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The underlying reasons for imposing an obligation in section 13 of the AD(JR) Act to furnish statements of reasons are: (a) from the point of view of a citizen seeking to resolve a grievance: (i) to overcome any grievance a person might experience when he is not told why something affecting him has been done; and (ii) to enable a person affected by a decision to see what considerations were taken into account and whether an error has been made so that he is sufficiently informed to determine whether to challenge the decision and if so to adopt the most appropriate means for doing so; and (b) from the point of view of the administrative decision-maker: (i) to stimulate that person to consider carefully the correct and proper decision to be made in the circumstances and, thereby, to improve the quality of the decision-making; and (ii) to cause that person to identify the reasons which motivate the decision.

Sub-section 13(1) of the AD(JR) Act provides as follows: "13(1) Where a person makes a decision to which this section applies, any person who is entitled to make an application to the Court under section 5 in relation to the decision may, by notice in writing given to the person who made the decision, request him to furnish a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision".

The following observations may be made in relation to sub-section 13(1): (a) The sub-section applies only where a person (e.g. the Commissioner) makes a "decision to which this section applies" as defined in sub-section 13(11). The definition of "decision to which this section applies" adopts, subject to three specific exclusions (paragraphs (a) to (c) of the definition), the definition of "decision to which this Act applies" in sub-section 3(1). By adopting this approach the former definition excludes from its scope a decision included in any of the classes of decisions set out in Schedule 1. Moreover, a decision included in any of the classes of decisions set out in Schedule 2 is also specifically excluded from the scope of section 13 (paragraph (c) of the definition). No request may therefore be made under sub-section 13(1) in respect of: (i) the classes of taxation decisions that are totally excluded by Schedule 1 from the scope of operation of the Act (see Appendix A); or (ii) the classes of taxation decisions that are specifically excluded by Schedule 2 from the operation of section 13 (see Appendix B). (b) The only persons who may make a request under sub-section 13(1) by the specific terms of that sub-section are those who are entitled to make an application to the court under section 5 in relation to a decision i.e. persons who are aggrieved by such a decision (including persons whose interests are adversely affected by such a decision). A person does not have to commence an application for an order of review under section 5 of the Act to entitle him to obtain a sub-section 13(1) statement but he must be entitled to make such an application. The general right to be provided on request with a sub-section 13(1) statement may therefore be exercised either independently of an application for an order of review or as an adjunct to review proceedings. (c) The section applies only in respect of decisions reviewable in accordance with section 5 of the Act i.e. decisions that have been made. It does not apply to decisions that are proposed to be made or required to be made. Nor does it apply in relation to conduct related to making a decision in respect of which a person may be entitled to apply for review under section 6 of the Act or in relation to a failure to make a decision in respect of which a person may be entitled to apply for review under section 7 of the Act (see Lally v West, unreported decision of Mr Justice Northrop, 5 November 1984). (d) The section also does not apply by the definition in sub-section 13(11) in relation to: (i) A decision in respect of which there is an obligation to furnish a statement of reasons under section 28 of the Administrative Appeals Tribunal Act 1975 (para. 13(11)(a)). (ii) A decision that includes, or is accompanied by a statement satisfying the requirements of sub-section 13(1) (para. 13(11)(b)). (e) The request under sub-section 13(1) must be made by notice in writing given to the person who made the decision (see paragraphs 28 and 30 for details). (f) Although referred to at times, for convenience, as a statement of reasons, the statement must not only give the reasons for the decision, but must also set out the findings on material questions of fact and must refer to the evidence or other material on which those findings were based. (g) The requirements of section 13 will be satisfied by a "statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision." It is important to notice that the section does not require that the relevant evidence or other material be set out in the statement, only that it be referred to : c.f. Re Palmer and Minister for the Capital Territory (1978) 23 ALR 196 at 206; 1 ALD 183 at 193. (h) The statement of reasons, unless effectively challenged, is evidence of the reasons for the decision to which it relates: Sezdirmezoglu and Another v Acting Minister for Immigration and Ethnic Affairs (1983) 51 ALR 561 per Smithers J at 570

Sub-section 13(2) of the Act provides as follows: "13(2) Where such a request is made, the person who made the decision shall, subject to this section, as soon as practicable, and in any event within 28 days, after receiving the request, prepare the statement and furnish it to the person who made the request."

The requirement to furnish the statement is specifically expressed to be subject to section 13. It is also subject to the operation of: • sub-section 13A(2) - which, broadly stated, provides that certain personal or business information supplied either in confidence or under a statutory duty or which is subject to a secrecy provision in some other legislation is not required to be included in a statement furnished under sub-section 13(1) - see paras. 19 to 22 below for more details; or • sub-section 14(2) - which provides that certain information which the Attorney-General has certified would, if disclosed, be contrary to the public interest is not required to be included in a statement furnished under sub-section 13(1) - see paras. 23 to 26 below for more details.

Sub-section 13(3) of the Act provides as follows: "13(3) Where a person to whom a request is made under sub-section (1) is of the opinion that the person who made the request was not entitled to make the request, the first-mentioned person may, within 28 days after receiving the request: (a) give to the second-mentioned person notice in writing of his opinion; or (b) apply to the Court under sub-section (4A) for an order declaring that the person who made the request was not entitled to make the request."

