The Commissioner of Taxation v Atherton [2007] FCA 1569 (5 October 2007)

Last Updated: 11 October 2007

FEDERAL COURT OF AUSTRALIA

The Commissioner of Taxation v Atherton [2007] FCA 1569

PRACTICE AND PROCEDURE – consideration of a guillotine order – consideration of compliance with the order – consideration of whether the order ought to be varied


Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543
Comcare v Foster [2006] FCA 6; (2006) 226 ALR 749
Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146























THE COMMISSIONER OF TAXATION v JONATHAN ATHERTON
QUD229 OF 2007

GREENWOOD J
5 OCTOBER 2007
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD229 OF 2007

BETWEEN:	THE COMMISSIONER OF TAXATION Applicant
AND:	JONATHAN ATHERTON Respondent

JUDGE:	GREENWOOD J
DATE OF ORDER:	5 OCTOBER 2007
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. The time fixed in paragraph 1 of the Order of Justice Spender dated 1 October 2007 for the provision of the list of documents referred to in paragraphs 1 and 2 of the Order of Justice Spender dated 29 August 2007 ("the 29 August order") be extended until 4 pm on 12 October 2007.

2. The respondent, by 4 pm on 12 October 2007, provide to the applicant’s solicitor one list of documents, in compliance with paragraph 2 of the 29 August order, incorporating:

(a) each document the subject of a claim for legal professional privilege identified in:

(i) the list contained in Annexure "MEL-6" to the affidavit of Michelle Elaine Lindley filed on 3 October 2007 ("Ms Lindley’s affidavit");

(ii) the further list contained in Annexure "MEL-12" to Ms Lindley’s affidavit;

(iii) the further list contained in Annexure "JMH-19" to the affidavit of Jane Maree Hale sworn on 5 October 2007; and

(b) any further document contained in the list of files unable to be accessed (contained in Annexure ‘MEL-11’ to Ms Lindley’s affidavit) in respect of which legal professional privilege is claimed.

3. Each of the documents the subject of this Application, other than the following documents, be released to the applicant on Tuesday 9 October 2007:

(a) those documents identified in the lists referred to in paragraph 2(a) of these orders which are the subject of a claim for legal professional privilege;

(b) the documents identified in the list referred to in paragraph 2(b) of these orders.

4. If the respondent fails to provide the list in accordance with paragraph 2 of these orders by 4 pm on 12 October 2007, then in the absence of any order to the contrary made before that time and date, all remaining documents the subject of this Application be released to the applicant forthwith.

5. If the respondent provides the list in accordance with paragraph 2 above of these orders by 4 pm on 12 October 2007, all documents identified in the list referred to in paragraph 2(b) of this order which are not the subject of a claim for legal professional privilege are to be released to the applicant forthwith.

6. The respondent pay the applicant’s costs of and incidental to this Application to be taxed.

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

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD229 OF 2007

BETWEEN:	THE COMMISSIONER OF TAXATION Applicant
AND:	JONATHAN ATHERTON Respondent

JUDGE:	GREENWOOD J
DATE:	5 OCTOBER 2007
PLACE:	BRISBANE

EX TEMPORE REASONS FOR JUDGMENT

1 This matter is listed for directions this afternoon in these particular circumstances out of which the respondent now seeks to vary existing directions orders. On 29 August 2007, Spender J made orders in the proceeding commenced by the Commissioner of Taxation in which the Commissioner seeks declarations that legal professional privilege does not attach to particular documents which had, historically, been held in the possession of the respondent and were the subject of arrangements made on 9 June 2005 and 15 June 2005, for the delivery up of particular documents and the creation of disks (an original and a duplicate) containing electronic versions of scanned documents which were then in the possession of the respondent.

2 The order Spender J made on 29 August was that by 29 September 2007, the respondent was to provide the applicant with a list identifying which of the documents contained on the disks held by then, by the Supreme Court, were subject to legal professional privilege.

3 His Honour also made, by order 2, orders providing for the content of the list, including such things as the name of each document, a general description of the document, the date of the document, the size of the document, and other things.

4 His Honour, by order 3, ordered that the documents not appearing on the list, were to be released to the applicant on 28 September 2007 and by order 4, his Honour made a self-executing guillotine order that if the respondent failed to produce the list of documents in the matter and with the detail described, by 4 pm on 28 September 2007, then, in the absence of any order of the Court to the contrary, made before that time and date, all documents the subject of the application be released to the applicant.

5 That order was the subject of a further order made by his Honour on 1 October 2007 which had the effect of varying those orders with the result that the list was to be provided by 4 pm on 2 October 2007 and the documents not appearing on the list were to be provided to the applicant by 3 October 2007. And as to the self-executing guillotine order, there was a variation by order 3 of the order made 1 October 2007 to order 4 of Spender J of 29 August 2007 with the result that if the respondent failed to produce the list in the manner and with the detail described in the order, by 4 pm on 2 October 2007, then, in the absence of any order to the contrary made before that time and date, all documents the subject of the application would be released to the applicant.

