This chapter sets out the facts of the collapse of the Bell Group of
Companies (Bell Group) and subsequent litigation concerning the tax debt owed
to the Commonwealth, considering the key issues relevant to the inquiry. This
will include a discussion of the Western Australian Government's involvement in
the matter through the enactment of the Bell Group Companies (Finalisation
of Matters and Distribution of Proceeds) Act 2015 (WA) (Bell Act), and the
actions of Western Australian and Commonwealth ministers and relevant
departments and agencies of both governments, in particular, the actions of the
On 6 May 2015, the Western Australian Treasurer, The Hon Dr Mike
Nahan MLC, introduced the Bell Act into the Western Australian Parliament, with
a view to concluding the Bell Group litigation process. In his second reading
speech, he outlined the purpose and aim of the bill:
threatens to consume more time and resources of this State, judicial and
otherwise, with no prospect of resolution in the short term.
This Government is
not prepared to allow the continuation of a third or possibly fourth, decade of
expensive Bell litigation consuming the judicial and government resources of
Government has introduced the Bell Group Companies (Finalisation of Matters and
Distribution of Proceeds) Bill 2015. This Bill ensures a fair and expeditious end
to the Bell litigation, providing for an equitable distribution of funds held
by the liquidator...
This Bill provides a
framework for the dissolution of those Bell Group companies registered in
Western Australia, and the administration and distribution of the Bell
litigation proceeds to avoid the perpetual litigation that appears to be
inevitable on any issue associated with these companies.
The Bell Act was passed by the Parliament of Western Australia on
26 November 2015.
The legislation prioritised the Western Australian Government's claims for Bell
Group liquidation funds before the claims of other creditors, including the tax
debts to the ATO.
The Bell Act establishes the Western Australia Bell Companies
Administrator Authority under sections 5F and 5G of the Corporations
Act 2001 (Cth) (Corporations Act) to manage the winding-up process of the Bell
Group. It also establishes the Western Australia Bell Companies
Administrator Authority Fund to expedite the winding-up process,
maximise funds available to creditors, and prioritise creditors based in
Following its enactment on 26 November 2015, proceedings challenging the
constitutional basis of the Bell Act were immediately brought by non-government
creditors, including W.A. Glendinning & Associates Pty Ltd, in the High
Court of Australia (High Court). The proceedings were brought on the basis that
the Bell Act was inconsistent with the Income Tax Assessment Act 1997
(Cth) (Income Tax Assessment Act) and the Taxation Administration Act 1953
(Cth) (Taxation Administration Act), under section 109 of the Commonwealth
of Australia Constitution Act 1901 (the Constitution), in addition to the
reliance by the Bell Act on sections 5F and 5G of the Corporations Act.
On 8 March 2016, the Australian Taxation Office (ATO) intervened in the
case. The ATO was represented by the Solicitor-General of the Commonwealth,
instructed by the Australian Government Solicitor. As the proceedings raised a constitutional
issue, a notice under section 78B of the Judiciary Act 1903 (Cth) was
issued to the Commonwealth and the states and territories, offering the
opportunity for the Commonwealth to intervene in the proceedings. Whilst the
ATO is the relevant Commonwealth agency in the context of the Bell Act
litigation, the Commonwealth also had an option to intervene in the proceedings
in addition to the ATO.
On 30 March 2016 the Attorney-General intervened in the case on behalf of
On 16 May 2016, the High Court upheld the constitutional challenge to
the validity of the Bell Act on the basis that there was an inconsistency
between the Bell Act and the Income Tax Assessment Act and the Taxation
Administration Act. This decision struck down the Bell Act under section 109 of
the Constitution, without giving consideration to the argument presented by the
Commonwealth in relation to sections 5F and 5G of the Corporations Act.
The High Court judgement includes a quote from the Commissioner of Taxation who
stated that the drafter of the Bell Act proceeded 'blithely in disregard' of
the Commonwealth tax legislation:
The Commissioner concludes his written submissions with the
observation that the basic problem here is that the drafter of the Bell Act
either has forgotten the existence of the Tax Acts or has decided to proceed
blithely in disregard of their existence. That, indeed, is the basic problem.