This provision is self-explanatory. It provides a procedure whereby a decision-maker, such as the Commissioner or a Deputy Commissioner, may obtain redress where he considers that the person who requests a statement of reasons is not entitled to do so. It is important to note that the right either to notify the person who made the request of his opinion or to apply to the court attaches personally to the decision-maker. The circumstances in which a person who has made a request under sub-section 13(1) in relation to a taxation decision may not have been entitled to do so include the following: (a) Where the person who made the request is not a person aggrieved by the decision for the purposes of section 5 of the Act. (b) Where the decision in respect of which the request was made under sub-section 13(1) is not one to which section 13 applies for one of the following reasons: (i) it is within one of the classes of taxation decisions included in Schedule 1 and totally excluded from the scope of the Act (sub-section 13(11) and definition of "decision to which this Act applies" in sub-section 3(1)); (ii) it is within one of the classes of taxation decisions included in Schedule 2 and excluded from the operation of section 13 (para. 13(11)(c)); (iii) it is not a decision reviewable in accordance with section 5 of the Act (sub-section 13(1)); or (iv) the decision itself included, or was accompanied by, a statement setting out the information required by sub-section 13(1) i.e. findings of fact, reference to the evidence and reasons for the decision (para. 13(11)(b)). (c) where the person who made the request did not do so within the time limits set out in sub-section 13(5).

Sub-section 13(4) of the Act provides as follows: "13(4) Where a person gives a notice under sub-section(3), or applies to the Court under sub-section (4A), with respect to a request, the person is not required to comply with the request unless: (a) the Court, on an application under sub-section (4A), declares that the person who made the request was entitled to make the request; or (b) the person who gave the notice under sub-section (3) has applied to the court under sub-section (4A) for an order declaring that the person who made the request was not entitled to make the request and the Court refuses that application, and, in either of those cases, the person who gave the notice shall prepare the statement to which the request relates and furnish it to the person who made the request within 28 days after the decision of the Court."

This sub-section provides the method for finalising an application to the court under sub-section 13(3). Where the decision-maker gives a notice under sub-section 13(3) or applies to the Federal Court under sub-section 13(4A), he is not required to give a statement of reasons unless the court declares the applicant to be entitled to a statement.

Sub-section 13(4A) of the Act provides as follows: "13(4A) The Court may, on the application of - (a) a person to whom a request is made under sub-section (1); or (b) a person who has received a notice under sub-section (3), make an order declaring that the person who made the request concerned was, or was not, entitled to make the request." It was held in Ralkon Agricultural Co Pty Ltd v Aboriginal Development Commission (1981) 43 ALR 535 that a declaration sought by a person mentioned in paragraph 13(4A)(a) could only be made that the person who made the request was not entitled to make it if the Federal Court was satisfied that the person requesting 'reasons' did not fall within the class of persons entitled to request reasons as provided in sub-section 13(1).i.e. persons who are aggrieved within the meaning of section 5. The Court considered that sub-section 13(4A) does not confer a right to seek an order declaring that a person, who does fall within the class of persons so entitled, is no longer entitled to seek reasons because of the expiration of 28 days after the day on which the decision was furnished.

Sub-sections 13(5) and 13(6) of the Act provide as follows: "13(5) A person to whom a request for a statement in relation to a decision is made under sub-section (1) may refuse to prepare and furnish the statement if - (a) in the case of a decision the terms of which were recorded in writing and set out in a document that was furnished to the person who made the request - the request was not made on or before the twenty-eighth day after the day on which that document was so furnished; or (b) in any other case - the request was not made within a reasonable time after the decision was made, and in any such case the person to whom the request was made shall give to the person who made the request, within 14 days after receiving the request, notice in writing stating that the statement will not be furnished to him and giving the reason why the statement will not be so furnished." "13(6) For the purposes of paragraph (5)(b), a request for a statement in relation to a decision shall be deemed to have been made within a reasonable time after the decision was made if the Court, on application by the person who made the request, declares that the request was made within a reasonable time after the decision was made."

The effect of these sub-sections is that a request for reasons may be refused by the decision-maker where: (i) the person requesting reasons had been notified in writing of the decision and had not made his request within 28 days of being so notified (para. 13(5)(a)); or (ii) the person requesting reasons had not been notified in writing of the decision and had not made his request within a reasonable time after the decision was made (para. 13(5)(b)).

There is no specific provision in the Act allowing the Court to extend the period of 28 days within which the request for reasons may be made under paragraph 13(5)(a) (Waterhouse v. D.F.C. of T. 86 ATC 4631, 17 ATR 997)

The court is empowered, however, by sub-section 13(b) to declare whether a request was made within a reasonable time or not. The person who made the request may apply to the court for a declaration that the request was made within a reasonable time either before or after any refusal by the decision-maker to furnish the statement. If the decision-maker does refuse to furnish the statement he must by sub-section 13(5) give to the person who made the request notice in writing within 14 days after receiving the request: (a) stating that the statement will not be furnished to him; and (b) giving the reason why the statement will not be so furnished.

Sub-section 13(7) of the Act provides as follows: "13(7) If the Court, upon application for an order under this sub-section made to it by a person to whom a statement has been furnished in pursuance of a request under sub-section (1), considers that the statement does not contain adequate particulars of findings on material questions of fact, an adequate reference to the evidence or other material on which those findings were based or adequate particulars of the reasons for the decision, the Court may order the person who furnished the statement to furnish to the person who made the request for the statement, within such time as is specified in the order, an additional statement or additional statements containing further and better particulars in relation to matters specified in the order with respect to those findings, that evidence or other material or those reasons."

In FCT v. Nestle Australia Ltd 86 ATC 4760 17 ATR 1130 the full Federal Court recognised that this sub-section empowers the Court to order that further and better particulars in relation to matters specified in the order be given in respect of a written statement furnished in response to a request made under sub-section 13(1). However the Court rejected the Commissioner's contention that sub-section 13(7) provides a substitute for the processes of discovery and inspection and therefore the Court could order discovery and inspection even though the taxpayer does not call sub-section 13(7) in aid of his case.

Sub-section 13(8) of the Act provides for the making of regulations to declare that certain classes of decisions, in addition to those set out in Schedule 2 to the Act, are not to be subject to the obligation to furnish a statement of reasons under section 13 of the Act. Sub-section 13(9) provides for the form in which classes of decisions may be specified in the regulations. Sub-section 13(10) provides that regulations so made only apply prospectively.

