and an offence against s 6 of the Crimes Act, ss 11.1, 11.4, 11.5 of the Criminal Code (which have a relationship with tax-related conduct prescribed by provisions of Subdivision B) or an offence against ss 134.1, 134.2, 135.1, 135.2, or 135.4 of the Criminal Code being offences that relate to a tax liability (s 8J(3)).  Division 3 deals with the prosecution of taxation offences and provides for those offences which are indictable, and those punishable upon summary conviction.  Section 8ZB provides that ‘a prosecution for a taxation offence may be commenced at any time’.  Division 4, Part III, deals with ‘prescribed taxation offences’. 

106               Division 255 of Part 4-15 of Schedule 1 to the TAA, deals with the general rules concerning the collection and recovery of tax; the meaning of tax-related liabilities; and the recovery of tax from third parties, including receivers and various categories of third party. 

107               Division 284 of Part 4-25 of Schedule 1, deals with the imposition of charges and civil penalties.  Division 353 of Part 5-1 of Schedule 1 confers power on the Commissioner to require by notice any person to give information to the Commissioner ‘covering any matter relevant to the administration or operation of this Schedule’  and to ‘attend and to give evidence before the Commissioner or an officer authorised by the Commissioner covering any matter relevant to the administration or operation of this Schedule’ and ‘to produce any documents in the person’s custody or under the person’s control that relate to these matters’. 

108               It can be seen from these provisions that the powers of the Commissioner are wide‑ranging.  They comprehend an administrative power both under the ITTA 36 and the TAA to examine the conduct of a taxpayer to determine whether a taxpayer has, according to law, accurately identified the taxable income upon which tax is levied.  In undertaking that examination or investigation for the purposes of the ITAA 36, ITAA 97 or the TAA, the Commissioner may exercise express powers such as those contained in ss 263 and 264.  The general administration of the legislation also comprehends a power to examine the conduct of a taxpayer not just to determine whether an assessment or an amended assessment issued by the Commissioner in reliance upon self assessment details supplied by the taxpayer is, in the light of proper analysis or audit (see Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649 per Mason CJ, Brennan, Deane, Dawson, Toohey and McHugh JJ), an accurate assessment of the taxpayer’s liability to tax for the purposes of Part III but also whether the taxpayer has engaged in conduct which constitutes the commission of an offence against a tax law or a tax‑related offence including offences against the Criminal Code and in particular, ss 134.4, 134.2, 135.1, 135.2 and 135.4 being an offence that relates to a liability to the Commonwealth arising under or by virtue of, a tax law.

109               The TAA contemplates that information might be disclosed to prosecutorial bodies or law enforcement agencies for the purposes of the tax law.  Inherent in the secrecy constraints and the prescription of the conditions upon which information might be disclosed is the recognition that the Commissioner has information made up not only of information supplied by a taxpayer in the ordinary course of self assessment but information obtained by the Commissioner through the exercise of powers, for the purposes of the Act.  The general administrative power comprehends that the Commissioner may seek to closely investigate particular arrangements put in place by a taxpayer and especially those involving complex structural arrangements reflecting interposed entities, offshore payments or receipts, inter‑company transactions and other arrangements which might reflect tax related contraventions of the Criminal Lawof the Commonwealth.  The Commissioner may seek to pursue an investigation through his own officers or may seek to cooperatively engage law enforcement agencies especially the Director of Public Prosecutions or the Australian Federal Police (see Grofam Pty Ltd v Australia and New Zealand Banking Group Ltd (1993) 116 ALR 535). 

110               In circumstances where the arrangements under examination involve complex financial analysis, no doubt the Commissioner’s officers would undertake such investigation or analysis, form a view and where appropriate brief law enforcement agencies with an assessment of the consequences of the conduct.  The failure to confer an express power upon the Commissioner by operation of the Criminal Code, the AFP Act or the Crimes Act does not lead to a construction that the Commissioner does not have the power to conduct an investigation of conduct which might express itself in the form of a contravention of the Criminal Law of the Commonwealth concerning tax related matters.  The source and repository of prosecutorial power in respect of any particular offence is another question. 

