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Nicholls v Commissioner of Australian Federal Police (No 2) [2009] FCAFC 101 (11 August 2009)

Last Updated: 24 August 2009

FEDERAL COURT OF AUSTRALIA

Nicholls v Commissioner of Australian Federal Police (No 2) [2009] FCAFC 101

TAXATION – whether information compulsorily acquired under a taxation law can be used to apply for a search warrant – information so acquired was put before the magistrate when seeking a search warrant – s 3E of the Taxation Administration Act 1953 authorises such use – appeal dismissed.

Crimes Act 1914 (Cth) – s 3E
Taxation Administration Act 1953 (Cth) – ss 3E, 8, 65
Income Tax Assessment Act 1936 (Cth) – ss 263, 264

ARTHUR CHRISTOPHER NICHOLLS v COMMISSIONER OF AUSTRALIAN FEDERAL POLICE and COMMISSIONER OF TAXATION
SAD 16 of 2009

SPENDER, GRAHAM AND GILMOUR JJ
11 AUGUST 2009
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION	SAD 16 of 2009

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	ARTHUR CHRISTOPHER NICHOLLS Appellant
AND:	COMMISSIONER OF AUSTRALIAN FEDERAL POLICE First Respondent COMMISSIONER OF TAXATION Second Respondent

JUDGES:	SPENDER, GRAHAM AND GILMOUR JJ
DATE OF ORDER:	11 AUGUST 2009
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1. The appeal be dismissed.
2. The appellant pay the respondents’ costs of and incidental to the appeal, to be taxed if not agreed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION	SAD 16 of 2009

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	ARTHUR CHRISTOPHER NICHOLLSAppellant
AND:	COMMISSIONER OF AUSTRALIAN FEDERAL POLICEFirst RespondentCOMMISSIONER OF TAXATIONSecond Respondent

JUDGES:	SPENDER, GRAHAM AND GILMOUR JJ
DATE:	11 AUGUST 2009
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

SPENDER J:

1 Before I pronounce my reasons, there is the matter of the proper parties to this appeal. The proper parties to the appeal do not include those which are styled the third to tenth respondents in the Notice of Appeal. The reasons for judgment of Mansfield J on 15 January 2009 indicate that there is an applicant, Arthur Christopher Nicholls, and then two respondents.
2 In respect of the first respondent, it is likely that the description "Australian Federal Police" is in error and it is likely that the proper description of the first respondent is either the Commissioner of the Australian Federal Police or the full name of the Commissioner.
3 In respect of the second respondent, it is likely that the proper respondent is the Commissioner of Taxation. The Taxation Administration Act 1953 (Cth) (the TAA) in Part II deals with the offices of the Commissioner of Taxation and a Deputy Commissioner of Taxation. Section 8(1) provides for delegation by the Commissioner.
4 It provides:

The Commissioner may, either generally or as otherwise provided by the instrument of delegation, by writing signed by the Commissioner, delegate to a Deputy Commissioner or any other person all or any of the Commissioner's powers or functions under a taxation law or any other law of the Commonwealth or a Territory, other than this power of delegation.

5 Subsection (2) of s 8 provides:

Subject to subsection (5), a power or function so delegated, when exercised or performed by the delegate, shall, for the purposes of the taxation law or the other law, as the case may be, be deemed to have been exercised or performed by the Commissioner.

6 I direct that the parties to this appeal be designated Arthur Christopher Nicholls, appellant, Commissioner of the Australian Federal Police, first respondent, and Commissioner of Taxation, second respondent. There will be no reference to what has been erroneously called the third to tenth respondents.
7 This is an appeal from orders made by Mansfield J on 15 January 2009 in Adelaide where his Honour ordered that the application be dismissed and the applicant pay to the first and second respondents their costs of the proceeding.
8 The respondents applied to the Federal Court of Australia to have the proceeding brought by Mr Nicholls, being proceeding SAD 138 of 2008, summarily dismissed. They also filed a Notice of Objection to Competency dated 23 September 2008.
9 In relation to that application, his Honour held, at [44]:

... I uphold the Notice of Objection to Competency in respect of grounds 9.1, 9.4, 9.5, 9.6, 9.7, 9.8 and 9.9 of the amended application. The amended application, to the extent that it relies upon those grounds, will be refused.