Section 13A of the Act provides as follows: "13A.(1) This section applies in relation to any information to which a request made to a person under sub-section 13(1) relates, being information that - (a) relates to the personal affairs or business affairs of a person, other than the person making the request; and (b) is information - (i) that was supplied in confidence; (ii) the publication of which would reveal a trade secret; (iii) that was furnished in compliance with a duty imposed by an enactment; or (iv) the furnishing of which in accordance with the request would be in contravention of an enactment, being an enactment that expressly imposes on the person to whom the request is made a duty not to divulge or communicate to any person, or to any person other than a person included in a prescribed class of persons, or except in prescribed circumstances, information of that kind. (2) Where a person has been requested in accordance with sub-section 13(1) to furnish a statement to a person - (a) the first-mentioned person is not required to include in the statement any information in relation to which this section applies; and (b) where the statement would be false or misleading if it did not include such information - the first-mentioned person is not required by section 13 to furnish the statement. (3) Where, by reason of sub-section (2), information is not included in a statement furnished by a person or a statement is not furnished by a person, the person shall give notice in writing to the person who requested the statement - (a) in a case where information is not included in a statement - stating that the information is not so included and giving the reason for not including the information; or (b) in a case where a statement is not furnished - stating that the statement will not be furnished and giving the reason for not furnishing the statement. (4) Nothing in this section affects the power of the Court to make an order for the discovery of documents or to require the giving of evidence or the production of documents to the Court."

The purpose of section 13A is to ensure that the obligation under section 13 to provide a statement of reasons does not require the disclosure of information if it relates to the personal or business affairs of a person other than the person requesting the reasons. This will be the case if the information was supplied in confidence or under a statutory duty, which would reveal a trade secret or which is subject to a secrecy provision in some other legislation e.g. section 16 of the Income Tax Assessment Act. Sub-section 13A(1) defines the category of information to which section 13A relates.

There is no provision in section 13A specifying the time within which a decision-maker must give written notice to a person requesting a statement of reasons stating: (a) that certain information to which section 13A applies has been omitted; or (b) that the statement of reasons will not be furnished.

The Act appears to envisage that such a notice should be given within the same time limit as is specified in sub-section 13(2) for the furnishing of statements of reasons, namely, "as soon as practicable, and in any event within 28 days, after receiving the request". As indicated below (see paragraph 62(c)), this is the time limit that it is suggested should be adhered to.

Section 14 of the Act provides as follows: "14.(1) If the Attorney-General certifies, by writing signed by him, that the disclosure of information concerning a specified matter would be contrary to the public interest - (a) by reason that it would prejudice the security, defence or international relations of Australia; (b) by reason that it would involve the disclosure of deliberations or decisions of the Cabinet or of a Committee of the Cabinet; or (c) for any other reason specified in the certificate that could form the basis for a claim in a judicial proceeding that the information should not be disclosed (this would extend not only to 'Crown privilege', but also to any privilege which might be claimed for a document in judicial proceedings, including legal professional privilege); the following provisions of this section have effect. (2) Where a person has been requested in accordance with section 13 to furnish a statement to a person - (a) the first-mentioned person is not required to include in the statement any information in respect of which the Attorney-General has certified in accordance with sub-section (1) of this section; and (b) where the statement would be false or misleading if it did not include such information - the first-mentioned person is not required by that section to furnish the statement. (3) Where, by reason of sub-section (2),information is not included in a statement furnished by a person or a statement is not furnished by a person, the person shall give notice in writing to the person who requested the statement - (a) in a case where information is not included in a statement - stating that the information is not so included and giving the reason for not including the information; or (b) in a case where a statement is not furnished - stating that the statement will not be furnished and giving the reason for not furnishing the statement. (4) Nothing in this section affects the power of the Court to make an order for the discovery of documents or to require the giving of evidence or the production of documents to the Court."

Section 14 provides that a decision-maker is excused from the obligation to provide any information concerning a specified matter in a statement of reasons under section 13 where the Attorney-General certifies, for any of the reasons specified in sub-section 14(1), that information would be contrary to the public interest.

It is not expected in the normal run of taxation decisions that the Commissioner or his officers will be required to furnish many statements of reasons that would involve a disclosure of information that would be contrary to the public interest by reason that it would prejudice the security, defence or international relations of Australia or by reason that it would involve the disclosure of deliberations or decisions of the Cabinet or of a Committee of the Cabinet. While some statements of reasons could involve disclosure of information concerning a specified matter that would be contrary to the public interest for the reason that it would be contrary to the secrecy provisions contained in section 16 of the Income Tax Assessment Act and the comparable secrecy provisions in other taxation legislation the appropriate procedure that would normally be followed in such cases is that provided for in section 13A of the Act as discussed above.

Like section 13A, there is no provision in section 14 specifying the time within which an application should be made to the Attorney-General for a certificate in terms of the section or within which the Attorney-General should make such a certification. However, paragraphs 14(2)(a) and 14(3)(a) also seem to envisage that the Attorney-General's certificate will be made available within sufficient time to enable a statement of reasons to be furnished within the 28 day time limit to be specified in sub-section 13(2).

Section 4 of the Act provides that the Act has effect notwithstanding anything contained in any law in force at the commencement of that Act. The meaning of the word "law" in the context of section 4 is accepted as including any "enactment" as defined in sub-section 3(1). The section is expressed in very general terms and, taken at its face value, it would have the effect of prevailing over, amongst other things, contrary provisions of any other Act. Although one consequence of section 4 would otherwise have been that section 13 of the AD(JR) Act would have overriden the secrecy provisions contained in taxation legislation, the provisions of sections 13A and 14 of the AD(JR) Act ensure that the secrecy provisions will remain intact.

