– start, middle and the end
Justice Michelle Gordon of the High Court of Australia
This article is taken from Justice Gordon's speech at the AGS Administrative Law Forum on 11 November 2016 at the Hyatt Hotel Canberra.
Writing is hard. Writing reasons for decision is harder. It is a process – not unlike completing a 3D jigsaw puzzle.
These thoughts on the process of writing reasons, based on experience, will hopefully be useful to those who write reasons, as well as those who give advice to decision-makers.
The title reflects 2 propositions that underpin my views on writing: that reason must be applied to reasons for decision and must be applied at 3 stages of writing – the start (before pen is put to paper or fingers to the keyboard), the middle (the writing) and the end (after completing the draft). The stages merge; but the task at each stage is different.
Whatever stage you are at, however, there is one overriding, crucial question that should underpin every step you take: 'Why?' Why, in the sense of what is the reason for me doing this? Why, in the sense of why is this needed? Why is this material? Why do I need to address this? It is by asking and answering the 'why' question, at each and every stage, that a draft is more likely to be not only clear, accurate and comprehensive, but also concise.
The task of writing reasons starts well before putting pen to paper or fingers to the keyboard. (Dictaphones, in my experience, are not at all conducive to clear and concise drafting, and should never be used). In matters concerning statutory provisions, you start with the statute. You must ask yourself, have I got the correct version for this matter? Is it complete? Is it the version that the applicant relied upon? If there is a discrepancy, you will need to resolve it.
Then you need to read that statute, and understand its terms, context and purpose. Why?
First, the statute identifies the relevant question or questions that need to be asked and answered by the reasons for decision. Just because the question posed and answered in yesterday's matter was correct, does not mean that it is the question and answer for today's matter. The statute also identifies the facts, matters and circumstances relevant to answering the relevant question or questions. Put simply, the statute identifies the playing field. And if you ask yourself the question without having proper regard to the statute, you will ask yourself the wrong question, and, consequently, you will get the wrong answer. Put another way, you will end up on the wrong playing field.
Second, the playing field created by the statute is not an isolated field – it is occupied and sits inside an arena. Its occupants vary from game to game – from applicant to applicant. And the arena – the wider legal context – changes from case to case. I accept that the arena is largely determined by the statute. That arena – the wider legal context – includes any relevant and up-to-date rules, regulations and/or administrative guidelines, and other Acts that inform or affect the operation of the statute, and/or its interpretation (such as the Acts Interpretation Act 1901 (Cth)). That list is not exhaustive. But the arena will, not may, also include a wider legal context – for example, fundamental principles of procedural fairness, natural justice, the criminal process and the like. What the relevant wider legal context is will vary from statute to statute, from matter to matter, and from time to time.
Third, there are some irreducible minimums.
The statute not only provides the playing field but also usually provides at least one of the umpires on whether the decision-maker has done their job. What do I mean? There is no free-standing common law duty to give reasons.1 The duty imposed on an administrative decision-maker to give reasons is often, if not always, 'no more and no less than the statutory duty' imposed by the statute that requires that reasons be given.2 And the 'content of that statutory duty defines the statutory standard that a written statement of reasons must meet to fulfil it'.3 That means, in each case, the adequacy of reasons will be determined against the standard imposed by the statute.4
As we know from Minister for Immigration and Border Protection v Singh, if there is an 'intelligible justification' for a decision, the justification 'must lie within the reasons the decision-maker gave for the exercise of the power';5 'either the reasons given by the decision-maker demonstrate a justification or they do not'.6
Finally, if a statute requires that reasons for decision be given, then we know from provisions such as s 25D of the Acts Interpretation Act 1901 (Cth), s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 28 of the Administrative Appeals Tribunal Act 1975 (Cth), that the reasons must set out 'the findings on material questions of fact and refer to the evidence or other material on which those findings were based'7 (emphasis added). The word 'material' has meaningful content and is important. You should not gloss over it or look past it. It means you do not have to set out findings of fact that are not material. And, of course, what is material will depend on the terms of the statute and the facts, matters and circumstances particular to the applicant and the matter. It is the facts, matters and circumstances particular to the applicant and the matter that compels you to then ask, have I got, and read, a complete copy of the material that is to be considered?
With those items in hand (the statute, the 2 facets of the wider legal context mentioned and a complete copy of the relevant material), then and only then, can the process of writing, thinking, more writing, more thinking and then editing, finally begin.
Your reasons should be structured, with headings, and be persuasive. For my part, reasons are usually divided into 6 parts – introduction, legislative framework, issues, facts, analysis, conclusion.
The hardest paragraph to write is the first paragraph – the introduction to the matter at hand. It should encapsulate the issue and then set out the answer up-front. The introduction is written last because, when you start writing, the content of your work is not finally settled. You cannot summarise and pithily encapsulate that which does not yet exist. Come back to it, at the end.
Next, the legislative framework. Start with the statute and end with it. Read the contents page. Remind yourself how the Act is structured. Read the objects of the statute.