The committee was told by the AGD that, in their view, whether or not the
Commonwealth separately intervened in the proceedings was not significant, as
the same arguments would be presented in the High Court by the ATO:
At the heart of what the commissioner wished to argue there
was a constitutional argument that was going to be run by the Solicitor-General
about the validity under section 109 of the Constitution of the WA Bell
litigation...The Commonwealth arguments about the revenue law and the invalidity
of the WA litigation would be made by the commissioner even if the Attorney did
Consultation between the Attorney-General and Solicitor-General
According to his statement to the Senate, the Attorney-General, Senator
the Hon George Brandis QC, was initially of the view that once the ATO had
decided to intervene and be represented by the Solicitor-General in the High
Court on 8 March 2016, the Commonwealth's interests were sufficiently
...the Commonwealth, through the ATO, was before the court and
the Commonwealth's interests were represented by the ATO, on whose behalf the
then Solicitor-General, Mr Gleeson, appeared. Mr Gleeson's client was the ATO.
His instructions were given by the Australian Government Solicitor on its
behalf. My view, at that time, was that this was a matter between the Western
Australian government and the ATO.
The Attorney-General has indicated that the Solicitor-General was
'strongly of the view' that the Commonwealth should intervene in the High
Court, in addition to the ATO.
The Attorney-General subsequently accepted the approach recommended by the
After I indicated that I did not intend to intervene in the
proceedings on behalf of the Commonwealth, I was contacted by the
Solicitor-General, Mr Gleeson. He gave me certain advice. I do not, by what I
am about to say, waive the Commonwealth's privilege in that advice. It is
sufficient to say that Mr Gleeson was strongly of the view that the Commonwealth
should intervene...Although, as I have said, my view of the litigation is that it
primarily involved section 109 issues concerning the Income Tax Assessment Act
and the Taxation Administration Act and was likely to be disposed of on that
basis, I saw the force of what Mr Gleeson put to me and I accepted his advice.
After the Commonwealth gave notice that it would also intervene in the High
Court on 30 March 2016, Western Australian ministers sought a regulation by the
Commonwealth under section 5I of the Corporations Act to facilitate the
continued operation of the Bell Act. In a letter to the Western Australian Attorney-General
dated 4 April 2016, the Attorney-General and the then Assistant Treasurer the
Hon Ms Kelly O'Dwyer MP cite the Solicitor-General's advice in forming their
view that such an arrangement would be inappropriate. They also indicated their
intention to continue with the Commonwealth's intervention in the High Court.
The Attorney-General stated in the Senate that following the hearing in
the High Court, he met with Dr Nahan and the Hon Mr Michael Mischin MLC,
Attorney-General of Western Australia, '...who expressed in strong terms their
disappointment that I had given instructions for the Commonwealth to intervene
and that the ATO had intervened'.
An issue relevant to the terms of reference was whether the
Attorney-General instructed the Solicitor-General not to challenge the Bell Act
in the High Court. A senior officer of the Attorney General's Department (AGD)
stated that he was present at a meeting attended by the Attorney-General and
the Solicitor-General. When asked whether '...the
Attorney-General told the Solicitor-General to run dead or not proceed to the
High Court' he responded: 'There was no discussion in those terms'.
He further stated that:
...there was a discussion around the fact that the
Solicitor-General had put some views to the Attorney...and there was a brief
discussion around the case and the reasons for intervention. I think the
Attorney said words to the effect of he would look into it further.
The issue of whether the AGD had drafted a direction to prevent
the ATO from intervening in the case was discussed at the first public hearing
of the inquiry. AGD was asked:
'Was your Department
ever asked to draft a formal direction that the ATO should not intervene?' They
replied: 'Not by the Attorney'
and took the question on notice when asked if this was ever requested by the
At the time of reporting, an answer to the question on notice had not been
provided to the committee.
In a public hearing, the AGD was also asked about the proximity of
discussions about the Bell matter between the Attorney-General and the
Solicitor-General, and an amendment to the Legal Services Directions initiated
by the Attorney in May 2016. The Secretary of the AGD provided his view that
the two incidents were not related.
