O'Flaherty v McBride [1920] HCA 60; (1920) 28 CLR 283 (27 September 1920)

HIGH COURT OF AUSTRALIA

O'Flaherty Informant, Appellant; and McBride Defendant, Respondent.

H C of A

On appeal from a Special Magistrate of South Australia.

27 September 1920

Knox C.J., Isaacs, Gavan Duffy and Rich JJ.

Cleland K.C. (with him Ward), for the appellant.

Thomson, for the respondent.

Cleland K.C., in reply.

The written judgment of the Court, which was delivered by Rich J., was as follows:—

Sept. 27

Knox C.J.,

Isaacs, Gavan Duffy and Rich JJ.

This matter comes before us in the form of a special case stated under sec. 40 of the Justices Procedure Amendment Act 1883-1884 S.A..

It appears that an information had been preferred by the appellant against the respondent under sec. 58 (1) (c) of the Income Tax Assessment Act 1915-1918, for making a return of income derived by Bradbury & Co. Ltd. (of which the respondent was a director) which was false in a certain particular, viz., "the surplus net profit derived by the said Bradbury & Co. Ltd. from personal exertion was in the said return stated to be £16,469 17s. 1d. whereas in fact it was more than £16,469 17s. 1d." The prosecution was instituted by the appellant as an officer of the Income Tax Department. It appeared in the course of the case that the appellant, on behalf of the Department, had interviewed the Wheat Commissioner of South Australia with reference to the Company, and had, after investigation, made a report to the Chief Clerk of the Income Tax Department. Stanley McKeller White, Deputy Commissioner of Taxation for South Australia and having control of the Department there, gave evidence objecting to the production of any reports relating to income tax matters and investigations between officers of the Department, and also objected to the admission of any verbal statements between such officers on the ground that such production or admission would be prejudicial to the best interests of the Commonwealth and against public policy. In cross-examination the appellant was asked whether he had discussed certain items in connection with the Company's business with the Wheat Commissioner. He also stated that on the official file there was a report by him to the Taxation Department or one of the superior officers purporting to report his interview with the Wheat Commissioner. In cross-examination the witness, not being able to remember certain matters asked of him, was requested to refresh his memory by looking at the report. On advice of his counsel he objected to do so. Thereupon counsel for the respondent called for the report. The Magistrate ruled that the witness must produce the document. Counsel for the appellant refused to produce it. Thereupon respondent's counsel applied for a dismissal of the case. The Magistrate says in the case stated:—"Having ruled that the report should be produced and directed the witness to produce it, and the appellant on the advice of his counsel having refused to produce it, I thereupon dismissed the information, and in doing so stated as follows:—Apart from the question of validity of the objection or of my ruling, the fact is that I have ruled that certain evidence called for by the defendant should be produced by the witness in the box, who is also the informant, which evidence he has refused to produce. Until this evidence is produced, what effect it may have on the case it is impossible for me to say. The counsel for the informant having stated that it will not be produced, I have come to the conclusion that the case must be dismissed, and I dismiss accordingly with costs £23 2s." Par. 6 of the case stated is as follows [His Honor then read the questions set out above].

Question (a) was not pressed, and the answer clearly is Yes.

As to question (b) the provisions of the Income Tax Assessment Act contained in sec. 9 (4) are of great importance. That sub-section is as follows: "An officer shall not be required to produce in any Court any return, assessment, or notice of assessment, or to divulge or communicate to any Court any matter or thing coming under his notice in the performance of his duties under this Act, except as may be necessary for the purpose of carrying into effect the provisions of this Act." There is no doubt, and it was in fact admitted, that the report which was ordered to be produced was within the sub-section, unless excluded by the final words, "except" &c. The effect of that sub-section is negative. Whatever obligation might have existed by law in the circumstances of the case apart from that sub-section, a new statutory exclusion was enacted, and that statutory exclusion applied to the production of the report in question unless it was "necessary for the purpose of carrying into effect the provisions of this Act." In order, therefore, to justify an order for production, the Court must see that the production is "necessary" for the stated purpose. There is nothing in the facts stated to show that the report was "necessary" for that purpose. The most that can be said for it is that if it were looked at it might on inspection appear to be "necessary," but the statutory provision quoted does not weaken, and is not intended to weaken, the rule of common law that evidence of affairs of State is excluded when its admission would be against public policy. That rule in the present case operates to exclude the admission of the report—and, of course, all secondary evidence of its contents—and consequently operates so as to leave the Court unable to say whether its production is or is not "necessary" for the purposes mentioned in sub-sec. 4 of sec. 9 of the Act. The principal authorities governing this branch of the case are Home v. Bentinck[1]; Hughes v. Vargas[2]; Asiatic Petroleum Co. v. Anglo-Persian Oil Co.[3]. It follows that the answer to question (b) should be in the negative.

Question (c) in this case depends entirely on the answer to the previous question. That question being answered in the negative, the dismissal was clearly erroneous.

Questions answered: (a) Yes; (b) No; (c) No. Case remitted to Special Magistrate to do what is right consistently with this order. Respondent to pay costs of appeal.

Solicitor for the appellant, Gordon H. Castle, Crown Solicitor for the Commonwealth, by Fisher, Ward, Powers & Jeffries.

Solicitors for the respondent, Varley, Evan & Thomson.

[1] [1820] EngR 447; 2 Brod. & B., 130.

[2] 9 R., 661; 9 T.L.R., 471, 551.

[3] (1916) 1 K.B., 822.