I type my own judgments. I read and type out each of the relevant statutory provisions. I do not cut and paste them. Why? Because I find that the process of writing reinforces in my mind what statutory provision (or provisions) I am dealing with, and helps me become familiar with its text and where it sits in the framework of the statute.
Use the text of the statute. Be precise. If there are relevant defined terms, read them, manually insert them into the relevant statutory phrase and use them. The words are critical and the way they are written is important. Do not paraphrase. Do not use secondary sources. By being familiar with what the provision actually says, you are less likely to incorrectly understand its operation based on an impressionistic understanding of how you think or assume that the provision operates.
Then identify the question or questions to be determined by reference to those statutory provisions. This appears under the heading 'Issues'. Why? Because it ensures that you have identified what it is you need to address. It is at this point that it is often useful, as a cross-check, to ask yourself – what is the end-play? What is it that the applicant wants and what is it that needs to be considered to answer that question?
In statutory terms, what facts must the applicant establish? What is not disputed? What is contested? What are the material findings of fact I must make? As already mentioned, you only need to refer to evidence or other material on which the material factual findings are based – not every piece of evidence submitted to the decision-maker. So, leave out of your reasons that which is not necessary. It will make your reasons shorter and easier to read and understand.
Write out the material facts, always cross-referenced to the sources. You do not have time to later go back and do the cross-referencing or to find the source or check the accuracy of your statement of the fact. The recitation of facts should, except in the rarest of cases, be chronological. Life is chronological.
If a material fact is not in dispute, identify it and the material that supports it and state the parties' position. If there is a material fact that is disputed about which you need to make a finding, what material is relevant to that fact? If the material is consistent with your finding, identify that material and say so. Where there is competing material, an evaluative assessment needs to be made. Why do you choose one piece of evidence over another?
Your reasons need to explain:
- What is the fact that the evidence or material is said to establish?
- What is the competing evidence or material?
- Why is one view preferable to another?
- Why have you not accepted certain evidence or material?
If, after reviewing the material, you form the view that it is insufficient to make a particular finding of fact, say so. 'I am asked to find X but there is no evidence to support X'; or 'There is not sufficient material to be satisfied that the finding is open'. The reader should know why a finding is or is not made.
Next is the critical stage of applying the findings of fact to the statutory questions. Again, the reasons should be structured. Use sub-headings. I often put the sub-headings in after completing the review of the legislative framework and before I start the facts section. If there are statutory criteria to be satisfied separately – separate them out. That approach provides a reliable way of checking that you have addressed each part of the statutory task.
I often print out what I have already written – the legislative framework, the issues and the facts – while I write the analysis section. Why? It enables the analysis section to be cross-referenced to the earlier sections of the draft and, no less importantly, I check as I am going that I have made the necessary findings of fact and that the language I have used is appropriate and necessary. In other words, I mark on those earlier sections of the draft amendments I need to consider and/or make. It is an organic process.
Then, the conclusion. This is not unimportant. What is it that you are doing? Are you rejecting a claim? Are you allowing it in part? What is the direct consequence of your conclusion? Revisit the other parts of the reasons and check that the conclusion you have drafted reflects the text of the statute, the issues, the facts and the analysis.
Finally, I return to write the introduction – what was the end-play and have I asked the right question and answered it? The shorter the introduction, the better. I adopt the Bryan Garner8 approach to issue identification. His thesis is that any issue can be (and should be) reduced to 75 words and should be structured by reference to premise, premise, premise, question. He gives the following example:9
 A Turk, having three wives, to whom he was lawfully married, according to the laws of his country, and three sons, one by each wife,  comes to Philadelphia with his family and dies, leaving his three wives and three sons alive, and  also real property in this State to a large amount. [Q] Will it go to the three children equally, under the intestate law of Pennsylvania? [67 words].
Notice the following things about it. How simply the facts are stated – no dates, no names; it is structured by reference to premise, premise, premise, question. There are no intensifiers, no colourful words, just facts. But they are facts that point unambiguously to one outcome rather than the other. The reader not only knows the issue but knows the answer or, at the least, wants to know the answer. That structure – premise, premise, premise, question – can be used whether the premises are ones of fact, fact and law, or law. The importance of issue-framing in writing reasons for decision – succinctly, directly and up-front – cannot be understated.
Contrary to many misconceptions, the completion of a draft is not the end. It is simply the start of another process – redrafting and editing. This means that the process of thinking, writing and re-writing begins again.
For my part, I stop and ask myself the following questions:
- Have I answered each of the questions I identified at the beginning? And, on reflection, were the questions I posed the right questions?
- Is the draft persuasive? Go through and analytically review each finding, factual or legal – sentence by sentence – and ask 'why?'. Why is this necessary and have I explained my conclusion? If it is not necessary, remove it. If the conclusion is necessary but you have not explained it, amend the draft. Remember your audience. You cannot write any piece of writing intended to persuade an audience without knowing who your audience is.
- Have I written in the English language? This question may seem facetious, but it is important to ensure you do not write in some foreign tongue called 'legalese'. Write clearly, simply, using accepted canons of grammar and punctuation. This is always important. But perhaps even more so when it comes to administrative decisions, where, in many cases, the person affected by the decision will not be a lawyer. Of course, if you must use technical terms, use them properly. But using technical terms does not mean that you cannot and should not take time to simplify and clarify your written work.