The Secretary of the AGD was also asked whether he witnessed the
Attorney-General instructing or requesting the Solicitor-General not to run a
particular argument in the High Court in relation to the Bell litigation. He
replied: 'No. I have not
been involved in any sorts of meetings where that sort of situation could have
During the third public hearing, Senator Watt asked the
Attorney-General: '...did your office ask your department to prepare a direction
to stop the ATO from intervening in this litigation?'.
The Attorney-General also declined to answer this question:
That is the question which [the Department] objected to
answering on public interest immunity grounds, and for reasons that have already
been discussed, that is the position that I will maintain.
Documents obtained by a freedom of information request suggest such a
direction did exist. An email exchange about the Bell matter between senior
members of the ATO refers to an attachment entitled 'Possible Attorney-General's
direction under the Judiciary Act'.
This would appear to contradict previous testimony given by the ATO that they
were not aware of any direction proposed by the Attorney-General, and requires
Dealings of the Commonwealth and Western Australian Governments
A key question for this inquiry is whether there was a deal between the
Western Australian and Commonwealth governments about the distribution of tax
revenue expected to result from the Bell Group insolvency process.
In the lead-up to the introduction of the Bell Act into the Western
Australian Parliament, the WA Treasurer at the time, Dr Nahan, had discussions
with his then Commonwealth counterpart the Hon Mr Joe Hockey MP, before writing
to him formally on 13 April 2015. Dr Nahan informed Mr Hockey that the Western
Australian Government planned to introduce legislation to conclude the Bell
Group liquidation. In this correspondence, he clearly indicated that this
legislation would use the power of the State to 'displace certain provisions of
the [Commonwealth] Corporations Act'.
Dr Nahan concluded by stating that:
I trust that our
discussion and this letter have conveyed to you the narrow and unique
circumstances driving the Western Australian Government to introduce the
planned legislation. I also trust that you would therefore see no need for the
Commonwealth to contest the legislation we plan to introduce into the Western
On 29 April 2015, Mr Hockey replied to Dr Nahan, acknowledging that the
proposed state legislation could displace Commonwealth legislation:
law, including the Corporations Act 2001, is dependent on a referral of power
from each of the States in the federation. As you note in your letter, that
legislation provides a mechanism for the States to retain their rights to make
laws in relation to corporate law matters, even where those laws conflict with
the Corporations Act.
Australian Government is choosing to exercise its right to displace the
Corporations Act in this instance given the unprecedented circumstances of the
long running Bell Group liquidation. I note this should not be seen as a
precedent for future actions which may undermine the national corporations
However, Mr Hockey also stated that he supported 'fair outcomes' for
creditors and his view that there should be 'good faith' engagement in relation
to the distribution:
I acknowledge the
desire of the Western Australian Government to see an efficient and timely
conclusion to the Bell Group insolvency process. It is important that the
ensuing process result in, to as great an extent as possible, fair outcomes for
creditors consistent with their legal positions before the legislation takes
I understand that the
proposed legislation will require any future determination in relation to
creditor distribution to have due regard to the agreements between creditors on
distribution issues. I consider that an outcome that mirrors as closes as
possible a commercially acceptable agreement, as would have been determined by
the parties themselves, is the optimal outcome to be sought. I trust that the
Western Australian Government will therefore continue to engage in good faith
in the forthcoming mediation processes.
It is unclear what verbal discussions took place between Mr Hockey and
Dr Nahan. However, on 25 November 2015, Dr Nahan told the Western
Australian Parliament that he did not expect that the ATO would initiate a
constitutional challenge to the Bell Act in the High Court:
I do not think there
is any indication from the Australian Taxation Office that it plans to do so.
Its focus so far has been to get what it perceives as its fair share ... The ATO
has not said anything about a constitutional challenge...
Prior to 2 March 2016, the Hon Christian Porter MP, currently Minister
for Social Services, and former Treasurer and Attorney-General in the Western
Australian Government also became involved in the matter. Senator Brandis
advised the Senate that Mr Porter received an email from the Western Australian
State Solicitor that contained a summary briefing and slides on the historical
background to the matter, as well as copies of the correspondence between Dr
Nahan and Mr Hockey.