111               The role of law enforcement agencies in connection with the investigation of the possible commission of offences by taxpayers or the possible prosecution of taxpayers by law enforcement agencies does not lead to the conclusion as a question of construction of the ITAA 36, ITAA 97 or the TAA that only a law enforcement agency has power to investigate conduct which finds its expression in the commission of an offence and in particular, the commission of an offence against s 134.2(1) of the Criminal Code by conduct involving, as contended in this case, a deception to dishonestly obtain a financial advantage from the Commissioner by securing a reduction in the quantum of the tax debt owed to the Commissioner by entities associated with the directors Wilhelm and Dempsey. 

112               The ITAA 36, ITAA 97 and the TAA establishes a regime, particularly having regard to the self assessment arrangements provided for by the tax legislation, by which all taxpayers are susceptible of audit or investigation, for the purposes of the legislation, by officers of the Commissioner, exercised in good faith according to the terms of the power, to seek to ensure as a matter of important public administrative policy and thus public confidence in the administration of the tax law, that taxpayers comply with the law relating to taxation.  The administrative power is not exercised simply, although critically, to secure payment to the Commissioner of the contended tax debt due to the Commonwealth but to deploy resources to examine conduct of a taxpayer by which a tax liability under the Act may potentially not have been met or whether an assessment might be susceptible of adjustment, and determine by forensic examination and investigation of the particular arrangements, whether an offence necessarily connected with or arising under or by virtue of a tax law has arguably been committed. 

113               One important aspect of the administration of the tax law in a civil society is that the Commissioner’s power of investigation of tax related conduct that might involve a contravention of Commonwealth criminal law can not be foreclosed by payment by the taxpayer to the Commissioner of the amount of the unpaid tax (including interest and penalties) arising out of the conduct.  Otherwise, a resourced taxpayer could simply pay his or her way out of an investigation by the Commissioner of whether a criminal offence also occurred. 

114               The offence may find its expression in the Crimes Act or the Crimes (Taxation Offences) Act 1980 or the Criminal Code but the investigative power of the Commissioner to examine, investigate, analyse, consider and form a view as to the character or content of the conduct is not constrained by whether law enforcement agencies might be called upon cooperatively or in aid of the Commissioner’s officers to investigate aspects of the particular conduct, possible prosecution of a taxpayer or the commencement of a prosecution of a taxpayer.  The powers of investigation of the Commissioner and the power to deal with information arising out of an investigation into tax related conduct on the part of a taxpayer includes a power to investigate the commission of tax related offences including those the subject of the warrant. 

115               The definition in s 2(1) of the TAA of ‘law enforcement agency’ is exclusive of the Commissioner because the defined term describes bodies to which information might be disclosed by the Commissioner subject to the terms of the Act, for particular purposes.  It contemplates the field of potential repositories of information from the Commissioner or those bodies that in the circumstances of the Act may have statutory responsibilities to discharge in connection with a person.  No inference of excluded power to investigate arises by force of that definition, as contended. 

116               Accordingly, I am not satisfied that there is an arguable case made out that Mr Bell’s election to swear and apply for a warrant is beyond power on the footing that the underlying power to investigate tax related offences derived from contended conduct on the part of the applicants, is itself beyond the power of the Commissioner. 

The Challenge to the Decision of Mr McKay SM

117               The proposed amended challenge to the decision of Mr McKay SM to issue the search warrant relies upon the particulars identified for Ground 1A and Particulars (aa), (ab) and (ac) of Ground 2.  Ground 3 is a ground of challenge directed to all respondents of abuse of the power conferred by s 3E of the Crimes Act.  However, for that ground, the applicants rely upon the Particulars 1A(a) and 2(aa), (ab) and (ac).  Those particulars are relied upon in support of Ground 4 namely, jurisdictional error.  Since I have determined that no arguable case is raised by the amendment in relation to any of those particulars, the proposed amended challenge to the decision of Mr McKay SM necessarily fails to raise an arguable case.  The applicants have not demonstrated an arguable case that Mr McKay SM did not have reasonable grounds for suspecting that evidential material was at the premises of BDW which satisfied the conditions recited in the warrant. 