- Have I left a small footprint? In other words, do not include things that are not necessary to answer the questions. Why? You simply run the risk of confusing the reader and muddying the waters.
After completing a draft, put it aside for a period. When you go back to it, print it out in hard copy. Do not read off the screen. Then, take a red pen in one hand and complete the following tasks:
- Remove every unnecessary word. Why? To make it clearer and more concise.
- Remove every amplifier and adjective, ie 'clearly', 'very', 'most', etc.
- Substitute the simple for the complex or formal.10 For example, 'cease' should read 'stop'; 'endeavour' should read 'try'. There are many others.
- Avoid legalisms and lawyerisms.11 For example, 'adjacent to' should read 'next to'; 'be able to' should read 'can'; 'enter into a contract with' should read 'contract with'; 'for the duration of' should read 'while'. Again, there are many others.
- Provide it to someone who knows nothing about the draft and ask them to read it. If they cannot understand it, then it is a sure bet that the intended audience will have great difficulties.
As I said at the beginning, writing reasons is hard. It takes time and considerable intellectual effort. Every piece of writing can be improved, and every writer can improve their skills.
What you write should be judged against 4 criteria:
- Is it clear?
- Is it concise?
- Is it accurate?
- Is it comprehensive?
From the decision-maker's perspective, finalising the statement of reasons may be the end of the matter for you, but it is just the start for others. It will be read by the intended audience – the applicant. That should never be forgotten. Next, the decision may be subject to review – merits and/or judicial review. If reasons are expressed clearly, concisely, accurately and comprehensively, then the chances of the decision being misunderstood, or being seen as incomplete, inaccurate or lacking intelligible justification are substantially diminished.
I wish you well – the task of writing is hard but fun.
- Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 662, 675–676;  HCA 7.
- See Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480 at 498 ;  HCA 43.
- Wingfoot (2013) 252 CLR 480 at 498 .
- Wingfoot (2013) 252 CLR 480 at 498 .
- (2014) 231 FCR 437 at 446 .
- Singh (2014) 231 FCR 437 at 447 .
- Section 25D of the Acts Interpretation Act 1901 (Cth). See also s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and s 28 of the Administrative Appeals Tribunal Act 1975 (Cth).
- Bryan A Garner, Garner on language and writing: Selected essays and speeches of Bryan A Garner, (2009) at Ch 3; Bryan A Garner, Garner's dictionary of legal usage, 3rd edn (2011), entry for 'Issue-framing', p 484–487.
- Bryan A Garner, Garner on language and writing: Selected essays and speeches of Bryan A Garner, (2009), p 121.
- Bryan A Garner, Garner's dictionary of legal usage, 3rd edn (2011), entry for 'Formal words', p 373–374.
- Bryan A Garner, Garner's dictionary of legal usage, 3rd edn (2011), entry for 'Legalisms and lawyerisms', p 531–532.
Duval-Comrie v Commonwealth
– a positive settlement for 10,000-member class action
Photo courtesy ABC News, Joanna Crothers
Towards the end of last year, settlement of a complex and long-running class action was approved by the Hon Justice AM North in the Federal Court.
Comprising around 10,000 people with intellectually disability, the class action alleged discrimination by the Commonwealth in developing and promoting the use of the Business Services Wage Assessment Tool (BSWAT) – a tool used to assess the wages of workers with disabilities in supported employment.
The settlement involved legislative amendment to increase the amount that class members could obtain under the existing BSWAT Payment Scheme, set up under the Business Services Wage Assessment Tool Payment Scheme Act 2015, from 50% to 70% of their claimed loss of wages.
In an outstanding example of cross-agency cooperation, the Department of Social Security (DSS), Department of Finance (Finance) and Comcover worked together to resolve the matter, supported by AGS.
A mediation steering group involving representatives from DSS, Finance, Comcover, AGS and counsel met fortnightly in the 6 months leading up to mediation, as well as throughout the mediation process, to develop strategy, and navigate through the complexities of the matter.
The settlement provided numerous challenges for government, as the information needed to develop the settlement offer was held by a number of Commonwealth agencies.
DSS spent a lot of time bringing together this information to ensure that an appropriate offer could be placed before the Court.
The BSWAT Payment Scheme was developed to provide a solid platform to determine and distribute payments to roughly 10,000 people with intellectual disability.
The Department was supported throughout this case with strong guidance and direction from AGS.
'We wouldn't have this outcome without the unwavering support and collaboration of Paul Barker and all the AGS lawyers. Their expertise, which was tinged with good humour, made the road to settlement a much smoother journey,' DSS Chief Legal Counsel and Group Manager Janean Richards said.
The BSWAT representative proceedings demonstrate the high level of cooperation required to achieve effective outcomes in complex liability claims. A highly cooperative approach was fostered among the government stakeholders from the beginning of the matter, with all parties committed to finding a resolution to the detailed problems that were constantly changing.
