FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Rawson Finances Pty Ltd [2015] FCA 628

THE COURT ORDERS THAT:

1.    The Commissioner of Taxation be released from the implied obligation not to make use of the affidavit of Chris Ardagna affirmed 4 March 2015 and filed in this proceeding for purposes other than those of the proceeding, so far as is necessary to enable the Commissioner of Taxation to use the affidavit in the proceeding of Andrew Binetter v Commissioner of Taxation of the Commonwealth of Australia in the Administrative Appeals Tribunal (proceeding 2015/2941)

2.    No order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    On 15 December 2014 the Commissioner of Taxation (the “Commissioner”) filed in this Court an Originating Application and a Statement of Claim. The Respondent to that proceeding was Rawson Finances Pty Limited (“Rawson Finances”). The directors of Rawson Finances are Mr Erwin Binetter, Ms Margaret Binetter and Mr Andrew Binetter. Serious allegations of wrongdoing are alleged in the Statement of Claim, including allegations (at paragraphs [23] and [24]) that Mr Andrew Binetter gave evidence in earlier proceedings which was “false or materially misleading”. That matter is presently docketed to Perry J. In that proceeding Rawson Finances sought an order from her Honour that it be excused from filing a Defence. In support of that order an affidavit was filed by a solicitor acting for Rawson Finances, Mr Chris Ardagna. That affidavit was not read. An arrangement between the parties permitted a Defence to be filed in May 2015.

2    Separate from that proceeding is a matter in the Administrative Appeals Tribunal. For the purposes of hearing that application the Tribunal is constituted by a Judge of this Court, Edmonds J. In the Tribunal proceeding, Mr Andrew Binnetter is the Applicant and the Commissioner is the Respondent. Mr Binetter seeks review of a Departure Prohibition Order made by the Commissioner pursuant to s 14S(1) of the Taxation Administration Act 1953 (Cth).

3    Now before the Court as a duty matter is an Interlocutory Application filed on behalf of the Commissioner. The Commissioner seeks to use parts of Mr Ardagna’s affidavit in the Tribunal proceeding. In order to do so, he needs the leave of the Court. Without the grant of leave the Commissioner is subject to an implied undertaking not to use the affidavit for purposes other than the present proceeding.

4    The matter assumes some urgency as Edmonds J is due to resume hearing the Tribunal matter at 10.15 am this morning.

The purpose of the implied undertaking and the grant of leave

5    Before an affidavit that has been filed in a proceeding it is read and thereby becomes part of the evidence in that proceeding, it is subject to an implied undertaking. The same undertaking applies to documents produced to the Court pursuant to the compulsory processes of the Court, such as discovery. The rationale for the undertaking has been explained by McMurdo P in Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd (No 4) [2009] 1 QCA 345, [2011] Qd R 145 at 150 as follows:

[13]    … The public policy considerations behind them are to ensure that, in compelling specified conduct (in this case, the production of documents in proceedings for a freezing order) privacy and confidentiality are not invaded more than is absolutely necessary for the purpose of securing that justice is done … Whilst all parties are expected to comply with court practice, procedure and orders, the implied undertaking is thought to encourage frank and full compliance …

6    An application may be made, however, for a party to be relieved from the implied undertaking.

7    Such an application is to be made in the proceeding in which the undertaking was impliedly given: Holpitt Pty Ltd v Varimu Pty Limited (1991) 29 FCR 576 at 577 per Burchett J. The forum in which the undertaking was given, it is accepted, is “the most appropriate place in which to make such an application” and that forum is “in the best possible position to determine such an application”: Transfield Philippines Inc v Pacific Hydro Ltd [2006] VSC 175 at [133] to [134] per Hollingworth J.

8    In order for a party to obtain a release or modification of the implied undertaking, a Court must be satisfied that there are “special circumstances”: Holpitt Pty Ltd v Varimu Pty Limited (1991) 29 FCR 576. Burchett J there observed at 578 to 579:

“... As far as the expression “special circumstances” is concerned, it is an expression which is liable to be misunderstood unless care is taken to ask and answer the question, special in relation to what? “Special” is one of those words which derive almost all their meaning from the context ... If all that is required is that, among the great number of cases in the court in which documents have been discovered, this one must evince some special feature which affords a reason for releasing or modifying the undertaking, there will be no difficulty. Circumstances in which there is a legitimate reason why documents discovered in one proceeding should be made available in another will, viewed in this way, be rare. In the ordinary course, the ordinary rule should apply, there being no special circumstance to suggest otherwise. Cf Jess v Scott (1986) 12 FCR 187, where the Full Court was concerned with the construction of O 52, r 15(2), by which leave to file an appeal out of time could be granted “for special reasons” ...