6 After the making of the order by Spender J, the solicitors for the respondent embarked upon a process of isolating documents which would be the subject of a claim for legal professional privilege. The affidavit of Ashley John Tiplady deposes to those matters. Apparently, the process began on or about 10 September 2007 but what emerged was that the task had been delegated to some solicitors in the office and on 24 September 2007, Mr Tiplady became aware that the task could not be completed or had not been completed and was unlikely to be completed in the timeframes contemplated by the order of Spender J as varied because there was some difficulty in accessing some of the documents by opening the disk.

7 The affidavit of Ms Michelle Elaine Lindley, filed 3 October 2007, deposes to engagement between the solicitor for the respondent and the applicant concerning the question of access to, at least, electronic documents and some IT difficulty in opening particular files. It seems that on 28 September 2007, an initial list setting out the documents reviewed, and any claims for privilege, including the basis of such claims, was provided to the applicant. It seems that there was also on 2 October 2007 a list provided to the applicant of those documents which the respondent was unable to open. Those documents are electronic documents and there are 124 files referred to in the list which I understand contain many more documents than the number of files.

8 On 2 October 2007, at 26 minutes past 11 pm, a list was sent to the applicant by the respondent, by facsimile, which is described as ‘MEL-12’, that is exhibit 12 to the affidavit of Ms Lindley and in that document there is a covering letter in which the solicitors for the respondent say that:

Pursuant to the consent orders dated 28 September 2007 (which is, I pause to add, a reference to the order made by consent on 1 October), please find enclosed a list of the documents for which privilege is claimed. We note that we are currently still reviewing a number of documents which we only gained access to today and envisage providing you with this tomorrow. We also note that we are still to provide you with a further list of documents for which a claim for legal professional privilege exists in relation to the documents which cannot be accessed.

9 Contention arose in the course of the directions hearing as to the adequacy of the documents which were provided. The applicant in the proceedings contends that there has not been compliance with the order or substantial compliance with the order. With respect to the documents which are not the subject of the electronic access opening difficulty, the applicant in the proceedings says that upon analysis of the schedule, one can see that there has not been compliance with the content of order 2 of his Honour’s order. It seems to me that there is some force in what is said about that matter but I do not propose to decide the question of whether there is or is not substantial compliance for present purposes.

10 Having regard to the significance of legal professional privilege in our jurisprudence and particularly the observations of the High Court that legal professional privilege is a rule of substantive law available to a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings (Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 at 9, per Gleeson CJ, Gaudron, Gummow and Hayne JJ), and having regard to the observations in the authorities that legal professional privilege is not merely a rule of evidence but an ‘important common law immunity’ not confined to simply processes of discovery and inspection (note the authorities collected in Comcare v Foster [2006] FCA 6; (2006) 226 ALR 749 [31] – [37]), it seems to me that the substantive question between the parties is one which ought not to be resolved on a guillotine order in the circumstances as they present.

11 I note that the matter is, substantively, on the docket of Spender J, and no doubt his Honour has some familiarity with the background in the matter and the matter is to be reviewed by him on 19 October 2007. Nevertheless, it is clear from the respondent’s position that there was a failure to comply with the orders within the timeframe nominated although it is contended there is otherwise substantial compliance, albeit it, out of time. As I say, I can see some force in the argument that there is a failure to comply within the order in more than trivial ways as to the substance of the orders. And, of course, it is common ground that the material was sent in whatever form its substance might be, very late on the evening of 2 October 2007.

12 However, having regard to the observations in Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 as to the importance of the attainment of justice between the parties, I am not persuaded that giving effect to a guillotine order as a final resolution of the matters of substance, ought to occur. Having said that, therefore, I propose to deal with the matter by making further directions. Some further directions have been foreshadowed by the applicant in the proceedings and I am content with those directions, subject to this qualification. The timeframe for each of the orders will be 4 pm on Friday, 12 October 2007. I will initial a draft of the orders, amended to read 12 October 2007. Order 3 will read, as to the date, Tuesday, 9 October 2007.

13 I am making a further guillotine order in terms of that draft order. I have expressed some reservations about a self-executing guillotine order but having regard to the argument today and the timeframe, it seems to me that some discipline needs to be injected into the resolution of the matter and if it be the case that there is non-compliance and the guillotine order takes effect with the result that it prescribes, then so be it. It seems to me that the respondent has had more than adequate time to deal with the underlying questions.

14

Accordingly, I make the orders 1, 2, 3, 4, 5 and 6 in terms of the draft as initialled by me.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate:

Dated: 5 October 2007

Counsel for the Applicant:	Mr S Lumb
Solicitor for the Applicant:	Mr M J Henry, Australian Government Solicitor
Counsel for the Respondent:	Mr D Keane
Solicitor for the Respondent:	Ms J Hale, Nyst Lawyers
Date of Hearing:	5 October 2007
Date of Judgment:	5 October 2007