Key learnings related to ensuring that information was communicated to the representative group members in appropriate terms, and engaging constructively with advocacy groups.
The DSS BSWAT team were outstanding – they embraced the various challenges. The AGS team, led by Paul Barker, provided direction and momentum that kept engagement and commitment high.
AGS's role in the matter included providing strategic advice; drafting submissions, pleadings, affidavits, settlement agreements, deeds and correspondence; managing opt-out and evidence-gathering processes; preparing complex evidence; and contributing to the settlement negotiation.
Robert Antich (Assistant Secretary, Finance/Comcover) wrote to AGS noting that the mediation had culminated in an 'excellent outcome for the Commonwealth'.
At the settlement approval hearing, Justice North observed that the supporting material had been prepared with 'competence, care and diligence'.
Outside court, lead plaintiff Tyson Duval-Comrie declared: 'It's a very good decision. I'm very happy.'1 And the Association of Employees with a Disability Legal Centre called it a 'historic victory for workers with a disability'.2
AGS is proud to have supported our clients in this matter. We congratulate all involved on working to bring about a positive result for the Commonwealth and the community it serves.
Numerous people worked on the matter over its 3-year duration (not all are named here).
From DSS, Principal Legal Officer Steven Francis had primary carriage of the matter. Chief Legal Counsel Janean Richards oversaw significant aspects of the matter, and both played key roles in settlement design and the legislative amendment process to increase payments from 50% to 70%. A/g Branch Manager Supported Employment Policy James Kemp was the deponent of highly complex affidavits relevant to the modelling of the tax and social security payment benefits of the Payment Scheme, the operation of the BSWAT Calculator and how DSS would promote the Payment Scheme to group members and help them apply. BSWAT Payment Scheme Director Bree Willsmore, Assistant Director BSWAT Payment Scheme Ngaire Harvey and Assistant Director Social Modelling Greg Bateman advised on the BSWAT calculator, modelling, and communication with group members about the Payment Scheme and the class action.
Finance Assistant Secretary Robert Antich and Assistant Director Major Claims Helen Boden, along with Comcover Claims Team Manager Russell Williams and Senior Claims Consultant Andrew Waddell, played key roles in developing the settlement strategy and settlement negotiations (they were also heavily involved in strategy formulation throughout the matter) – a great credit to them, particularly given the magnitude and complexity of the case. Andrew and Helen also had the day-to-day running of the matter on behalf of Comcover and Finance.
AGS's core team of contributors was led by Senior Executive Lawyer Paul Barker, with Senior Lawyer Dejan Lukic as second-in-charge. Senior Lawyers Ashlee Briffa, Cherie Canning and Anna Lord were key members of the group. Chief Counsel Tom Howe PSM QC was instrumental in the early stages, developing an overall blueprint for the Commonwealth's defence. Office of General Counsel National Leader Leo Hardiman, Chief General Counsel Guy Aitken and Senior General Counsel Olivia Abbott all gave evidence as tax law experts for the settlement approval hearing (with excellent assistance from Counsel Sam Arnold). Senior Lawyer Simone Krauss also assisted with preparation of evidence for the settlement approval hearing.
Debbie Hastings is the Deputy Commissioner, Review and Dispute Resolution (RDR) at the Australian Taxation Office (ATO), based in Sydney. Here, she and 2 members of her team, Executive Director and South Australian Site Director Mary Hannigan and Principal Lawyer Cassandra Franklin of Sydney, talk about their team, its work and being government lawyers.
After graduating from the University of Sydney, Debbie got a job in the ATO and, for more than 25 years, has worked in advisings, litigation or tax counsel work, providing high-level advice on strategic litigation from the AAT to the High Court.
RDR in its current structure was set up 4 years ago by ATO Commissioner Chris Jordan AO to look after all the disputes in the ATO – and Debbie has been the leader since then.
RDR has responsibility and accountability for all objections and litigation and alternative dispute resolution (ADR) approaches in the ATO. It responds to taxpayers who initiate proceedings if they're disagreeing with an assessment or the result of a review of an objection they've lodged with ATO.
Maintaining good relationships with tax agents is a priority, as are relationships with legal practitioners. RDR works in partnership with the legal profession through a number of panel firms (including AGS). It also hosts roundtables covering topical issues for the legal profession.
The ATO established RDR because it values the independence, specialised expertise in taxation and efficiencies that flow from having an internal dispute resolution and legal practice. 'And it is wider and quite different than a traditional in-house practice,' Debbie says, 'because it is not just the standard provision of legal services, but includes ADR, a focus on earlier resolution of disputes, preventing disputes in future and providing certainty for taxpayers. We also provide training and skilling to other people in the larger organisation about settlements and evidence, for example – what does evidence look like? what are facts and assertions? That training is often easier to achieve within your own practice.'
Another legal area in the ATO is its General Counsel Unit, which manages all employment-related issues within the Office, freedom of information requests, privacy and secrecy, contract and commercial work, procurement, and compensation claims for defective administration.