In my opinion, the court's duty, in an application of this kind, is to consider whether the applicant has shown some circumstance which takes the matter out of the ordinary course, according to which production of documents pursuant to an obligation to make discovery involves the implied undertaking to the court; and, if so, whether an exercise of the court's discretion in favour of the application would be in the interests of justice.”

9    In Springfield Nominees Pty Ltd v Bridgelands Securities Limited (1992) 38 FCR 217 at 225 Wilcox J gave content to what constituted “special circumstances” when he set out a list of considerations of relevance to an assessment of that requirement, including:

    the nature of the document;

    the circumstances under which the document came into existence;

    the attitude of the author of the document and any prejudice the author may sustain;

    whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain;

    the nature of the information in the document (and in particular whether it contains personal data or commercially sensitive information);

    the circumstances in which the documents came into the hands of the applicant; and

    most importantly of all, the likely contribution of the document to achieving justice in other proceedings.

That list, of course, is not exhaustive. It is not “possible or desirable to propound an exhaustive list of the factors that may bear upon the discretion”: Cadbury Schweppes Pty Ltd v Amcor Ltd [2008] FCA 398 at [14] per Gordon J. The list of considerations provided by Wilcox J nevertheless provides a “helpful guide”: Liberty Funding Pty Ltd v Phoenix Capital Ltd [2005] FCAFC 3 at [32], (2005) 218 ALR 283 at 290 per Branson, Sundberg and Allsop JJ. The reasons for implying an undertaking and the principles to be applied when seeking a release from that undertaking have been summarised in Groves, ‘The implied undertaking restricting the use of material obtained during legal proceedings’, (2003) 23 Aust Bar Rev 314.

The grant of leave

10    That part of Mr Ardagna’s affidavit intended to be employed by the Commissioner in the Tribunal proceeding are the following paragraphs:

5.    The allegations made in the Statement of Claim (SOC) filed by the Applicant in these proceedings against the Respondent, Rawson Finances Pty Ltd, and in particular the allegations made concerning the Respondent’s state of knowledge about certain matters, are tantamount to allegations against the Company’s directors and in particular Andrew Binetter.

6.    Further, the allegations made by the Applicant in the SOC are allegations that constitute elements of serious criminal offences (refer paragraphs 16, 18, 20, 22, 24, 26, 31 and 33 of the SOC) and therefore those allegations are in substance allegations of serious criminal conduct against the individual directors. Therefore, any requirement for the Respondent to plead to the allegations is in substance to impose an obligation on the directors to plead the allegations of criminal conduct on their part.

11    The Interlocutory Application is opposed.

12    In seeking the grant of leave, it was submitted on behalf of the Commissioner that:

    Mr Ardagna’s affidavit was filed in support of an application that Rawson Finances not be required to file a Defence and was not filed in circumstances where it could be expected that the affidavit would be kept confidential;

    paragraphs [5] and [6] of Mr Ardagna’s affidavit do not contain any commercially sensitive information and nothing of a private nature;

    those paragraphs expose a recognition that the allegations made in the Statement of Claim are allegations against Mr Binetter of “serious criminal conduct” – an issue which may well assume relevance in the Tribunal proceeding; and

    those statements in the affidavit were presumably statements made with the knowledge of and upon instructions by Mr Binetter.

13    In opposing the grant of leave, it was submitted on behalf of Mr Binetter that:

    the making of serious allegations against both Rawson Finances and Mr Binetter in particular was already self-evident from the terms of the Statement of Claim;

    to the extent that the Commissioner may seek to invite inferences to be drawn by the Tribunal as to the advice Mr Binetter “must have received in order to claim the privilege against self-incrimination”, that is but a speculative forensic course which has no relevance; and

    to the extent that the Commissioner may invite the Tribunal to draw adverse inferences, the drawing of any such inferences would be contrary to the privilege against self-incrimination.

In summary form, it is submitted on behalf of Mr Binetter that the likely contribution of paragraphs [5] and [6] to achieving justice in the Tribunal proceeding is marginal – at best.

14    Although there are self-evidently competing considerations, it is concluded that on balance the good administration of justice requires that the leave sought by the Commissioner should be granted. The forensic utility to the Commissioner of paragraphs [5] and [6] may initially appear marginal. But the Commissioner should not be denied the opportunity to employ those paragraphs as best as he is able before the Tribunal. Those paragraphs take the sub-stratum of facts slightly beyond the Defence to paragraphs [23] and [24] of the Statement of Claim. The second and third of the submissions made on behalf of Mr Binetter are matters best left to the Tribunal to resolve.

Associate:    

Dated:    23 June 2015