The Secretary to the Department of the Prime Minister and Cabinet sought advice from the Attorney-General's Department of the circumstances in which the obligation arises to furnish a statement of reasons under section 13 of the Act. It was specifically inquired whether the person requesting a statement is required to express or imply that the request be made under the Act. Set out in the following paragraphs is the substantial part of the reply from the Attorney-General's Department. "In my view, the obligation under sub-section 13(2) of the Act to furnish a statement of the kind set out in sub-section 13(1) does not arise unless - (a) notice in writing is given to the person who made the decision in question; and (b) the form of the notice is in substantial compliance with sub-section 13(1); that is, it must either be in the form required by that sub-section or it must be apparent from the notice that what is being requested is a statement of the kind referred to in that sub-section. Person on Whom Notice is Served Section 13 provides that a request for a statement under that section is to be by way of 'notice in writing given to the person who made the decision'. The requisite notice must be given to the person who, for the purposes of the Act, is the person who made the decision, and not to some other person. It is on that person that the obligation to furnish the statement is imposed by section 13. In most cases, the person who actually made the decision will be the person to whom the notice is to be given. There may however be cases where the notice is required to be given to some other person. For example, section 17 of the Act provides that where a person has, in the performance of the duties of an office, made a decision in respect of which an application may be made to the Federal Court under the Act and that person no longer holds or is not performing the duties of that office, the Act has effect as if the decision had been made by the person for the time being holding or performing the duties of the office in question or, where there is no such person, such person as the responsible Minister, or some person authorised by him, specifies. In such a case the notice under sub-section 13(1) must be given to the person who is ascertained in accordance with paragraph 17(c) or 17(d) of the Act. In other cases, where a decision is made by a person on behalf of another person, that other person being invested with the statutory authority to make the decision, the person who made the decision for the purposes of section 13 will be that other person. Such a case may arise where a Minister is invested with statutory power to make a decision and the decision is made in his name by an officer of his Department. In such a case the person who made the decision for the purposes of section 13 would seem to be the Minister and not the officer of his Department. How Service is Effected Sub-section 13(1) requires that the notice be given to the person who made the decision. In the absence of any relevant statutory provisions, that would require personal service on the person who made the decision. Sub-section 3(6) of the Act provides, however, that a notice that is required by the Act to be given to a person may be posted to the person by a pre-paid letter addressed in a manner which accords with the provisions of paragraphs (a) or (b) of that sub-section. The requirement in sub-section 13(1) for the relevant notice to be given to the person who made the decision in question requires that, at least as a matter of good administration, that person be sufficiently identified and his address given when the decision is communicated to a person adversely affected by it. Whether that would be required as a matter of law, either generally or in a particular case, is not an issue on which it is necessary to express an opinion in the present context. Next, a notice is required by sub-section 13(1) to be in writing. An oral request would not suffice. Form of the Notice Thirdly, there is the matter of the form of the notice. Sub-section 13(1) refers to a notice in writing requesting 'a statement setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision'. Clearly, a notice in these terms is one which is capable of giving rise to an obligation under sub-section 13(2). The question for onsideration is whether a notice which is not so expressed may be capable of having that effect. There is a well-recognised distinction between statutory requirements which are mandatory in character and those which are directory only. In the latter case, all that is required is substantial compliance with the statute. I have no doubt that a court would hold that the requirement in sub-section 13(7) as to the content of a notice under that sub-section is directory only, and a notice may be valid so long as there is substantial compliance with the requirement. In my view, a notice would substantially comply with the sub-section if it were apparent to the decision-maker that he were being requested to furnish a statement of the kind referred to in that sub-section - Guyot v. Evans (1980) 1 N.S.W.L.R. 636. No particular form of words is required for this purpose. Thus, a letter requesting 'a statement under section 13 of the Administrative Decisions (Judicial Review) Act' would be plainly adequate; a letter saying only 'please tell me why the decision was made' would seem not to be enough. There will, of course be borderline cases. It may be expected that departments will, in the interests of good administration, not seek unduly to limit responses to requests for reasons to those requests which satisfy sub-section 13(1) of the Act. In the great majority of cases it is likely to be more economical of time to respond sympathetically and fully to an informal request than to take the point that no proper request has been made. There may, however, be cases where a department has reason to believe that a request is not made in good faith and it may be proper to refuse any such requests that do not comply with the section."

There is no specific provision in the Act requiring that a statement of reasons (sub-section 13(1)) or a further and additional statement of reasons (sub-section 13(7)) will become part of the record of the decision for the purposes of any application under section 5 for an order of review in respect of a decision. However, it can reasonably be expected that such a statement or additional statement will be treated as part of the record so that it may be subject to corrective action (if necessary) by appropriate order of the court. This appears to be what the Commonwealth Administrative Review Committee (the Kerr Committee) envisaged in its report of August 1971 at pages 78/79, paragraph 266.

It is important to note that the obligation to furnish reasons imposed by section 13 attaches personally to the decision-maker. The actual reasons relied upon by the decision-maker at the time the decision was made must be set out, and not other reasons or facts which may subsequently have come to light or appear to be more desirable : Re Palmer and Minister for Capital Territory (1978) 23 ALR 196 at 209; 1 ALD 183 at 196. Section 17 of the Act provides for cases where a person who made a decision in the performance of the duties of an office either no longer holds that office or for some other reason, is not performing the duties of that office e.g. temporary absence due to illness, leave or overseas travel.

The question has been considered whether a decision can be supported before the Federal Court on an application under section 5 for an order of review for reasons other than those on which it was originally based. The Committee of Review in its Report on Prerogative Writ Procedures (the Ellicott Committee Report) clearly envisaged that a decision which can be so supported should not necessarily be upset and that the court should have power in such cases to confirm the original decision (p.9, para 38). The view is therefore taken that, in an appropriate case, it is open to the Commissioner to seek to support a decision for reasons other than those on which it was originally based.

There is no sanction provided in the Act for a failure to furnish a statement of reasons, on request, within the prescribed time limit of 28 days (although mandamus may be sought under s39B of the Judiciary Act - see Clanwilliam v. Bartlett, unreported decision of Mr Justice Fitzgerald 8 May 1984). Notwithstanding this, however, it is intended that every effort be made to comply with the provisions of section 13 within the time limit prescribed.