A national practice
RDR has around 640 staff. Not all are lawyers – some are accountants or businesspeople – and fewer than 40 are clerical staff. The team is located across 14 sites, including all capital cities in Australia. The main litigation practice is based where the main clients are – and bigger businesses and privately held groups are found – in Sydney, Melbourne and Perth. There are also offices in Parramatta in Sydney, in Newcastle, at 4 sites in Melbourne, and in Townsville. So it is truly a national practice.
Debbie's management team consists of 7 senior executives who champion particular areas of tax disputes and sites, taking a hands-on approach and ensuring they are across the key things that have arisen in each office. Members of the leadership group swap site responsibilities every 6 months. A group of 50 executive leaders and principal lawyers within the various offices provide local leadership.
The team has established good relationships with the Administrative Appeals Tribunal through regular appearances and also with the Federal Court Registry. 'Not many agencies enjoy the privilege of being the solicitor on the record – as we have for a number of years,' Debbie says, 'and we are very proud of that.'
While the team has a very strong litigation practice with a strategic focus, its expertise is used not just at the point when litigation arises but also earlier in the process, providing assistance at audit stage, in evidence-gathering, at interlocutory challenges and through managing and leading litigation.
Changing to a focus on fairness
Three years ago, a House of Representatives Standing Committee conducted a review of how the ATO managed disputes. Outcomes, and the means by which they were arrived at, became measures of success and effectiveness. Fairness is now a key performance indicator for RDR – taxpayers who have interactions with RDR are surveyed, to establish whether they feel they were treated fairly and with respect.
Debbie said, 'This required quite a culture shift in the way you do it – and how you do it. It has been a shift from "what" we do to "how" we manage and resolve disputes. It has involved a shift from focusing on "outputs" to "outcomes". I have seen a really positive shift over the 4 years.'
At the same time, RDR established its in-house facilitation service. Staff in each region are trained as facilitators in ADR, and are often involved at audit or objection stages.
The motto of RDR is 'We prevent and resolve disputes'.
To prevent disputes, they try to get involved in a matter at the right time – the point where they can communicate directly with the taxpayer (or their representative) and drive early resolution by ensuring the taxpayer has the opportunity to tell their story, and allowing RDR to weigh up the evidence and analyse the technical issues. By promoting open communication, they can ensure the best possible chance of a positive outcome. In most cases, that means early resolution. It involves communicating openly and transparently, negotiating fairly and educating the taxpayer – encouraging voluntary compliance not just in that instance, but into the future.
'It's what we can learn from such disputes that we can feed back to other areas in the ATO to try to avoid them arising in the future,' Debbie says. 'Not that we can avoid all disputes – but our contribution is to resolve disputes as early as we can.'
Of course, the Commissioner likes to see success in litigation as well, when it is necessary, and ATO has a good record of success.
There are 3 main categories of litigation the ATO will pursue:
- Matters that seek to clarify the law for the benefit of the community
- Cases involving fraud or evasion or off-shoring of assets. The ATO does not resile from these cases as it sends a positive message to the majority of the community about the ATO being willing to pursue tax cheats or evaders.
- Intractable cases where, after negotiation and other ADR techniques, the taxpayer really wants their day in court.
What it takes to be an ATO lawyer
Debbie says, 'The qualities I look for in both our RDR staff and external legal advisers are similar. Legal and technical competency is a given – so, over and above that, I value that ability to look at the case and what we want to achieve, joining the dots and seeing the bigger picture, not just what's in front of you.'
'For example, if in a matter we are looking for clarification of the law – what are the possible implications of the litigation decision? We need to have scenario plans in place to ensure all possible outcomes can be managed for the benefit of the wider community. This is the value-add or expertise that the lawyers bring to the work.'
Mary Hannigan has dual roles in RDR: she is the Executive Director and Site Leader for RDR's South Australian litigation office, as well as the national manager of their external panel firms. Her team of 11 includes a couple of administrative staff and an executive colleague, Allan Goss, who manages tax technical work, while Mary supervises debt-related work and manages the external firms.
Adelaide is a small office but it has national responsibility for all voidable preference claims and tax technical cases requiring legal advice at the audit stage. It is also the escalation point for panel firms and ATO colleagues around the country for all routine debt matters.
'Our lawyers have very good analytical and technical skills as litigators,' says Mary. 'They must be able to think strategically and ensure we litigate only the cases that we need to, to be involved as early as we can, at the most appropriate time to prevent them from going to litigation or, if it has commenced, to resolve the cases that should be resolving early on.'
'We expect our people to have a good working knowledge of the Commissioner's requirements, to be able to apply the policy of the Commissioner, and ensure we fulfil our requirements as officers of the court (including the model litigant principles under the Legal Services Directions).'
Mary Hannigan Executive Director and RDR Site Director Adelaide
While working as an Occupational Psychologist in the then Commonwealth Department of Education, Employment and Training, Mary studied law and became a Judge's Associate, before joining a commercial firm in Adelaide as a commercial litigator, where she became a Partner. She then worked for AGS Adelaide for a couple of years before joining the ATO, where she has been for nearly 10 years.