10 The reason for the upholding of the Objection to Competency in respect of the grounds directed at persons who were styled the third to tenth respondents, was based on the fact that there was nothing to suggest that those persons had properly been joined as respondent parties to the application filed by Mr Nicholls. That application had originally been filed in the Federal Magistrates Court of Australia and was later transferred by that Court to the Federal Court of Australia.
11 None of those persons had been served, or at least the evidence does not suggest that that was the case. No leave was sought, either in the Federal Magistrates Court or in the Federal Court, for the joinder of those persons. They were, therefore, as Mansfield J held, not parties to those proceedings.
12 In respect of the remaining matters, his Honour considered grounds 9.2 and 9.3. Having regard to the conduct of the application before Mansfield J, those grounds have to be read down, so as to seek to impugn the decision of the relevant officers of the respondents. That decision was to provide to the magistrate who issued a search warrant in respect of Mr Nicholls’ premises certain information in support of the application which had been compulsorily acquired by the Australian Taxation Office from Mr Nicholls or other entities in relation to his affairs. That ground asserted that, by reason of having been compulsorily acquired, that information was not information to which the magistrate was entitled to have regard; or alternatively, the ground asserted that the decision of those officers not to inform the magistrate that that information had been compulsorily acquired had the consequence that that information could not be considered by him.
13 In respect of those matters, his Honour considered, in [54], that they were inadequately expressed. One of those grounds refers to the decision to put certain (unspecified) information before the magistrate in support of the application for the search warrant. And the other refers to a decision not to disclose certain (unspecified) information.
14 As Mansfield J noted, neither specifies the information referred to or explains why it should or should not have been put before the magistrate. There is only an oblique reference to the detail of ground 9.2 in par 19 of the amended application where there is alleged to have been "... an attempt to circumvent [unspecified] limitations" upon the use of materials previously obtained from Mr Nicholls.
15 The submission made to Mansfield J concerning the misuse of information compulsorily acquired was repeated by Mr Nicholls before this Court and, subject to the question of joinder of respondents which has already been disposed of, became the primary focus of Mr Nicholls’ appeal to this Court.
16 Mansfield J identified the basis of that claim in [57]:

The premise is that information obtained from Mr Nicholls by the ATO [Australian Taxation Office] pursuant to s 65 of the TAA could not lawfully be used for the purpose of applying for a search warrant under s 3E of the [Crimes Act 1914 (Cth) (the Crimes Act)] to search for evidential material for which there was – to the satisfaction of the issuing officer – reasonable grounds for suspecting it will afford evidence as to the commission of the specified offences contrary to ss 135.1, 135.2 and 11.1 of the Criminal Code.

17 His Honour expressed the view, "I do not consider the premise is arguable".
18 I am of the same opinion.
19 The judgment of Mansfield J on this point is set out at [59] of his reasons:

Section 3E(1) of the TAA states that information obtained by the DCT [Deputy Commissioner of Taxation] under the provisions of a taxation law may be disclosed to an authorised law enforcement agency officer if the Commissioner of Taxation is satisfied that the information is relevant to establishing whether a serious offence has been committed. Section 3E(2A) permits that officer then to divulge or communicate that information for or in connection with the investigation of a serious offence. Section 3E(4) also permits that officer to communicate that information to a person for the purposes of, or in connection with, the possible prosecution of a person for a tax-related offence. The AFP [Australian Federal Police] is included in the list of law enforcement agencies: s 21(1). A "serious offence" is defined in s 3E(11) to include an offence against a law of the Commonwealth which may be dealt with as an indictable offence. That includes ss 135.1 and 135.2 of the Criminal Code, as their contravention may lead to imprisonment for 12 months: s 4G of the Crimes Act. A "tax-related offence" is defined in s 3E(11) to include an offence against ss 135.1 or 135.2 of the Criminal Code if it relates to a liability to the Commonwealth arising under, or by virtue of, a tax law as defined in s 2(1): it clearly includes the offences specified under the Third Condition section of the search warrant.