The Attorney-General stated that he became involved on 3 March 2016 when he
discussed the matter with Mr Porter, who informed him about the email he
received from the Western Australian State Solicitor. The Attorney-General advised
the Senate that he considers that was when his personal involvement in the
matter first occurred, although his '... office had been dealing with the matter
prior to that time'.
The former Western Australian Attorney-General, the Hon Mr Michael
Mischin MP, has stated that he spoke to the Commonwealth Attorney-General in
early February 2016, apparently contradicting the Attorney-General's position
a Senate Estimates hearing of the Legal and Constitutional Affairs Legislation
Committee on 28 February 2017, the Attorney-General addressed the issue:
At the time I made my 28 November statement, I had no
recollection of the exchange to which Mr Mischin refers. I still have no
recollection of it. Were I to say that I recall such an exchange, I would be
misleading the Senate, because I do not. ... That said, I do not dispute what Mr
Mischin says. I am not in a position to do so, because I do not recall the
exchange. I do not say that it did not happen. I merely say that I do not
recall it. Of course I do speak to Mr Mischin from time to time. Early last
year, I had a telephone conversation with him, at his request, for the purpose
of discussing the appointment of a judge to the Family Court of Western
Australia. It may be, though this is only conjecture on my part, that Mr Mischin
said something to me about Bell at the end of that conversation—though, as I
say, if he did, I do not recall it. In any event, I do not consider Mr
Mischin's statement to be a contradiction of what I told the Senate about the
time at which my personal involvement in the matter began—that is, as and from
my meeting with Mr Christian Porter on 3 March.
With regard to the Attorney-General's statement to the Senate on
28 November 2016, he claimed that stating 'I recall' once at the beginning
of the statement, he qualifies anything he later says.
Further, the Attorney-General has repeatedly told the Senate that 3 March 2016
was the first time he became involved in the Bell matter.
This is arguably a semantic assertion and reminiscent of the manner in which he
approached the committee's 2016 inquiry into his amendment of the legal services
direction where he argued that on his definition he had 'consulted' with the
Solicitor-General, a statement that was accurate according to his particular
definition of 'consultation'.
According to the Attorney-General:
The statement I gave to the Senate was chronological, so of
course if the first involvement in the matter I recall was on 3 March then
obviously everything subsequent to that is qualified by the words 'I recall'. I
have no recollection—.
The Hon Ms Kelly O'Dwyer MP, who became the Minister for Small Business
and Assistant Treasurer with responsibility for the Australian Taxation Office
on 21 September 2015, was also involved in the matter. The Attorney-General has
strongly refuted the suggestion that he (or Ms O'Dwyer) had any knowledge of a
verbal agreement between the Western Australian and Commonwealth Treasurers:
There has been much mention of an asserted agreement between
the Commonwealth and the Western Australian Government. If Western Australian
ministers considered their dealings with Mr Hockey to constitute some form of
agreement, I can only observe that the only written record of those
dealings—the exchange of letters between Dr Nahan and Mr Hockey of April
2015—does not, in my view, constitute or evidence such an agreement. In any
event, whatever may have been discussed between Mr Hockey and Dr Nahan, neither
I nor Ms O'Dwyer was aware of it at the time; we first became aware of the
position asserted by Western Australian ministers after speaking to them on 4
March 2016. Nothing in any of my discussions with Mr Mischin constituted an
agreement, as Mr Mischin himself has said.
Senator Brandis has further stated that '...I have no knowledge of what
passed between Mr Hockey and Dr Nahan other than what is revealed by the April
2015 exchange of letters, which lends no credence to that view'.
In response to any suggestion that he participated in a deal that preferenced
the Western Australian Government over the Commonwealth Government in the
distribution of tax revenue from the insolvency process, the Attorney-General
...every decision I made in this matter did protect the
interests of the Commonwealth: by supporting the decision of the ATO to
intervene in the matter and by deciding to accept Mr Gleeson's advice that the
Commonwealth of Australia should also intervene in the matter.