'The purpose, beliefs and values of the ATO and the APS were much more aligned to my values and interests. The work being done by the ATO and its external legal service providers is very interesting and significant and, in some cases, strategic – providing an opportunity to contribute to a team that is using their legal skills in that Commonwealth context. Both within the ATO and our external legal service providers, there are very skilled and knowledgeable people and I feel privileged to have the opportunity to work collaboratively to resolve issues.'
The Hua Wang Bank matter
The ATO has noticed an increase in complexity in the tax dispute matters proceeding to determination by the courts.Many of these matters involve deliberate tax evasion, often using overseas tax havens or complex corporate structures to avoid detection and recovery. One recent example was the Hua Wang Bank matter,1 where the Australian-resident taxpayers sought to avoid tax in Australia by setting up overseas boards to implement the instructions of the Australian-resident beneficial owner.
The Hua Wang Bank matter involved 19 interlocutory applications by the taxpayers – which were ultimately unsuccessful. The taxpayers have since unsuccessfully appealed to the Full Federal Court and the High Court. Sixteen other cases and 5 appeals have been determined against related taxpayers, with a further 8 cases and another special leave application currently on foot. In excess of $300 million in tax is involved in this one scheme.
The message from the Court about unacceptable behaviour was very clear. In his judgment, Justice Perram commented: 'The facts I have found strongly suggest widespread money laundering, tax fraud of the most serious kind and, possibly in some instances, insider trading. The conduct revealed in this case is disgraceful.'2
ATO Principal Lawyer Cassandra Franklin worked with AGS Senior Executive Lawyer Emma Whan on the matters. 'They are not over yet, as we have moved on to the next tranche,' Cassandra says. 'The behaviour is such that we need to send a message that that behaviour is not OK and we won't stand by and let it go. We have been very successful in presenting our evidence and the case narrative – but there were many procedural issues that were an attempt by the taxpayers to derail or obfuscate the true nature of the case, including evidentiary challenges, and refusal to participate actively in the litigation, which presented a challenge to our ability to present a proper, balanced case to the Court.'
Cassandra and Emma had Dr Julianne Jaques as Junior Counsel throughout the process. AGS's Michael Abood, now a Senior Lawyer, worked with Emma on the matter at first instance. For the hearing, Jill Gatland, who was a reader at the time, was an additional Junior Counsel. Initially, Michael Wigney SC was Senior Counsel, but he was appointed to the Federal Court prior to the hearing. He was replaced by Des Fagan SC for the hearing. Prior to the Full Court hearing, Des was appointed to the Supreme Court of NSW, so he was replaced by Kristina Stern SC for the Full Court hearing. In the High Court, Kristina and Julianne were joined by Senior Counsel Tony Slater QC. The Solicitor-General was also initially briefed and settled the submissions, but he was unavailable for the hearing.
While the recent case represents roughly $30 million in tax, it will ultimately be much more because of the many participants affected. This is the lead case – and each tranche of cases will be able to rely on the success in the first case because a precedent has been created. 'People are definitely more open to attempting to resolve their dispute with us through ADR when a strong precedent has already been set,' Cassandra says.
These recent decisions confirm that the ATO is applying the tax law correctly and that following through on litigation has been the right course of action. Not only has it had success in the cases, it is demonstrating preparedness to take on taxpayers and their advisers who are not transparent, who are uncooperative or who engage in aggressive game-playing and egregious behaviour.
This message is precisely what the majority of the community needs to hear. People who do the right thing need to be reassured that the ATO is taking appropriate action against those who warrant it – and this ultimately influences people to stay compliant.
'The ultimate vision of the ATO is to make sure people want to willingly participate in the tax system – the overwhelming majority want to do the right thing,' Cassandra says. 'It gives encouragement to the majority when we pursue the minority who don't do the right thing. We have to persist with them – and it is linked to our desire to honour the perception of fairness. How do you build confidence, if you aren't prepared to deal with misconduct?'
- Text taken from the keynote address by Commissioner Chris Jordan AO to the Tax Institute 32nd National Convention in Adelaide, 16 March 2017 [full text: https://www.ato.gov.au/Media-centre/Speeches/Commissioner/Commissioner-addresses-the-Tax-Institute---2017/ ]
- Hua Wang Bank Berhad v FCT  FCA 1392 (Federal Court, Perram J, 19 December 2014)
Cassandra Franklin Principal Lawyer, Sydney
Cassandra's favourite subjects at university were administrative law and constitutional law, so she actively pursued a job in government, and soon was offered a position at the ATO.
'You'll never see the range and depth of administrative law in private practice that you do in government. It was quite clear from early on, when talking to other lawyers I knew, that the quality of work I was being exposed to was probably 3 or 4 years ahead of what they were doing. Early in your career, you have access to really high-quality professionals – the best counsel and the best external lawyers, as well as the seniors in your agency. There is an enormous satisfaction in getting to the end of a case and knowing that you've achieved something quite monumental for the community, something that will resonate through the community for a couple of decades to come.'