The Challenge to Decision 3, the Decision by Ms Jilani to Execute the Warrant

118               Ground 3 is a ground of challenge directed to the respondents generally and thus includes the decision by Ms Jilani to execute the warrant, take possession of documents and deliver the documents to officers of the ATO.  The challenge to the execution of the warrant by Ms Jilani goes to the implementation of steps consequent upon the swearing and making of an application by Mr Bell, the exercise of power by officers of the ATO and the issuing of the search warrant in reliance upon the information put before Mr McKay SM, all of which are challenged.  Since the proposed amended challenge fails to demonstrate an arguable case, there is no basis upon which the steps taken by Ms Jilani pursuant to and in execution of the warrant and thus authorised by the warrant are arguably called into question.  Since there is no separate ground identified which calls into question Ms Jilani’s decision to execute the warrant, no arguable case of a challenge to the decision made by Ms Jilani is made out. 

The Exercise of the Discretion Generally

119               In considering an application for leave to amend and leave to join a party, the history of the amendments ought to be borne in mind.  In this case, the applicants initially challenged a decision of Ms Jilani to swear information in circumstances where, it is said, she had no reasonable grounds for doing so.  There was no basis for that contention and no material on which it could have been made.  Ms Jilani did not swear any information and it could not be demonstrated that in respect of any relevant matter Ms Jilani was influenced by an improper purpose, that is, bad faith.  The applicants then contended that Ms Jilani’s conduct in applying for and executing a search warrant and delivering seized documents to the ATO was conduct susceptible of review.  The applicants contended that whoever swore the information for the purposes of obtaining the search warrant was not authorised to do so.  Both of those challenges were misconceived.  The primary Application was the subject of significant proposed amendment and then a further proposed amendment in terms of the present application with a reformulation of the proposed amended primary Application by the introduction of a contention of want of good faith in Ground 2(ab).  Now the applicants formulate the challenge in terms of three decisions and rely upon grounds which fail to demonstrate an arguable case including a case of want of good faith.  The applicants seem to have real difficulty in identifying an arguably sustainable basis for calling into question the issue and execution of the warrant. 

Orders

120               Having regard to all of these matters, I refuse leave to amend the primary Application and refuse leave to join Mr Bell as a party in the primary Application.  The Notice of Motion must be dismissed with costs. 

SCHEDULE

‘AMENDED APPLICATION FOR AN ORDER OF REVIEW

(Order 54)

Application to review the following decisions:

1.         The decision of the secondthird respondent, Kellie Nadine JilaniPhillip Richard Bell, to swear and make an information Application for a Search Warrant on the 7^th day of July 2004 (the “Application”) in which he swore, inter alia, that she had reasonable grounds for suspecting that each of the applicants had committed offences against the laws of the Commonwealth and, in particular, the following alleged offences:

(a)        That on or about the nineteenth day of July 2001 at Brisbane in the State of Queensland, Michael Perry DEMPSEY and Otto Heinrich WILHELM did, contrary to section 134.2(1) of the Criminal Code (Commonwealth), by a deception dishonestly obtain a financial advantage from the Commissioner of Taxation, a Commonwealth entity, namely a reduction in the quantum of the tax debt owed to the said Commissioner by Markit Pty Ltd, a company of which they were both directors;

(b)        That on or about the third day of August 2001 at Brisbane in the State of Queensland, Michael Perry DEMPSEY and Otto Heinrich WILHELM did, contrary to section 134.2(1) of the Criminal Code (Commonwealth), by a deception dishonestly obtain a financial advantage from the Commissioner of Taxation, a Commonwealth entity, namely a reduction in the quantum of the tax debt owed to the said Commissioner by Urinda Pty Ltd, a company of which they were both directors;