The Attorney-General stated that he spoke to Ms O'Dwyer and a senior ATO
officer, Mr Andrew Mills, between 5 and 7 March 2016 '...to settle the
Commonwealth's position in relation to the High Court proceedings...in particular
in light of the views that had been expressed to us by the Western Australian
Further, he stated that:
...after my discussions with Ms O'Dwyer and Mr Mills, I arrived
at the firm conclusion that it was desirable that the ATO should intervene to
protect the interests of the Commonwealth, notwithstanding the views that had
been expressed by Mr Mischin and Dr Nahan regarding Dr Nahan's discussions with
Mr Hockey and the related exchange of correspondence. I was also of the view,
at that stage, that it was not necessary for the Commonwealth to intervene in
addition to the ATO. Accordingly, the ATO intervened in the Bell litigation on
8 March, which was the final date for the ATO to lodge with the High Court its
application for leave.
A key question for this inquiry is whether there was a deal between the
Western Australian and Commonwealth governments about the distribution of tax
revenue from the Bell Group insolvency process. The letters described above
appear to indicate that a deal may been struck. Dr Nahan's statements in the
Western Australian Parliament that he did not expect that the ATO would initiate
a constitutional challenge to the Bell Act in the High Court are significant,
particularly given that if a deal was made, hundreds of millions of dollars in
taxation revenue would have been jeopardised. 
The Attorney-General asserted that while he has seen no evidence that a
deal was made, he did consider possible options in case evidence of such a
deal came to hand:
I would have discussed with my office what the consequences
would be if it looked as if, as a result of Mr Hockey's discussions with Dr
Nahan, somehow the Commonwealth had given an undertaking not to oppose the Bell
Act, which is what Dr Nahan and Mr Mischin were saying effectively, and we did
discuss what the consequences might be and what should happen then. But this is
all hypothetical because, having in particular seen Mr Hockey's letter of 29
April 2015, and without for a moment reflecting on the genuineness of what Mr [Mischin]
and Dr Nahan believed, it was perfectly clear to me that Mr Hockey had not tied
the Commonwealth's hands in any way, and therefore it was perfectly
appropriate—and, indeed, more than appropriate, it was the desirable course—for
the Commonwealth's participation, or at least the ATO's participation, in the
litigation to proceed.
It is unclear whether the Attorney-General or staff in his office asked
for a direction to be prepared to prevent the ATO intervening. If a direction
was prepared and the Attorney-General did consider preventing the ATO from
intervening, this would indicate that he considered an option that would have
exposed the Commonwealth to foregoing hundreds of millions of dollars in
Involvement of Commonwealth departments
The committee has considered the involvement of Commonwealth departments
and agencies in relation to the Bell Group litigation. The committee has found
that while the Treasury had a limited role, the AGD and ATO had a greater role
in the matter.
According to information provided by the Treasury at the first public hearing
of the inquiry, this agency had minimal involvement in the matter. In April
2015, Treasury were given a
copy of the correspondence from the Western Australia Treasurer to the
Commonwealth Treasurer, and
provided advice to the then Commonwealth Treasurer's Office. However, Treasury was not
involved in negotiations or legal decision-making. Treasury advised the
committee that: 'In terms of the process of deciding on the intervention, we
were not directly involved except as observers'.
Treasury did however
provide some advice with respect to briefings and an exchange of letters that
took place. In relation to the letter written by Mr Hockey to Dr Nahan on 29
April 2015, Treasury provided advice on the Treasurer's response: 'The
response from the Treasurer [the letter dated 29 April 2015] is on the public
record and...that response was consistent with what Treasury recommended'.
At the first public hearing of the inquiry, the ATO provided an outline
of the their approach to debt recovery in relation to the Bell Group
The object of any
action we take in relation to a liquidation, and the related litigation or
possible settlement, is to protect the Commonwealth's interests and secure
appropriate payment of taxes due. The decision made and actions taken by the
ATO in relation to the Bell Group are entirely consistent with our approach to
insolvencies, of which there were 12,000 or so in which we were a creditor last
financial year, and the almost 7,000 court actions relating to debt matters in
which we were involved last financial year. I will note that it is unusual,
although not unheard of, to have constitutional challenges in taxation matters.
