On 15 December 2021, the Federal Court held that the “Harman undertaking” (broadly, to not use court documents other than for the purposes of that court case) does not constrain the Commissioner’s lawful exercise of his statutory powers to get access to and require delivery of documents and information, nor his duties (to assess tax).
La Mancha was granted leave to inspect and copy various subpoenaed documents produced by Ernest Henry Mining (EHM), subject to confidentiality orders and undertakings in relation to the use of the documents. EHM sought additional orders and undertakings by the Commissioner, the effect of which would be to limit the Commissioner’s use of the subpoenaed documents for the purposes of these proceedings only.
EHM contended that the “Harman undertaking” – the obligation imposed by law on parties to a proceeding who receive documents or information from the other side or third parties pursuant to the Court’s processes – restricted the Commissioner’s use of the subpoenaed documents to use in these proceedings only, unless released by the Court.
Davies J, however, relied on a “a wealth of appellate authority” to agree with the Commissioner that the “Harman undertaking” did not operate to constrain his lawful exercise of his statutory powers and duties under the taxation laws. In 2018, for instance, the Full Federal Court found in the Commissioner’s favour, on this issue, in DCT v Rennie Produce (Aust) Pty Ltd (in liq) [2018] FCAFC 38 (see related TT article).
The Commissioner is required by s 166 of the ITAA 1936 to act upon the information which he has in his possession, regardless of how he came to have it.
CATCHWORDS
TAXATION – Harman undertaking – where the Commissioner of Taxation (Commissioner) is a party to a proceeding – where documents produced under subpoena in the proceeding by a third party – whether the Harman undertaking constrains the Commissioner’s use of the subpoenaed documents without a release from the Court – Harman undertaking yields to inconsistent legal obligations – Harman obligation does not abrogate any duty or compulsion imposed by law or statute – Harman undertaking does not preclude the Commissioner from using subpoenaed documents in the lawful exercise of his powers and functions.
(La Mancha Africa S.A.R.L. v CofT [2021] FCA 1564, Federal Court, Davies J, 15 December 2021.) [LTN 244, 17/12/21]
[Tax Month – December 2021 – Previous 2021] 5.1.22