                                                                                    (the “alleged offences”);

            2.         The decision of the first respondent, in his capacity as an issuing officer within the meaning of the Crimes Act 1914 (Cth) (the Crimes Act), to issue a search warrant, on the 7^th of July 2004, purportedly authorising the second respondent to search the commercial premises of Blake Dawson Waldron Lawyers, situated at Level 40, Riverside Centre, 123 Eagle Street, Brisbane  Q  4000 (the “premises”) and to take possession of documents referred to in the first condition of the search warrant (the “search warrant”);

            3.         The decisions of the second respondent to execute the search warrant at the premises, take possession of documents seized at the said premises, and hand over or deliver the documents seized at the said premises to officers employed by the Australian Taxation Office, in Brisbane.

            Alternatively, an application to review the conduct of the second respondent in swearing an information alleging that she had reasonable grounds for suspecting the commission of the aforementioned offences in circumstances where she did not entertain any such suspicion.

            Alternatively, the application is made pursuant to s.39B of the Judiciary Act 1903.

            The applicants are aggrieved by the decisions and conduct referred to herein because:

            1.         The documents seized from the aforementioned premises included documents owned by the applicants, which documents were to be returned by Blake Dawson Waldron to Messrs Clayton Utz, solicitors for the applicants on the 8^th of July 2004, pursuant to the terms of a deed of settlement entered into by the applicants and the Commissioner of Taxation, for and on behalf of the Commonwealth of Australia, on the 7^th of July 2004 (the “Deed of Settlement”).  The Applicants cannot, until discovery is completed, provide a complete list of the documents seized but are presently aware that the documents included the following:

(a)        Minutes of meeting of the directors of Markit Pty Ltd, the third applicant herein, dated the 1^st of February 1994, 22^nd of February 1994, 14^th of November 1994 and 23^rd of February 1995;

(b)        Management agreement between the third applicant, Markit Pty Ltd, and the first and second applicants, Messrs Wilhelm and Dempsey, dated 20^th of May 1995;

(c)        Minutes of meetings of the directors of the fourth applicant herein, Urinda Pty Ltd, dated the 15^th of October 1994 and 21^st of June 1994

     (hereinafter referred to as “the aforesaid documents”);

2.         The applicants are entitled to possession of the aforesaid documents, as the owner thereof, and pursuant to the terms of clause 2(c) of the deed of settlement referred to herein, and to possession of any other of the documents seized of which they, or any of them, are the owners.

The grounds of the application are as follows:

1.         That procedures that were required by law to be observed in connection with the making of the decisions were not observed:

Particulars

                        (a)        The information sworn by the second respondent, Ms. Jilani, contained allegations which were false and/or misleading in that it was alleged that she had reasonable grounds for suspecting the commission of the offences referred to previously herein when she entertained no such suspicion;

            1A.       The decisions to swear and make the Application and issue the warrant involved errors of law and were otherwise contrary to law:

Particulars

(a)        The third respondent swore and made the Application in circumstances where neither he nor any other officer employed by the Commonwealth of Australia in the office of the Commissioner of Taxation had the power to investigate the alleged offences, pursuant to the Criminal Code (1995) (Cth) (the “Code”), the Taxation Administration Act 1953 (Cth) (the “TAA”), the Australian Federal Police Act 1976 (Cth) (the “AFP Act”), or the Crimes Act 1914 (Cth) (the “Crimes Act”), or any other Commonwealth Act, properly construed;

(b)       Sub-section 2(1) definition of “law enforcement agency”, s.3A “General Administration of the TAA”, subs.8J(3) definition of “relevant offence”,[1] subs.8M(2), reference to “relevant offence” in subpara.8M(2)(b), subs.8R(2), reference in subpara.8R(2)(c) to “relevant offence”, and subs.8V(2), reference in subpara.8V(2)(b) to “relevant offence” of the TAA, subparagraphs 8(1)(b) and (c), 9(1)(a)(i) and (c) of the AFP Act, definition of “law enforcement officer” in s.3 of the Crimes Act and s.3C of the Crimes Act, definition of “constable assisting” and “executing officer”, s.3E and Part 1C, Division 1 and Division 3, particularly s.23B, definition of “investigating official”, and ss.23F, G and M of the Crimes Act are all consistent with AFP members being the only persons authorised to investigate alleged offences under the Code, except in very limited circumstances which are not presently relevant;

