The Federal Court has granted a taxpayer an interlocutory injunction to prevent the Commissioner from making use of certain information obtained without the taxpayer’s consent.
The taxpayer engaged a law student and a firm of lawyers that was associated with the law student to provide advice relating to his personal and family financial matters. The Court said after the taxpayer failed to pay the invoices for outstanding fees, he alleged the law student provided various documents to the ATO without his consent. Subsequently, the taxpayer received notices of assessment, and the ATO also sent s 264 notice to the taxpayer’s wife that required her to give evidence regarding her and her family’s tax affairs.
The taxpayer then filed an application for relief under s 39B of the Judiciary Act 1903 seeking that the Commissioner deliver or destroy the documents, and also to restrain the Commissioner from using the documents for assessing his taxable income or exercising any power under ss 263 and 264 of the ITAA 1936, or s 353-10 of Sch 1 to the TAA. Broadly, the taxpayer argued that the documents were, and remain, subject to a duty of confidentiality and/or subject to legal professional privilege.
The Court said it had “sufficient doubt about the validity of the submissions made on behalf of the Commissioner to conclude that [the taxpayer] has established a sufficiently strong prima facie case for final relief to justify an interlocutory injunction being granted”. Further, it said it also considered that the taxpayer had demonstrated a prima facie case justifying relief on the alternative ground that the documents were subject to legal professional privilege. In conclusion, the Court held the taxpayer was entitled to interlocutory injunctive relief as he had met all the relevant criteria.
(Donoghue v FCT [2013] FCA 84, Federal Court, Reeves J, 14 February 2013.)
[LTN 32, 18.2.13]