Photographs courtesy of Royal Flying Doctor Service of Australia
Grant agreement between the Department of Health and the Royal Flying Doctor Service of Australia
Over recent years AGS Commercial has advised the Department of Health on a number of high-profile grant matters, including its arrangements for funding the Royal Flying Doctor Service (RFDS).
The RFDS is an Australian icon and has received Commonwealth funding over many decades for its provision of health and medical services to rural and regional Australia. The RFDS primarily receives Commonwealth funding through a grant agreement with the Department of Health. These funding arrangements are by their nature complex and involve the operation of the RFDS's large fleet of aircraft.
Having reviewed the RFDS's existing funding agreement with the Commonwealth and the RFDS's governance arrangements, we provided Health with options and recommendations for the structure and design of the Commonwealth's new comprehensive grant agreement with the RFDS.
Based on this advice, Health chose a form of grant agreement that recognised the federated structure of the RFDS and involved the Commonwealth contracting with the Royal Flying Doctor Service of Australia (RFDSA) as the legal agent of its 6 affiliated State-based RFDS organisations. It was therefore underpinned by agency and sub-contracting agreements between the RFDSA and these State-based organisations.
AGS then worked closely with Health to develop and draft the new RFDS funding agreement, including a number of project-based schedules. These schedules detailed the funding and provision of various health and medical services, the performance of various RFDS governance activities, and the process for funding replacement aircraft and non-aircraft capital items. Following execution of the new agreement, we advised Health on its options for managing various aspects of the grant agreement.
AGS worked with the client to ensure that the resulting agreement satisfied Health's program require-ments and public and financial accountability obligations, while also facilitating the RFDS's efficient and effective delivery of these important health and medical services across regional and remote Australia.
Of our work on this interesting and complex matter, our key instructing officer noted:
'AGS provided a principal legal representative to follow through this body of work from its inception. AGS provided the required advice in a useable format for non-legal department staff, supporting this advice with verbal discussion and review as required … the comprehensive response from AGS and its level of engagement over the period of this work assisted the department to put in place substantially new funding arrangements which were acceptable to both the department and the stakeholder with only minor amendment.'
AGS Senior Executive Lawyers Katy Grimes and Stuart Hilton advised Health on this matter.
The Indigenous Affairs Legal practice in the Department of Prime Minister and Cabinet in the 'Yarning Space' with artwork by Doreen Djorlom from the Oenpelli area in West Arnhem Land, NT.
Brendan Jacomb joined the Indigenous Affairs Legal Branch as Assistant Secretary in March 2017. He has previously held roles as the National Manager in the area of Service Delivery Performance Analysis at the Department of Human Services, Chief Counsel at Austrade and National Manager of Legal Services at Centrelink.
Indigenous Affairs Legal (IA Legal) was formed in December 2013 when Indigenous affairs functions were transferred to the Department of the Prime Minister and Cabinet as part of a machinery-of-government change. It is the in-house legal branch for Indigenous Affairs Group.
Canberra-based, IA Legal is a professional branch of 25 lawyers and paralegal staff led by Assistant Secretary Brendan Jacomb, who is Indigenous Affairs Group's General Counsel.
Partnering with clients, having a strong client-service culture and being solutions-driven are the foundations for IA Legal to understand their clients' business.
Focused on improving the lives of Aboriginal and Torres Strait Islander peoples, IA Legal assists clients to achieve the Australian Government objectives of getting adults into jobs, getting children into school and ensuring safe communities.
The branch operates in a flexible and paper-light work environment. Staff 'soft wall' across 3 legal teams to ensure continuity of service and build corporate knowledge. IA Legal provides legal services for grants and funding agreements, land and leasing, litigation and dispute resolution, and develops legislation. Work is prioritised to align with the Indigenous Affairs Group's priorities. Apart from tied work, most work is done in-house, unless capacity is limited or specialist expertise is required.
The branch's work has been recognised widely. Former General Counsel Marian Moss won the Australian Corporate Lawyers Association Government Lawyer of the Year Award in 2015, and the branch recently won the Lawyers Weekly Corporate Counsel Awards 2017 award for Government Team of the Year.
Township leasing is a voluntary arrangement under s 19A of the Aboriginal Land Rights (Northern Territory) Act 1976 and provides an alternative to leasing under s 19 of the Act.
A township lease is typically a lease from traditional owners to the Executive Director of Township Leasing – a statutory office holder who enters into and administers the lease on behalf of the Commonwealth. A township lease helps provide a strong foundation for building economic activity and intergenerational wealth in towns on Aboriginal land. It involves granting a head lease over the whole of the community under which long-term sub-leases can be granted in accordance with the terms of the township lease agreed to by traditional owners.
IA Legal has been working with clients on a different model for township leasing in the Northern Territory. This model involves a community entity holding the township lease, rather than the Executive Director. A community-entity-held township lease is currently being negotiated for the community of Gunyangara in Arnhem Land. This approach strengthens local decision-making in the community, giving the community the ability to determine tenure arrangements that work best for them.