There is an obvious need at the outset to identify urgently requests by taxpayers for statements of reasons. It can be expected that some notices under section 13 will specifically refer to section 13 of the Act and request a statement in writing in terms of the section viz "a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision". No difficulty is expected in identifying such requests. In other cases, however, it can be expected that notices by taxpayers will make no reference to section 13 of the Act but will merely seek reasons for particular decisions. In the latter cases, provided that the notices are in some way directed to the provisions of section 13, the view is taken that they should be regarded as a section 13 notice and would need to be dealt with accordingly. A notice under section 13 may be in the form of a written communication expressed in words that are reasonably calculated to convey to the understanding of the person to whom it is addressed that the writer is seeking a relevant statement of reasons (see also paragraphs 41-50) and Ansett Transport Industries (Operations) Pty Ltd v Wraith (1983) 48 A.L.R. 500 where Mr Justice Woodward at page 508 stated that: "It is to be noted that no form of request is prescribed. Nor does section 13 require that the request be stated as being made pursuant to the Judicial Review Act. Persons making decisions to which that Act applies must be taken to know of their obligation to supply reasons when requested to do so. They should not need to be referred to the relevant legislation. Nor should a person with rights under the Judicial Review Act be denied those rights merely because he does not know of them, or only knows of them vaguely, and so makes a request in some informal letter or other communication which does not follow the wording of s13(1)."

The PAO or APAO in the Appeals area in each Branch Office will examine the requests and determine whether they are, or ought to be, properly a matter falling within the responsibility of the Appeals area or are matters relating to decisions taken by other areas of the office where Appeals did not have, and ought not to have had, an involvement (other than that of keeping statistics). For instance, the Sales Tax area, the Debt Management area or the Audit area will each have sole responsibility for the preparation of an appropriate response to requests in respect of decisions made in those areas of the Office.

In the former case the matter will be allocated to an appropriately experienced Advising Officer in Appeals to determine the competency of the request, to ascertain the terms of the decision, to collect the relevant documents and to formulate a proposed course of action in relation to the request including drafting a response to the request for reasons where this is considered to be the appropriate course of action.

In the latter cases the matter will be referred to the area of the office where the decision was made for action similar to that in paragraph 35 above. The assistance of the Appeals area may be sought by that other area if necessary.

As to the appropriate content of statements of reasons, there can be no blueprint or universal pro forma for such statements. What would be an adequate statement of reasons for one decision will not necessarily be adequate for another. The characteristics of an individual decision will largely determine the material to be set out in a statement of reasons. Generally, the more complex a decision, the greater will be the material necessary in a statement of reasons for that decision. Bearing in mind the purpose and function of a statement for reasons, the desirable aim of a decision-maker should always be to provide as full and adequate a statement as he or she can in all the circumstances. What is clear is that Parliament certainly intended that the person requesting the statement of reasons should be fully informed.

Generally, the adequacy of a statement of reasons may be tested by asking two linked questions: (a) What, if anything, did the person who made the request for a statement of reasons have to show or seek to show? (b) What had to be determined in order to reach the decision made? A statement of reasons should answer these questions and state how the decision-maker dealt with the matters contained in those answers. In the Ansett case (supra), Mr Justice Woodward stated that the decision-maker should set out his statement in clear and unambiguous language, not in vague generalities or the formal language of legislation. The appropriate length of the statement covering such matters will depend upon considerations such as the nature and importance of the decision and its complexity.

A statement of reasons must be intelligible to the recipient (Re Palmer and Minister for the Capital Territory (1978) 23 ALR 196 at 206 and 209; 1 ALD 183 at 193 and 196) and be of sufficient precision to give him or her a clear understanding of why the decision was made. The court will judge the adequacy of a statement of reasons by reference to the purposes of the obligation to furnish reasons, in particular, that of enabling persons affected to determine whether to challenge the decision and how to do so.

A statement of reasons must contain all three elements set out in sub-section 13(1) : the findings on material questions of fact, a reference to the evidence or other material on which those findings were based, and the reasons for the decision. The Act does not require that the three elements be set out under separate headings although in many cases it may be convenient to do so.

The findings of fact to be set out are on the questions of fact material to the decision. There is no obligation to set out findings on all questions of fact irrespective of their substantiality or materiality. It is therefore not necessary that the statement canvass all of the evidence or other material submitted, or all of the contingencies raised by the person seeking the decision in question. What is required is that the decision-maker sets out such findings of fact as were taken into account in making the decision and were sufficient to resolve the material issues. The decision-maker must make amply clear the factual basis on which he has proceeded; all material findings of fact that he relied on must be set out. If a matter was regarded by the decision-maker as material, and was considered by him, then the findings of fact in relation to it must be set out.

In so far as the statement of reasons does not set out findings of fact on a matter, it is possible that the court may infer that those facts were considered to be immaterial; if the court finds that those facts are material, it may follow that the decision-maker has erred in law : Sullivan v Department of Transport (1978) 20 ALR 323 at 348-9 and 352-3 and Public Service Board of NSW v Osmond (1986) 4 Leg. Rep. 1 at 2, where the High Court said "if the decision-maker does not give any reason for his decision, the court may be able to infer that he had no good reason". See also Ahern v D.F.C. of T. 83 ATC 4698 17 ATR 807 where the Federal Court held that the fact that the taxpayer had lodged an objection, the fact that the objections had not been dealt with and the fact that the taxpayer had not been informed of the basis on which he had been assessed were relevant considerations which the Deputy Commissioner was bound to take into account in deciding whether to grant or refuse an extension of time for payment of tax. It was conceded that he had failed to do this and the decision was set aside for the Deputy Commissioner to reach a fresh decision taking into account all relevant facts.