(c)        All of the aforementioned provisions are consistent with officers who are members of the AFP being authorised to execute search warrants obtained under the Crimes Act, and investigate offences pursuant to the Code, and officers employed by the Commonwealth of Australia in the ATO not having any power so to do;

(d)        In the premises, the decisions to swear and make the Application and issue the warrant were vitiated by errors of law, or were otherwise contrary to law. 

2.         That the making of the decisions to swear the informationand make the Application and the decision to issue the search warrant was involved an improper exercise of the power conferred by the enactment in pursuance of which those decisions were purported to be made:

Particulars

(a)        The second respondent took into account irrelevant considerations in the purported exercise of the power in that the information was sworn and the search warrant issued at the request of officers employed by the Commonwealth of Australia in the office of the Commissioner of Taxation, in Brisbane, for purposes other than the investigation of offences pursuant to the Criminal Code and, in particular, the offences referred to in the search warrant;

(b)        The respondents purported to exercise the power contained in s.3E of the Crimes Act for a purpose other than the purpose for which the power was conferred in that the search warrant was obtained at the request of officers employed by the Commonwealth of Australia in the office of the Commissioner of Taxation in Brisbane for purposes other than the investigation of offences to which the search warrant purportedly related;

(c)                The powers referred to in s.3E of the Crimes Act were purportedly exercised by the respondents at the direction or behest of another person, namely officers employed by the Commonwealth of Australia in the offices of the Commissioner of Taxation at Brisbane;

(aa)      The Application sworn by the third respondent, Mr. Bell, contained allegations which were misleading and omitted material facts, as follows:

(i)         the failure to mention the Deed of Settlement at all, or any of the terms thereof, including the terms of Clause 2(c) thereof, pursuant to which the first and second applicants, and/or their solicitors, were entitled to collect the documents sought to be seized upon the terms and conditions referred to therein;

(ii)        the failure to mention that the applicants had paid the amount of $600,000.00 referred to in Clause 2(a) of the Deed of Settlement, by telegraphic transfer on the 7^th day of July 2004, in accordance with the terms of the Deed of Settlement. 

(ab)      Further, or in the alternative, the Applicants contend that the decisions under review involved a purported exercise of power unfairly and involved a want of good faith, having regard to the following facts and circumstances;

            (i)         The settlement of the Supreme Court proceedings;

(ii)        The entry by the Commissioner of Taxation into the Deed of Settlement on the morning of 7 July 2004, which Deed of Settlement included in Clause 2(c), an entitlement on the part of the First and Second Applicants and/or their solicitors to collect the documents upon certain terms and conditions referred to therein;

(iii)       The acceptance by the Commissioner of Taxation through his then solicitor, BDW, of payment of the amount of $600,000.00, in accordance with Clause 2(a) of the Deed of Settlement, by a telegraphic transfer on the 7^th of July 2004, at or about 11.30am;

(iv)       The execution by the solicitors then acting for the Commissioner of Notices of Discontinuance of  the Supreme Court proceedings and delivery of the executed Notices of Discontinuance to the solicitors for the Applicants;

(v)        The delivery by the solicitors then acting for the Commissioner of Taxation, BDW, of the letter dated 7^th of July 2004 containing an undertaking that the documents referred to in Clause 2(c) of the Deed of Settlement were still in the possession of BDW, on the 7^th of July 2004 at approximately 9.45am, and the implication arising therefrom that there was no reason known to the solicitors then acting for the Commissioner of Taxation that the documents would not be available for collection upon payment of the amount of $600,000.00 referred to previously herein, and the execution of the Notices of Discontinuance referred to previously herein;