20 As s 3E of the TAA makes plain, it is a clear and complete answer to the contentions made on Mr Nicholls’ behalf before Mansfield J and repeated by Mr Nicholls himself before this Court.
21 In that context, Mansfield J noted the relevant question is whether, upon the proper construction of s 65 of the TAA and ss 263 and 264 of the Income Tax Assessment Act 1936 (Cth), those provisions in their context permit or prohibit the use of information acquired by them for the purpose of applying for a search warrant under s 3E of the Crimes Act, and so for the purpose of exercising the power under s 3E.
22 Mansfield J referred to the judgment of Greenwood J in Wilhelm v McKay (2007) 173 FCR 301, particularly at [78].
23 Mansfield J also considered the cases relied on by counsel for Mr Nicholls including Johns v Australian Securities Commission [1993] HCA 56; (1993) 178 CLR 408, Commissioner of Taxation v De Vonk (1995) 61 FCR 564 and R v Tang [2007] SADC 74. After considering those matters, his Honour concluded that Mr Nicholls’ propositions, including the proposition that there was an impermissible use of information that had been compulsorily acquired, was not arguable.
24 There were other reasons for his Honour’s orders, referred to at [68]-[69] of his reasons, but his finding in [59], that s 3E of the TAA was a complete answer to the complaint of the applicant concerning the misuse of information point, is sufficient to dispose of that point on this appeal.
25 None of the other grounds of appeal warrant further detailed consideration, except perhaps the suggestion that the search warrant was invalid because it did not specify an offence. It was said that by using the word "Commonwealth" in the description of the offences rather than "Commonwealth entity" the search warrant was invalid.
26 Having regard to the Dictionary of the Criminal Code Act 1995 which defines "Commonwealth entity" to mean: "(a) the Commonwealth; or (b) a Commonwealth authority", there is no substance in that point.
27 In my opinion the appeal should be dismissed with costs.

GRAHAM J:

28 I agree with the order proposed by the presiding judge and have nothing to add.

GILMOUR J:

29 I agree with the orders of the presiding judge and his reasons for so ordering, and I have nothing further to add.

SPENDER J:

30 The order of the Court is the appeal is dismissed with costs.

I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Spender, Graham and Gilmour.

Associate:

Dated: 24 August 2009

Counsel for the Appellant:	The Appellant appeared in person

Counsel for the Respondents:	Ms L Chapman

Solicitor for the Respondents:	Australian Government Solicitor

Date of Hearing:	11 August 2009

Date of Judgment:	11 August 2009

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1.	The appeal be dismissed.
2.	The appellant pay the respondents’ costs of and incidental to the appeal, to be taxed if not agreed.

1	Before I pronounce my reasons, there is the matter of the proper parties to this appeal. The proper parties to the appeal do not include those which are styled the third to tenth respondents in the Notice of Appeal. The reasons for judgment of Mansfield J on 15 January 2009 indicate that there is an applicant, Arthur Christopher Nicholls, and then two respondents.
2	In respect of the first respondent, it is likely that the description "Australian Federal Police" is in error and it is likely that the proper description of the first respondent is either the Commissioner of the Australian Federal Police or the full name of the Commissioner.
3	In respect of the second respondent, it is likely that the proper respondent is the Commissioner of Taxation. The Taxation Administration Act 1953 (Cth) (the TAA) in Part II deals with the offices of the Commissioner of Taxation and a Deputy Commissioner of Taxation. Section 8(1) provides for delegation by the Commissioner.
4	It provides:

6	I direct that the parties to this appeal be designated Arthur Christopher Nicholls, appellant, Commissioner of the Australian Federal Police, first respondent, and Commissioner of Taxation, second respondent. There will be no reference to what has been erroneously called the third to tenth respondents.
7	This is an appeal from orders made by Mansfield J on 15 January 2009 in Adelaide where his Honour ordered that the application be dismissed and the applicant pay to the first and second respondents their costs of the proceeding.
8	The respondents applied to the Federal Court of Australia to have the proceeding brought by Mr Nicholls, being proceeding SAD 138 of 2008, summarily dismissed. They also filed a Notice of Objection to Competency dated 23 September 2008.
9	In relation to that application, his Honour held, at [44]:

