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Page 20 Senate Friday, 17 February 2017 Senator IAN MACDONALD: I am really not asking for advice. I am just asking, from your experience in the past, whether commissioners of taxation or other similar litigants usually seek costs? What I am really getting at is that these things are all costly. I assume whoever pays—the final payer is the liquidator of the Bell Group who is trying to conserve some assets to give something to creditors. Are you able to comment on that in this case? Mr Faulkner: I am afraid I do not think I can venture into the area. The questions of costs and so on are so tied up with the litigation I think I would be venturing into the area of advice, try as I might not to. So I do not think I could go there. Senator IAN MACDONALD: Are you aware in this case if the commissioner has sought any sort of costs order in the actions that have proceeded so far? Mr Faulkner: I would have to take that on notice, I am afraid. I do not know. Senator IAN MACDONALD: Is that something you would know? It would not be advice; it is a matter of fact. Mr Faulkner: It certainly is a matter of fact, but I do not know. Senator IAN MACDONALD: Could you take that on notice and see if there has been any requests for costs by any party and, factually, what the decision was if there has been a decision? Mr Anderson: As a matter of fact, we will be able to look at the decision of the court and see whether orders were made about costs. As to whether anything subsequent has happened—for example, the commissioner seeking to follow up any costs orders if such were made—we will not know about those. Senator IAN MACDONALD: No. Mr Anderson: But we can say whether cost orders were in fact made. We can take that on notice. Senator IAN MACDONALD: Thanks. Senator HINCH: Mr Anderson, I have spent a lot of time around courts over the years, but not in the political sphere, so you might just answer for me some questions. Ultimately, is it the Attorney-General and not the Solicitor-General who makes that final decision to intervene on constitutional grounds? Mr Anderson: That is correct. It is the Attorney-General. Senator HINCH: If the Attorney-General had said no, could the Solicitor-General, having the ATO as his client, have still run the constitutional argument? Mr Anderson: Once the commissioner had intervened and become a party the commissioner can run a range of arguments. At the heart of what the commissioner wished to argue there was a constitutional argument that was going to be run by the Solicitor-General about the validity under section 109 of the Constitution of the WA Bell litigation. Senator HINCH: So if the Attorney-General's decision had gone the other way and he had said, 'We're not going to intervene,' that would not have prevented the Solicitor-General saying, 'The ATO is my client; this is a very good defence and I'm going to run it.' Mr Anderson: Absolutely. The commissioner had already intervened to make those points. The Commonwealth arguments about the revenue law and the invalidity of the WA litigation would be made by the commissioner even if the Attorney did not intervene. Senator HINCH: Thank you. Senator DODSON: Could you help clarify the discussion about this period of time between the Commonwealth deciding to join in the litigation once the ATO had embarked upon it? Was that a ruling of sorts or was that statutory? What is the cause or the reason for the difference in response to the opportunity to bring an action? Mr Faulkner: I apologise if I am repeating myself here. I may be doing that; it is hard to recall. It comes down to a question of procedure really. Generally speaking, in a proceeding, at a directions hearing, the court will set out a timetable for certain actions to occur. In this case, at a directions hearing, the court had effectively set a date for the Commissioner of Taxation that was earlier than the date that would have applied to an Attorney- General who wanted to intervene, and that set the dates. So it was really just a matter of potential parties to the case making their decisions in time to meet the court timetable. The commissioner had until 8 March, I believe, and the Attorney had until 30 March, I believe, and that was simply a function of the court timetable. Senator DODSON: Could the Commonwealth have conjoined at that point? LEGAL AND CONSTITUTIONAL AFFAIRS REFERENCES COMMITTEE
Friday, 17 February 2017 Senate Page 21 Mr Faulkner: In theory, there are all kinds of theoretical possibilities. But, in the event, what happened happened. Senator DODSON: I understand that. I am just trying to get clear why the Commonwealth did not seek to join at the same point at which the ATO had decided that the constitutionality of the Western Australian legislation may be inconsistent. I am trying to understand that. Mr Faulkner: Mr Anderson may want to add something to this, but my simple point would be that it would be a matter for the tax commissioner to make a decision about what he considered appropriate in the circumstances and to instruct accordingly. Senator DODSON: I understand the tax commissioner. I am trying to figure out the Attorney-General's office not deciding or not seeking to join at the same time. Mr Anderson: You are absolutely right. The Attorney could have made a decision earlier than he did, because the court simply said it had to be by the 30th. But, as the Attorney said in his statement to the Senate, initially he was of the view that the ATO should intervene and that this was primarily about revenue and that there was not a need for the Commonwealth to also intervene. He subsequently changed that view after a discussion with the Solicitor-General. He could have decided earlier, but at the earlier time he simply thought, 'Well, the commissioner's going to intervene. That's enough to protect the Commonwealth's interests.' Senator DODSON: What then was the basis for the decision to join? Mr Anderson: Some additional arguments beyond the validity of the revenue law alone were also raised. There was a question about chapter III of the Constitution, which is about judicial power. There were also some questions about the validity of the corporations law. So there were matters that went beyond simply the validity of the revenue measure. While I cannot say what persuaded the Attorney—that is a matter for the Attorney—I can simply say that there were some additional matters— Senator DODSON: Beyond the section 109 considerations? Mr Anderson: That is right. CHAIR: Mr Anderson, we do understand that you have commitments in another hearing shortly. I am not sure if we are in a position to conclude exactly by 10, so we are just seeking some advice about how the other committee is tracking. Senator IAN MACDONALD: Let me help us here. I am leaving at 10, and I do not think you will be quorate then, so I do not think that will be a question. Senator WATT: I just want to turn to some issues around the preparation for the first High Court appearance, which I think was on 8 February. As I can best put it together, a submission which dealt with these issues went up to the Attorney-General's office in late January. Presumably, that was the beginning of a process about deciding about whether to intervene or not. I think there was a directions hearing in the High Court on 8 February 2016. What is the usual practice of the department? Is the usual practice that you receive advice or approval—whatever the terminology is—from the Attorney-General prior to appearing at that kind of a directions hearing? Mr Faulkner: There really is, I am afraid to say, no 'usual practice' here, because, as I am sure you would understand, litigation is so unpredictable and so non-standard in the way that it plays out. When things go tremendously well, then we have a straightforward process where we have all the instructions we need by the time of the first directions hearing. It is often the case that that is not so, and it is a relatively trivial matter, in a sense, to instruct an AGS lawyer perhaps to go along to observe at a directions hearing. On other occasions we will inform the office that we have instructed AGS to appear, to mention to the court that the possibility of an intervention is still being considered, and would like the timetable to be structured to take that into account. Senator WATT: For this particular directions hearing, on 8 February 2016, I think it was Mr Watson and Ms Heger, counsel, appeared for the Commonwealth, instructed by the Australian Government Solicitor. You were there on that day, Mr Loughton? Mr Loughton: Yes. Senator WATT: Presumably the Australian Government Solicitor was acting on instructions it had received from the Attorney-General's Department. Mr Faulkner: That is right. Senator WATT: Who instructed you to ensure that the Commonwealth was represented on that day? Mr Faulkner: That raises an interesting question. I would, strictly speaking, regard myself as having instructions to keep open the possibility of the Attorney-General's intervention, should he choose to intervene. But LEGAL AND CONSTITUTIONAL AFFAIRS REFERENCES COMMITTEE
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