The ATO advised the committee that their primary concern was that the
Bell Act may reduce the funds available for the Commonwealth and set a
precedent for future cases:
The ATO was concerned
about the potential adverse effect on the Commonwealth revenue of the WA Bell
act, including the precedential nature of such an act. This was brought to a
head when the Bell act was passed and other creditors commenced proceedings in
the High Court. Our decision to intervene was a normal and proper exercise of
the commissioner's statutory powers to legally pursue tax debts. Joining the proceedings
raised the questions of law concerning fundamental collection, recovery
provisions and priority applying to tax debts. We obtained independent legal
advice about the commissioner seeking the High Court's leave to intervene.
The ATO clarified the tax debt of the Bell Group, advising the committee
that they believe the Commonwealth is owed
...in excess of $460 million. In addition, recognising that
some of the debts arose in the late eighties and early nineties, there is well
in excess of $1 billion in accrued general interest charge on top of that...I
think it would be in the order of $1.8 billion.
The ATO told the committee that their approach in this case was
consistent with normal procedures, in terms of their processes and liaison with
ministers and other agencies:
Our decision to
intervene was a normal and proper exercise of the commissioner's statutory
powers to legally pursue tax debts. Joining the proceedings raised the
questions of law concerning fundamental collection, recovery provisions and
priority applying to tax debts. We obtained independent legal advice about the
commissioner seeking the High Court's leave to intervene. 
The nature of the
exchanges with ministers and their offices was to provide high-level
explanations to them of our intentions and our decisions. This was done in the
normal course of our duties, as we do with all high profile and significant
The ATO briefed the relevant ministers of their approach to the Bell
I would like to note that we provided advice to a handful of
ministers over the period from May 2015 to March 2016. I emphasise that
point—that this was advice. We were advising ministers of our decisions. We
were not, and did not, seek permission or approval from the minister for our
decision or action. The ATO have upheld our position as an independent
administrator and independence in our decisions throughout the course of this
matter. Neither the commissioner nor I, or any other decision-maker in the ATO,
were lent on by a minister or their office or directed to do anything other
than what we did. The nature of the exchanges with ministers and their offices
was to provide high-level explanations to them of our intentions and our
decisions. This was done in the normal course of our duties, as we do with all
high profile and significant cases.
On 5 June 2015, the ATO provided written advice to the Assistant
Treasurer's Chief of Staff regarding the legal advice they had received:
The ATO has obtained preliminary advice from the Deputy
General Counsel in AGS concerning the proposed Western Australian legislation
Bell Group Companies (Finalisation of Matters and Distribution of Proceeds)
Bill. That advice concentrated on whether the WA Parliament had the power to
make such legislation and the possible effects of the legislation upon the
Commonwealth’s ability to collect certain tax debts. The advice concluded that...there
is a potential inconsistency between the Bill and the Taxation Administration
Act as the Bill appears to 'impair or detract from the operation of those
Commonwealth statutory provisions which facilitate recovery of assessed
liabilities'. AGS has indicated that this is a preliminary view that requires
detailed analysis before determining if s109 of the Australian Constitution is
The ATO told the committee that they had previously received an informal
offer of tax revenue from the Bell Group matter from the Insurance Commission
of Western Australia (ICWA), but had no communication from the Western
Australian Treasurer. ATO were concerned that the amount offered by ICWA would
not be guaranteed:
The Western Australian Treasurer did not speak to the
commissioner or me at any time. We did receive an offer from the Insurance
Commission of Western Australia, in a discussion that included the Western
Australian state solicitor, and the number being offered to us was in the order
of $402 million.
There was a refusal to put the offer in writing or give us
any guarantee, in relation to that. It was a complete 'trust me'. It was
dependent, completely, on whether or not the other creditors would come to the
table, in relation to their amounts. Obviously, had the other creditors refused
to accept the kind of number that may have been in the head of the Insurance
Commission of Western Australia and wanted more, that would have impacted on
how much we were chasing. Without a guarantee we had clear indications from the
other creditors, or at least one of the other creditors, that they intended to
challenge the Bell act if it passed, so any agreement would have been,
As discussed earlier in this chapter, the Attorney-General called
senior ATO officer Mr Andrew Mills, on 7 March 2016 to discuss the Bell Group
matter. Mr Mills clarified that the call was to understand what the ATO was
doing in relation to the Bell litigation:
It was a discussion where I outlined what we were doing,
where we were at in the process and what our proposal was...he indicated to me
that he had not made a decision at that time as to whether or not the
Commonwealth should intervene more generally. That was the essence of the
Mr Mills noted that it was 'unusual' for him to receive a call from a
minister about the approach the ATO would adopt in a particular matter.