10	The reason for the upholding of the Objection to Competency in respect of the grounds directed at persons who were styled the third to tenth respondents, was based on the fact that there was nothing to suggest that those persons had properly been joined as respondent parties to the application filed by Mr Nicholls. That application had originally been filed in the Federal Magistrates Court of Australia and was later transferred by that Court to the Federal Court of Australia.
11	None of those persons had been served, or at least the evidence does not suggest that that was the case. No leave was sought, either in the Federal Magistrates Court or in the Federal Court, for the joinder of those persons. They were, therefore, as Mansfield J held, not parties to those proceedings.
12	In respect of the remaining matters, his Honour considered grounds 9.2 and 9.3. Having regard to the conduct of the application before Mansfield J, those grounds have to be read down, so as to seek to impugn the decision of the relevant officers of the respondents. That decision was to provide to the magistrate who issued a search warrant in respect of Mr Nicholls’ premises certain information in support of the application which had been compulsorily acquired by the Australian Taxation Office from Mr Nicholls or other entities in relation to his affairs. That ground asserted that, by reason of having been compulsorily acquired, that information was not information to which the magistrate was entitled to have regard; or alternatively, the ground asserted that the decision of those officers not to inform the magistrate that that information had been compulsorily acquired had the consequence that that information could not be considered by him.
13	In respect of those matters, his Honour considered, in [54], that they were inadequately expressed. One of those grounds refers to the decision to put certain (unspecified) information before the magistrate in support of the application for the search warrant. And the other refers to a decision not to disclose certain (unspecified) information.
14	As Mansfield J noted, neither specifies the information referred to or explains why it should or should not have been put before the magistrate. There is only an oblique reference to the detail of ground 9.2 in par 19 of the amended application where there is alleged to have been "... an attempt to circumvent [unspecified] limitations" upon the use of materials previously obtained from Mr Nicholls.
15	The submission made to Mansfield J concerning the misuse of information compulsorily acquired was repeated by Mr Nicholls before this Court and, subject to the question of joinder of respondents which has already been disposed of, became the primary focus of Mr Nicholls’ appeal to this Court.
16	Mansfield J identified the basis of that claim in [57]:

17	His Honour expressed the view, "I do not consider the premise is arguable".
18	I am of the same opinion.
19	The judgment of Mansfield J on this point is set out at [59] of his reasons:

20	As s 3E of the TAA makes plain, it is a clear and complete answer to the contentions made on Mr Nicholls’ behalf before Mansfield J and repeated by Mr Nicholls himself before this Court.
21	In that context, Mansfield J noted the relevant question is whether, upon the proper construction of s 65 of the TAA and ss 263 and 264 of the Income Tax Assessment Act 1936 (Cth), those provisions in their context permit or prohibit the use of information acquired by them for the purpose of applying for a search warrant under s 3E of the Crimes Act, and so for the purpose of exercising the power under s 3E.
22	Mansfield J referred to the judgment of Greenwood J in Wilhelm v McKay (2007) 173 FCR 301, particularly at [78].
23	Mansfield J also considered the cases relied on by counsel for Mr Nicholls including Johns v Australian Securities Commission [1993] HCA 56; (1993) 178 CLR 408, Commissioner of Taxation v De Vonk (1995) 61 FCR 564 and R v Tang [2007] SADC 74. After considering those matters, his Honour concluded that Mr Nicholls’ propositions, including the proposition that there was an impermissible use of information that had been compulsorily acquired, was not arguable.
24	There were other reasons for his Honour’s orders, referred to at [68]-[69] of his reasons, but his finding in [59], that s 3E of the TAA was a complete answer to the complaint of the applicant concerning the misuse of information point, is sufficient to dispose of that point on this appeal.
25	None of the other grounds of appeal warrant further detailed consideration, except perhaps the suggestion that the search warrant was invalid because it did not specify an offence. It was said that by using the word "Commonwealth" in the description of the offences rather than "Commonwealth entity" the search warrant was invalid.
26	Having regard to the Dictionary of the Criminal Code Act 1995 which defines "Commonwealth entity" to mean: "(a) the Commonwealth; or (b) a Commonwealth authority", there is no substance in that point.
27	In my opinion the appeal should be dismissed with costs.