Statutory powers of compulsion to be invoked reasonably

Justice Pagone considered the Commissioner of Taxation’s invocation of a power to compel the production of documents and information (s 264(1)(b) of the Income Tax Assessment Act 1936 (Cth)). In this case, the subject of the compulsion was the Law Institute, more used to flinging such powers around itself.  Legal regulators not infrequently list poorly formulated allegations drafted by angry laypeople and then requiring ‘a full written response’ from lawyers.   Sometimes, requiring a ‘full written response’ is specifically contemplated by statute (e.g. s. 4.4.11(1)(a) of the Legal Profession Act, 2004, which is about investigating disciplinary complaints) but sometimes it is not (e.g. s. 7.2.7 of the same Act, which relates to investigations of offences against the Act).  If the response is not ‘full’ in the way the regulators think about ‘fullness’, the respondents risk being convicted of the crime of non-cooperation (seriously: see s. 7.2.7(1)).  His Honour cautioned regulators and said they must use such powers ‘wisely and responsibly’:

‘7 No doubt part of the problem for the LIV is the patently broad description adopted by the Commissioner to describe the documents sought in the exercise of his statutory power. A failure by a recipient to comply with a notice under s 264 carries with it a substantial jeopardy of sanction. The law has long been established that the Commissioner may use his statutory powers of investigation to undertake what are frequently described as “fishing” enquiries. The existence of the power, and its breadth extending to fishing enquiries, does not absolve the Commissioner from an obligation to exercise the powers wisely and responsibly. The description adopted by the Commissioner for the first category of documents is broad and of its nature potentially cast upon the recipient of the Notice a burden which is disproportionate to the likely benefit to the Commissioner by the LIV’s compliance. The two affidavits filed by Mr Cheetham on behalf of the Commissioner make no attempt to indicate that the information sought by the first category could not be obtained from other sources. Mr Cheetham’s first affidavit does little to “assist” the Court in the task of having to balance competing policies beyond expressing his view that the documents sought “are likely to make a unique contribution to the audit” into [the business and financial affairs of the solicitor in whom the Commissioner was interested]; no explanation of that assertion is given. His second affidavit goes little further by saying that he had reviewed the information in the Commissioner’s audit files and on the basis of his review of the list of documents provided by the LIV had formed an opinion that it was “distinctly possible” that the information contained in the documents held by the LIV might be of some assistance in the audit. No further assistance was given to the Court by Mr Cheetham or by submissions for the Commissioner and no attempt was made to explain why it was a responsible exercise of statutory power by the Commissioner to cast upon another regulatory authority a burden to provide documents by reference to such broad descriptions in the exercise of a statutory power which carried with it potential sanction upon the other regulatory authority for failure to comply. A consequence of a broad description by the Commissioner is inevitably that he will be requiring more than is likely to be of assistance to his investigation, that he will put a burden upon independent regulators which might not be justifiable as a matter of proper administration, and which may unnecessarily expose other regulators to the risk of sanction.

8 In any event, whatever my misgivings about the Commissioner’s exercise of statutory power in the way in which it has occurred, no objection to the Notice was made by the LIV on the grounds of invalidity or excess of power.’

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