In Clarke & Kann v D.F.C. of T 83 ATC 4764 15 ATR 42 the court canvassed various considerations which were or were not taken into account in deciding whether compliance with section 264 notices should be insisted upon. Sheppard J. also gave the reminder that it is only the material which was before the decision-maker that is important, not material led in evidence before the court by the applicant (83 ATC at p.4772) (15 ATR at p.51).

Findings on questions of fact may relate to what are sometimes called basic or primary facts (i.e. those established directly by the evidence or other material) or they may relate to what are sometimes called ultimate facts (i.e those derived or inferred from findings on basic or primary facts). Findings on ultimate facts will often be expressed in terms of the language of a statutory standard, for example, that a person would be likely to suffer hardship if such and such an act or thing is done or not done, as the case may be. The findings of primary facts will be based on such material as may be available concerning his income, his savings, his assets, his family size, his outstanding debts and the like. It will ordinarily be necessary to state the material primary facts and the process of derivation or inference from those facts in order to provide adequate information about the way in which the decision was reached.

Findings on facts are distinguishable from subjective judgments or opinions. Where a subjective judgment or opinion is based on facts, it is desirable that those underlying facts should be set out as well as the judgment or opinion formed on the basis of them.

The evidence or other material upon which the findings on material questions of fact are based must be referred to in the statement. As previously stated, the requirement is that they be referred to and not that they be set out in the statement. A reference to the evidence or other material should, however, be sufficiently specific for persons affected to identify that which is referred to, i.e. the detail of the statement should be sufficient to enable the applicant to decide whether there are grounds for challenging the legality of the primary decision (see Elliot v London Borough of Southwark [1976] 2 All E.R. 781 at 791). The evidence or other material may be identified by stating its source or nature, whichever is the more intelligible and informative. In A.R.M. Constructions Pty Limited & Ors v D.C. of T. (86 ATC 4213, 17 ATR 459, Burchett J), it was stated that a purported list of all the documents which were before the decision-maker is not sufficient.

Where the evidence or other material before the decision-maker is conflicting, the reasons for preferring some and rejecting other items should be stated.

Every decision should be capable of a logical explanation. A statement of reasons should contain all the steps of reasoning linking the facts to the ultimate decision which are necessary for a person affected to understand how the decision was reached. It would not be helpful to a person affected to be told simply that the decision in respect of which he sought reasons had been reached, for example, because he was considered to come within the ambit of a particular statutory provision. The actual reasons relied upon at the time the decision was made are to be set out, and not other reasons or facts which may subsequently have come to light or appear to be more desirable (Re Palmer, supra).

The criteria relevant to the decision, the weight to be attached to each criterion, and the conclusion reached on the criteria should be stated. Clarity of explanation may make it desirable in some cases to state separately the conclusion on each criterion. The statement of reasons must not leave the reader to guess or to choose between conflicting inferences. It should not consist of such uncritical generalities or looseness or expression as to make it impossible to determine what lies behind the conclusions.

The reasoning should identify any element of official policy or official guideline (whether written or oral and whether emanating from the Government or internal to the Australian Taxation Office) or official practice which is part of the justification for the decision made. See Ahern (supra) where documents detailing official policy in relation to extensions of time for payment of tax were enclosed as attachments to the statement of reasons. Care must however be taken in attributing weight to criteria found in policies or guidelines and relied upon to justify the decision. A recent Tribunal decision reported as Case U88 87 ATC 505, Tribunal Case 66 18 ATR illustrates the point. The issue in that case was whether the Commissioner's decision to impose section 226 additional tax was the correct and preferable decision in the circumstances. Income Tax Ruling 2012 provided relevant guidelines to taxation officers considering requests for remission of section 226 additional tax but in directing the Commissioner to reduce the additional tax payable the Tribunal, at p.512, emphasised "that if the guidelines are to be applied as signposts rather than fences, the computations inherent in them must be tempered by an exercise of discretion. To insist on a blind application of a culpability factor of 40% is not to exercise the discretion which the Commissioner is bound to exercise under sub-section (3) ... The application of an inflexible formula to those facts without considering other elements, is not a proper exercise of discretion".

Decision-makers frequently act upon recommendations, reports and results of investigations carried out by subordinate officers or appropriately qualified experts. Where these recommendations etc. are considered in making a decision, the statement of reasons should incorporate the recommendation, etc. as well as the facts (and a reference to the evidence or other material on which they are based) and the reasons leading thereto. It is insufficient merely to state that the decision-maker has relied upon the advice of a named person.

Where a decision is made in which the decision-maker must apply his judgment or experience to the facts, or in which the decision-maker must exercise a statutory discretion in relation to the facts, in explaining the process of reasoning leading to the decision it may be sufficient: (a) to state the findings on material questions of fact and any relevant official policy; (b) to state the decision reached; and (c) to explain that the decision was made, having regard to the material findings of fact and/or policy, on the basis of his judgment or experience, or in his discretion, as the case may be.

Where a person who has made a request under section 13 has presented arguments, submissions or evidence to the decision-maker, it is desirable that these should be referred to and the way in which they were dealt with be indicated. For example, in Barina Corporation Ltd. v. D.F.C. of T. 85 ATC 4186 16 ATR 336 the person who requested reasons had applied for the exercise in his favour of a statutory discretion and took advantage of the opportunity of putting before the decision-maker such material as he believed would support his case. In his statement of reasons the Deputy Commissioner stated that he "was not satisfied that the company was unable to pay the tax assessed by 19 April 1984" a finding which the Federal Court held was consistent with an insufficiency of information to find either way. In supporting the Deputy Commissioner's evaluation of the applicant's material Wilcox J. stated that no principle of law requires the decision-maker to give advance notice of a view that the material is insufficiently persuasive to warrant a favourable exercise of discretion.