The Community Priorities team (one member absent)
Emma Morrison Principal Legal Officer
'Working in-house in government means we are "on the ground" with our clients and can work closely with them to assist in delivering real outcomes for the Australian community. The procurement of Low Aromatic Fuel supply arrangements was a highly technical procurement and significant to the Department in dollar terms. We retained most legal work in-house (including all contract negotiations) and worked closely with our clients and an independent fuel expert. One of the most challenging and rewarding aspects was needing to understand the industry context, then translate this into pragmatic solutions that met commercial drivers and fit within the broader Commonwealth procurement framework. Working in Indigenous Affairs is varied and complex but we all have a common purpose to support Government's agenda to close the gap. Whether I am working on a funding agreement, legislation or preparing an advice, it is satisfying to know my work contributes to making a real difference to the lives of real people'.
Low Aromatic Fuel matter
IA Legal has partnered with clients on a range of legal issues relating to Low Aromatic Fuel, which is part of the Australian Government's strategy to reduce petrol-sniffing.
The rollout of this fuel dramatically reduces petrol-sniffing in regional and remote communities, and the harm caused by petrol-sniffing. Low Aromatic Fuel has been designed to discourage people from sniffing by lowering the amount of the toxic aromatic components, which give people who sniff petrol a 'high'. This, in turn, improves health and related factors for Aboriginal and Torres Strait Islander peoples. The Menzies School of Health Research found an 88% reduction in petrol-sniffing across communities surveyed since 2005–07 where Low Aromatic Fuel has been rolled out. There are currently over 170 sites which supply Low Aromatic Fuel across the Northern Territory, Queensland, South Australia and Western Australia.
IA Legal is playing a significant role in the procurement of the supply arrangements for Low Aromatic Fuel and resultant commercial arrangements. It is a complex procurement, with highly technical legal and industry-specific subject matter.
The bulk of legal work is being conducted in-house (including all contract-drafting and negotiations), with external legal assistance being sought strategically on discrete issues and to second-counsel important documents. IA Legal is also working in tandem with an industry fuel expert engaged by clients to advise on industry-specific issues.
As in-house lawyers, one of the greatest challenges (and rewards) has been taking the opportunity to understand the industry angle and then applying Commonwealth procurement policy and commercial law concepts to find pragmatic solutions. In addition, by retaining the work in-house, IA Legal has better enabled the Department to manage legal risk within the broader Commonwealth policy framework, and improved the capacity of lawyers to provide a range of high-quality legal services in future complex procurements.
IA Legal drafted legislative instruments under the Low Aromatic Fuel Act 2013. These instruments introduced penalties for supplying regular unleaded fuel in designated areas with a high incidence of petrol-sniffing.
Rather than outsource the entire matter, IA drafted the instruments in-house, with second-counselling by Office of Parliamentary Counsel drafters. This enabled IA Legal to build in-house capacity to perform this specific type of drafting work.
IA Legal now has the skills necessary to draft similar instruments under legislation (ie instruments that designate areas, which is a common type of instrument in the Indigenous Affairs portfolio). In this regard, IA Legal assisted clients to achieve their immediate policy objectives, while positioning itself to contribute to the Department's broader objectives in future similar matters. There are currently 4 designated areas for Low Aromatic Fuel in the Northern Territory and Queensland.
Higher Education Support Act matter
IA Legal worked with clients on implementating of the Government's Indigenous Student Success in Higher Education measure. It assists Indigenous students to undertake higher education and aims to increase the number of Indigenous students enrolling in, progressing through and completing courses, leading to higher education awards.
The branch advised on the design of amendments to the Higher Education Support Act 2003 and instructed the Office of Parliamentary Counsel on the drafting of the amendments. IA Legal also drafted several legislative instruments, including the Indigenous Student Assistance Grants Guidelines 2017, to implement the measure.
The measure will allow universities to better respond to the needs of Aboriginal and Torres Strait Islander students and support their progress through university to graduation. Improving completion outcomes contributes to increasing employment within the Aboriginal and Torres Strait Islander community.
Connecting Commonwealth legal practices
IA Legal officers have had significant involvement in the establishment and development of the Australian Government Legal Network (AGLN), including the AGLN Practice Managers Forum, Engagement and Communications Committee and Professional Development Committee. Part of this work has been to connect in-house lawyers across the Commonwealth, to share resources and to develop training that uniquely meets the needs and interests of Commonwealth practices and their clients.
Sarah Henderson Legal Officer
'My most exciting matter was a complex legislation project where I was fortunate enough to be involved from the very early stages, all the way through to debate in Parliament. Being involved from the early stages of policy development; working closely with the policy team, other departments and the Office of Parliamentary Counsel on the draft legislation; briefing the minister; and preparing to sit in the adviser box at Parliament House for debate was a fantastic experience – seeing the legislation process in action! As in-house lawyers, the breadth of work we get to see is really quite extraordinary and I really enjoy the opportunity to work across lots of different projects. Seeing the work that we put in behind the scenes to shape and inform policy and strategy eventuate into practical and positive changes for people on the ground and out in communities is such a fantastic thing to see'.
Minister Nigel Scullion with members of the policy and legal teams celebrating the passing of the Higher Education Support Legislation Amendment Bill 2016