The AGD first became aware of the Bell Act in April 2015, when it was
consulted about the by Treasury. The AGD informed the committee that it
initially believed the matter was more relevant to Treasury than the AGD:
At that point
[Treasury] asked us whether it was a matter that we had a particular interest
in, and, given it involves the corporations law, which is administered by the
Treasurer and the Treasury, we thought at that point it was a matter primarily
The Secretary of the AGD suggested that the AGD's involvement in the
matter commenced on 27 November 2015, when '...the first challenge to the WA
Bell Act was commenced in the High Court'.
The AGD provided its first written briefing to the Attorney-General on
28 January 2016, but acknowledged that verbal discussions with the
Attorney-General's office occurred prior to that time:
My understanding is
that we briefed the Attorney in January 2016, which was in relation to the
litigation, once the litigation had actually commenced and 78B notices had been
issued. There was some engagement with the Attorney-General's office prior to
that, but I believe that the only time we formally briefed the Attorney was in
The AGD told the committee that they have no knowledge of a deal
between the Commonwealth and the Western Australia Government regarding the distribution
of the tax revenue that would flow from the Bell Group liquidation:
We do not have any
knowledge of any such deal, and perhaps the explanation is that there was no
such deal. That is what the Attorney has also said: he is not aware of any such
arrangements. He made that point in his statement to the Senate.
The committee asked AGD whether they had provided advice to the
Attorney-General regarding the High Court proceedings. AGD declined to answer
this question and referred to the Attorney-General's statements to the Senate
on the matter:
Attorney-General indicated in his statement to the Senate, he formed a view
initially that it was a matter that the ATO could intervene in, and he
subsequently changed that position after engaging with the Solicitor-General.
But the intention was always, as I understand it, that the Solicitor-General
would appear in the High Court on behalf of a Commonwealth party intervening.
Senior officers of the Australian Government Solicitor (AGS) also
declined to discuss legal advice they provided to the Attorney-General and the AGD,
but did comment on whether there was any conflict of interest that arose by having
both the Commonwealth and the ATO as clients. AGS advised the committee that
'...it did not at any point have a legal conflict of duty in relation to its role
as legal adviser to, and legal representative of, the Commissioner of Taxation
and the Attorney-General in relation to the Bell Group litigation'.
It is notable that the ATO states that it first contacted AGS and began
requesting legal advice in relation to the Bell matter in May 2015.
This is immediately after the Bell Act was introduced in the Western Australian
Parliament, which indicates that the significance of the case was known in one
of the Attorney-General's portfolio agencies almost a year prior to the time
that the Attorney-General considers that he became 'seized' of the matter, in
An issue confronted by the committee during its inquiry was the large
number of questions taken on notice by the Attorney-General and the AGD, and the
fact that some of these questions have not been answered. The AGD deferred
answering a number of questions and referred them to the Attorney-General. The
committee understands that the Attorney-General is considering making a claim
of public interest immunity in relation to some of the questions asked.
The third public hearing held on 8 March 2017 focused on the public
interest immunity claims over legal advice. The committee made it clear that
the fact that something is legal advice is not an accepted ground for a public
interest immunity claim.
However, the Attorney-General did not accept the assertion, maintaining that it
is a consistent position of the Commonwealth not to disclose legal advice.
I have told you what the position of the executive government
of the Commonwealth of Australia is and has always been by reference to, among
others, two attorneys-general and one shadow Attorney-General—two of whom were
from your side of politics. This is not controversial. It may be that maybe the
Senate does not accept that rule, but it is not controversial that the
executive government of the Commonwealth of Australia has always taken this
The Attorney-General considered that he was:
...merely being obedient to the practice of successive
Australian governments. Were I not to be obedient to the practice of successive
Australian governments, I think I would be rightly criticised for prejudicing
the legal position of the Commonwealth.