(vi)       The request by officers employed by the Commonwealth of Australia employed in the Commissioner of Taxation, on or about the 7^th of July 2004, to Ms Jilani, the Second Respondent herein, that she provide her assistance to obtain a search warrant, with respect to the said documents, execute that search warrant at the premises of BDW, and, once the documents were seized, hand the documents over to Mr Bell;

(vii)      The swearing and making of an Application for the issue of a search warrant with respect to the documents by Mr Bell, an officer employed by the Commonwealth of Australia in the office of the Commissioner of Taxation in Brisbane, wherein Mr Bell failed to mention the Deed of Settlement at all, and failed to mention the payment of the amount of $600,000.00 referred to previously herein;

(viii)     The obtaining of the seized documents by Mr Bell after the exercise of the powers contained in the search warrant, and the retention of those documents;

(ac)      The applicants repeat and rely on the particulars supplied in paragraph 1A(a) hereof;

3.         The respondents purported to exercise the power contained in s.3E of the Crimes Act in a way which constitutes an abuse of the power;

Particulars

(a)     The applicants repeat and rely on the particulars supplied in subparagraph 1A(a) hereof;

(b)     The applicants repeat and rely on the particulars supplied in subparagraphs 2(aa), (ab) and (ac) hereof;

            4.         Further, or in the alternative, the purported exercise of power pursuant to s.3E of the Crimes Act by the respondents in the circumstances involved jurisdictional error:

Particulars

(a)        The applicants repeat and rely on the particulars supplied in subrelation to the preceding groundsparagraphs 1A(a) and 2(aa), (ab) and (ac) hereof.

            The applicant claims:

            1.         A declaration that the search warrant purportedly issued by the first respondent on the application of the second respondent, dated the 7^th of July 2004, is invalid;

            2.         A declaration that the second respondent was not entitled to remove from the premises referred to previously herein the aforesaid documents;

            3.         Further, or in the alternative, an order in the nature of a writ of certiorari quashing the decisions referred to herein with effect from the date when the decisions were made;

            4.         Alternatively, an order pursuant to s.16(1)(a) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) quashing or setting aside the decisions referred to herein with effect from the date when the decisions were made;

            5.         Further, or alternatively, a declaration that the third respondent does not have power to investigate alleged offences pursuant to the Criminal Code 1995 (Cth);

            5.6.      An order directing the second and/or third respondents to return the documents seized, including the aforesaid documents, to the applicants or their solicitors within seven days from the date of the Court’s order;

            6.7.      Alternatively, an order directing the second and/or third respondents to return the documents seized, including the aforesaid documents, to Blake Dawson Waldron within seven days from the date of the Court’s order;

            7.8.      An order that the second and/or third respondents pay the applicants’ costs of and incidental to this application to be taxed, if not agreed.

            Date:  4 August 2004.

            Signed:

            Lloyd Nash Solicitor for the Applicants

            NOTICE TO THE RESPONDENTS

TO the first respondent, William Joseph McKay, 240 Roma Street, Brisbane, Queensland and to the second respondent, Kellie Nadine Jilani, 203 Wharf Street, Spring Hill, Queensland and to the third respondent, Phillip Richard Bell of care of the Australian Taxation Office, 10 Banfield Street, Chermside, Queensland:

            This application has been set down for the time and place stated below.  If you or your legal representatives do not attend the Court at that time, the application may be dealt with and judgment may be given, or an order made, in your absence.  As soon after the time mentioned as the business of the Court will allow, any of the following may happen:

(a)        the application may be heard;

(b)                directions may be given for the further conduct of the proceeding;

(c)                any application for interlocutory relief may be heard.

Before any attendance at Court, you must file an appearance in the Registry.

Time and date for hearing:

Place:

Date:

                                                                                                            Registrar

The applicant’s address for service is c/- the office of their solicitors, Messrs Clayton Utz Solicitors at Level 26, 215 Adelaide Street, Brisbane  Q  4000.’

Associate:

Dated:         15 March 2007