Case: Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248 
Outcome: cited
The submissions made on behalf of 3D in this regard were to the following effect: (1) To the extent that assertions were made by the Commissioner against 3D, those accusations had to be squarely put to the relevant witnesses. (2) As certain accusations were not put to the witnesses for 3D, the Tribunal fell into serious error by taking those assertions into account in making its determination. Not only did the Tribunal take those assertions into account but made findings of fact, and findings on credit, based upon matters never put to witnesses (in particular Mrs Montgomery). (3) In this regard the Tribunal must apply notions of procedural fairness: Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 ; Jagelman v FCT 96 ATC 4055 , Fletcher &amp; Ors v FCT (1988) 19 FCR 442 , Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248. A breach of these principles constitutes an error of law: Australian Postal Commission v Hayes [1989] FCA 176 ; (1989) 23 FCR 320 at 326 per Wilcox J. The first part of s 39(1) of the AAT Act provides statutory recognition of these principles: Sullivan v Department of Transport (1978) 20 ALR 323. (4) The integrity of the Price Spreadsheets was of fundamental importance to the case sought to be put by 3D. The Price Spreadsheets were recognised by the Commissioner as 'the central plank in the Applicants' case'. (5) In the course of the hearing, counsel for the Commissioner put to Mrs Montgomery in respect of the Price Spreadsheets that '...the numbers have been massaged and fiddled with'. (6) Counsel for 3D strenuously objected to such a question on the following basis: 'Mr McGovern: I object to that, because it is quite important. That proposition may be an ultimate submission, but in fairness to the witness and she is here now my friend should take her directly to each of the figures which he asserts to have been massaged, each of which has been fiddled with, so that we all know, rather than put it globally. Its unfair to the witness to do it otherwise.' Later: 'Mr Fagan: I don't purport to be able to put a positive to this witness about which number has been adjusted in which respect. I submit that it's quite appropriate to put, in this sort of circumstance, to this witness that the whole thing has been an adjustment and fiddling of numbers to reach a number to correspond with a cheque that as [sic] cashed. The Deputy President: I can see no reason why it can't be put. She can deny it if she likes.' Later: 'Mr McGovern: ... But at this point, and this is not just forensic flourish, this is really a question for the decision-maker at the end of the day to have to make a grave determination about this lady's credibility and whether you accept her or not, and, in those circumstances, to just put a rolled-up general proposition which is, now we know, unsupportable by as he frankly confesses he can't ascribe any particularity to any massaged figures or numbers, at least what should be done ... ... Mr Fagan: ... I am entitled to put this general proposition that they have been fabricated, by its very nature I wouldn't know how.' (7) As counsel for 3D feared, and as ultimately eventuated both in the Commissioner's written and oral submissions, counsel for the Commissioner proceeded to make submissions with some particularity as to discrepancies within the Price Spreadsheets. The alleged discrepancies, being the basis for the Commissioner's submissions, were not put to the witness, particularly Mrs Montgomery. Accordingly she was denied an opportunity to be heard on the matter in response. (8) In this regard, the Commissioner's submissions (both written and oral) asserted with some particularity the manner in which the Price Spreadsheets were allegedly manipulated, and these submissions were both taken into account, and adopted by the Tribunal, without demur, in finding against 3D. (9) For the Tribunal to accept submissions on such matters not put to the witness was an error in law, being a clear failure to provide procedural fairness to 3D on a crucial part of 3D's case. (10) In such circumstances it is difficult to resist the conclusion that an acceptance of the Commissioner's submissions by the Tribunal amounted to gross unfairness. (11) Mrs Montgomery in particular was confronted in the witness box with an imprecise, generalised and unspecified assertion about 'fudging and fiddling' the contemporaneous records, but the final submissions, which she was not offered opportunity to address in evidence, then contained detailed allegations never put to her. This was a clear breach of the rule in Browne v Dunn (1893) 6 R 67 (HL), and that rule has been treated as an aspect of procedural fairness, and if breached will give rise to a vitiation of the decision of the Tribunal; see Hoskins v Repatriation Commission [1991] FCA 559 ; (1991) 32 FCR 443 at 446.