In Nestle Australia Ltd. v. D.F.C. of T. 86 ATC 4499 17 ATR 747 the Federal Court (Wilcox J.) noted that in a case where the complaint is that a matter considered by the decision-maker was extraneous to the decision or that the decision reflected an error of law it will often be enough for the applicant to point to the statement of section 13 reasons in which the decision-maker has revealed the matters taken into consideration and the process of reasoning involved. However in a case in which the complaint is that the decision-maker failed to take into account a particular matter the section 13 statement will normally reveal that the particular matter was not considered. It will not normally show the existence of facts said to be material or their availability to the decision-maker. These matters must be separately proved and sometimes discovery will be necessary to procure access to documents necessary to be tendered for this purpose.

Errors contained in a section 13 statement may lead to an inference that the decision-maker took irrelevant considerations into account and failed to take into account relevant considerations : Lally v The Minister for Immigration & Ethnic Affairs (unreported, 17 Jan 85, Keely J). As well, the Federal Court can look at the reasons provided by a decision-maker and conclude that he did not give any consideration at all to relevant matters: Tagle v Minister for Immigration & Ethnic Affairs (1983) 48 ALR 379 at 386-7. Also see A.R.M. Constructions Pty Limited v D.C. of T. (supra) where Burchett J. severely criticised a section 13 statement for making no mention of argument put by the applicants that the objections had specially good prospects of success, and, for making no reference, as a matter taken into account, to the likely effects upon the business of the applicants of the almost immediate payments of tax due, or to the claim made on their behalf in respect of that matter. In that case the applications were remitted to the Deputy Commissioner for further consideration according to law.

It is recognised that section 13 of the Act increases the work expected in each office. This occurs in two ways. First, it is most desirable that in respect of all classes of decisions reviewable under the Act (other than those where the operation of section 13 is to be specifically excluded) a sufficient record be made of the decision at the time it is given to enable a statement fulfilling the requirements of section 13 to be given later if requested. Secondly, the actual processing of requests and the writing of the reasons takes time.

It is possible that procedures may be able to be adopted to minimise the additional workload. For instance, it may be appropriate that a pro forma document or rubber stamp, with provision for insertion of the findings on material questions of fact, evidence and the reasons which led to the decision, be filled out at the time the decision is made and entered on the relevant file. Wherever practicable at the time decisions are made it would be advantageous for the decision to be accompanied by a statement setting out findings of fact, a reference to the evidence or other material on which those findings were based and the reasons for the decision. If this is done, paragraph 13(11)(b) of the Act would be satisfied and would obviate the need to furnish later any statement of reasons under sub-section 13(1).

As to further decided cases that bear on the extent of information that will need to be supplied in a statement of reasons some guidance is available from decisions of the Administrative Appeals Tribunal under the comparable provisions (section 28 and 37(1)(a)) in the Administrative Appeals Tribunal Act (the AAT Act) for the supply of reasons for decisions. In Re Palmer and Minister for the Capital Territory (1978) 1 ALD 183 the Tribunal held that the statement of reasons furnished to the applicant in that case was inadequate and that further and better particulars, as detailed in the decision, should be lodged with the Tribunal. The Tribunal in that case made some useful observations on what is required in a statement given under section 28 and 37 of the AAT Act. It emphasised, in particular, that the actual reasons for the decision and the findings on material facts at the time the relevant decision was taken must be set out, that the applicant is entitled to be sufficiently informed of the matters which prompted the decision to determine whether he or she wishes to take the matter further, and that the statement must be intelligible to a layman. In Re Palmer and Minister for the Capital Territory (No. 2) (1979) 2 ALD 209 the Tribunal held that the additional information supplied by the Minister was sufficient to comply with the Tribunal's previous order. The fact that there may have been a better means of providing information to the applicant was regarded as not being to the point.

On the form that a statement of reasons must take, the decision of the Tribunal in Re Harkins and Minister for the Capital Territory (1978) 1 ALD 537 is also relevant. The Tribunal mentioned that a statement of reasons that might be adequate in one case might not be sufficient in another. The Tribunal also made it clear that a reference to documentary evidence on which a decision was based does not lead to an obligation to produce the documents prior to the hearing.

The Tribunal in Re Ajamian and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 366 criticised a statement of reasons furnished under section 37 of the AAT Act because it did not: (a) make clear which facts recited in the statement had been accepted by the Minister and which had not; and (b) did not deal with the specific matters relevant to the decision but contained only a general formulation.

Attached at Appendices C, to H are examples of the form of statements under section 13 which were recommended by National Office.

Broadly, the appropriate response to a request for a statement of reasons may take one of the following forms: (a) Where the decision-maker is of the opinion that the person who made the request was not entitled to make it (e.g. because the decision involved is one that is either totally excluded from the scope of the Act or one that is specifically excluded from the operation of section 13, because the person who made the request was not a person aggrieved by the decision for the purposes of section 5, or because the decision included or was accompanied by a statement of reasons) the decision-maker may, within 28 days after receiving the request: (i) Notify in writing the person who made the request of the decision-maker's opinion that the person was not entitled to make the request. (ii) Apply to the Federal Court under paragraph 13(4A)(a) for an order declaring that the person who made the request was not entitled to make it. (iii) Take both of the courses of action specified in sub-paragraphs (i) and (ii) above. (iv) Take action as in (i) above but give reasons where this would not be inappropriate. It is not envisaged that either of the courses of action in (ii) or (iii) above be taken unless the request for a statement of reasons exhibits features of an unusual, important or exceptional nature. If the court should determine that the person is entitled to a statement of reasons, the decision-maker must prepare the statement and furnish it to that person within 28 days after the decision of the court (sub-section 13(4)). The initial action will be to decide whether the person making the request for reasons is entitled to do so. If it is decided that the person is not so entitled, in the normal course, he should be informed of this opinion. Otherwise the reasons requested should be supplied. Both actions have a time limit of twenty-eight days. It is expected that it will only be in rare cases that you would apply to the Federal Court under sub-section 13(4A) but such an application may be necessary in important cases. (b) Where it is considered that the person who made the request has not applied in time (i.e. within the time limit specified in sub-section 13(5)), issue of a statement of reasons may be refused. It is not obligatory, however, that the decision-maker refuse to furnish a statement. Where such a request is received and it is contemplated that the request be refused you must give to the person who made the request notice in writing within 14 days after receiving the request: (i) stating that the statement will not be furnished to him; and (ii) giving the reason why the statement will not be so furnished e.g. the request was not made within the time required. In any case where the decision was made in National Office the relevant papers should be forwarded to this Office immediately as it will be the responsibility of the decision maker in National Office. (c) Where it is considered that the information to which a request under section 13 relates is information of the kind specified in section 13A - that is, personal or business information which has been supplied in confidence or under a statutory duty, which would reveal a trade secret or which is subject to a secrecy provision in some taxation legislation - the decision-maker is not required to include in a statement of reasons any such information. If the omission of that information would make such a statement of reasons false or misleading, then there is no obligation to furnish that statement. On receiving a request for a statement of reasons which is considered to seek information to which sub-section 13A(1) refers, a decision will need to be made: (i) whether the statement of reasons to be furnished needs to omit the personal or business information to which section 13A applies; or (ii) whether no statement of reasons should be furnished because, with the omission of such information, the statement would be false or misleading. In a case where a statement of reasons is to be furnished which will omit personal or business information to which section 13A refers, the decision-maker, as soon as practicable, and in any event within 28 days, after receiving the request, must give to the person who made the request notice in writing stating that the information is not included and giving the reason for its omission (paragraph (3)(a)). In a case where no statement of reasons is to be furnished the decision-maker, as soon as practicable, and in any event within 28 days, after receiving the request must give to the person who made the request notice in writing stating that the statement of reasons will not be furnished and giving the reason for it not being furnished (paragraph (3)(b)). Note that sub-section (4) provides that nothing in section 13A affects the power of the Court to make an order for the discovery of documents or to require the giving of evidence or the production of documents to the Court. (d) Where it is considered that a statement of reasons in response to a request under section 13 will involve disclosure of information concerning a specified matter that would be contrary to the public interest: (i) an application will need to be made to the Attorney-General under section 14 (the provisions of which are discussed more fully below) for a certificate in terms of that section; (ii) on receipt of a certificate from the Attorney-General: • if the statement of reasons would not be false or misleading if it omitted such information - the decision-maker is not required to include in the statement any such information; • if the statement of reasons would be false or misleading if it omitted such information - the decision-maker is not required to furnish the statement; (iii) the decision-maker must give notice in writing to the person who made the request: • in a case where information is not included in a statement of reasons - stating that the information is not so included and giving the reason for not including the information; • in a case where a statement is not furnished - stating that the statement will not be furnished and giving the reason for not furnishing the statement. On receiving a request for a statement of reasons which is considered to necessitate an application under section 14 for a certificate, a copy of any such request together with a report from the Branch Office should be prepared and forwarded to the appropriate Branch in National Office to enable any such application to be made. It is considered more appropriate for applications to the Attorney-General under section 14 to be made by National Office rather than by the Branch Offices. (e) Where it is considered that the person who made the request was entitled to make it and that a statement of reasons under section 13 should be furnished, the following procedures should be followed to ensure that the statement is furnished as soon as practicable and in any event within 28 days after receiving the request. Immediately after a request under section 13 is received and identified as such and it is accepted that the person who made the request is entitled to a statement of reasons the request should be directed to the person who made the decision. That officer, with the assistance, if necessary, of an Appeals Officer, will then need to prepare a draft statement of the actual reasons he relied upon at the time the decision was made and set out in the statement his findings on material questions of fact referring to the evidence or other material on which those findings were based. The following factors should be taken into consideration when preparing the statement : (i) the decision and any related papers the subject of the request; (ii) any document setting out the terms of the decision furnished to the person who made the request; (iii) whether the officer was properly authorized to make the decision; (iv) whether the decision was based on a report or recommendation of some other subordinate officer; (v) the facts leading up to the decision including any relevant correspondence with the person involved and any discussions or interviews held with him; (vi) any other considerations taken into account by the decision-maker at the time the decision was made; (vii) if there were procedures that were required by law to be observed in connexion with the making of the decision (whether by statute, regulations or otherwise), whether those procedures were observed by the decision-maker; (viii) whether the decision made is still regarded as a lawful decision, and could be successfully defended on the basis of the reasons for decision, etc. at the time the decision was made; (ix) whether on examination it appears to the decision-maker that a different decision would have been preferable, and whether the original decision should be withdrawn and a new decision (based on more adequate or other reasons) made; (x) whether the decision is regarded as lawful and could be successfully defended for reasons other than, or in addition to, those at the time the decision was made; (xi) relevant provisions of the appropriate taxation Act, regulations, etc. and relevant Taxation Rulings, circular memoranda, head office memoranda etc.; (xii) the official policy (if any) in the matter, whether the decision was made in accordance with that policy and, if so, whether and how the merits of the particular case were also taken into account; (xiii) whether there are matters in prior or subsequent years etc. which affect the decision made; and (xiv) whether the decision, if an application for an order of review is made, will affect other taxpayers. If it appears that the reasons which actuated the decision were inadequate or erroneous and render the decision unlawful, the decision should be withdrawn if possible and a new one rendered. Similarly, if it appears that a different decision would be preferable, the decision should be withdrawn if possible and a new one rendered. If the original decision is the preferable one, but further or better reasons appear than those which actuated it, it will be necessary to either: (i) furnish separately from the actual reasons for the decision a statement of these further or better reasons; or (ii) where the reasons are changed to such an extent that it would be better to withdraw the original decision, withdraw the decision, assuming power to do so, and render a new one. If a new decision is to be rendered, it is to be communicated to the person who made the request together with a statement of reasons for the new decision.