The Attorney-General was asked what the nature of the public interest
immunity claims were, and it was emphasised to him that: 'To make a public
interest immunity claim, the harm to the public interest must be specified...'.
According to the Attorney-General:
The public interest immunity claim speaks for itself, and I
do not want to expand upon it, but self-evidently the harm to the public is the
publication of legal advice to the Commonwealth which is confidential.
A significant number of questions on notice were taken by the AGD and
the Attorney-General over the course of the inquiry, and a significant
proportion of these were not answered. Appendix 1 sets out the questions taken
on notice that remain unanswered at the time of tabling this report. An example
of an answer that was provided is as follows:
The question goes to the content of legal advice. It is the
long standing practice of successive Australian governments that it is against
the public interest to disclose confidential legal advice.
The committee considers this to be unsatisfactory and emphasises that this
response does not include or constitute a formal claim of public interest
immunity, as outlined in advice provided by the Clerk of the Senate:
The underlying principle is that the Senate has an
overarching right to obtain information, a right supported by the inquiry
powers it possesses under section 49 of the Constitution... any refusal to
provide a committee with information must be made by a minister and must
include a statement by the minister that it would not be in the public interest
to disclose the requested information. The minister is required to provide to
the committee a statement of the ground for that conclusion, specifying the
harm to the public interest that could result from the disclosure.
The fact that certain information is provided to the Government as legal
advice is not sufficient to satisfy a claim of public interest immunity. In
relation to claims of legal professional privilege, the fourteenth edition of Odgers'
Australian Senate Practice states that:
It has never been accepted in the Senate, nor in any
comparable representative assembly, that legal professional privilege provides
grounds for a refusal of information in a parliamentary forum...It must be
established that there is some particular harm to be apprehended by the
disclosure of the information, such as prejudice to pending legal proceedings or
to the Commonwealth’s position in those proceedings. 
The committee considers that there are an unusually high number of
questions that have been taken on notice by witnesses to this inquiry and which
remain outstanding, particularly in relation to whether legal advice was sought
and obtained on a particular issue, who provided the advice, and when it was
provided. The committee has provided a copy of the Clerk's advice to the AGD to
assist with the preparation of answers to outstanding questions on notice.
According to advice received by the committee, the existence of legal
...may lend weight to a public interest immunity claim, but any
such claim must nonetheless be raised on an accepted ground and accompanied by
a statement of the harm to be apprehended from the disclosure of the
Order 10 (c) (5) of the procedural orders and resolutions of the Senate
of continuing effect provide that if a committee concludes that a response does
not sufficiently justify the withholding of the information or document from
the committee, the committee shall report the matter to the Senate. On this
basis, the committee is reporting to the Senate the failure of the
Attorney-General to appropriately respond to the committee's questions.
Finally, the committee notes that it has become aware of further
documents which may shed light on the Commonwealth's actions in the Bell
These documents are referred to in documents that have been obtained through
freedom of information requests. The documents referred to include:
correspondence between the Attorney-General and Ms O'Dwyer in
March and April 2016;
a letter from the former Solicitor-General, Mr Justin Gleeson SC,
to the Attorney-General regarding the High Court proceedings in the Bell
matter, dated 15 March 2016;
an email chain between the offices of the Solicitor-General and Attorney-General
entitled 'Bell - Commissioner of Taxation request for advice from the
Solicitor-General - referral to Counsel Assisting the Solicitor-General'
dated 6 March and 7 March 2016;
a submission from the AGD to the Attorney-General's office on the
question of intervention in the Bell High Court case, dated 28 January 2016;
a document entitled 'FW: Possible Attorney-General's direction
under the Judiciary Act'
(which is earlier correspondence), attached to an email between officers of the
ATO, dated 29 November 2016.
Committee views and recommendations
In the course of this inquiry, the committee has gained a more detailed
understanding of the dealings of the Commonwealth and Western Australian
governments in relation to the liquidation of the Bell Group. The information that has been withheld from
the committee is crucial to determining the involvement of various agencies and
ministers in the Bell matter. The committee does not accept the Attorney-General's
claim that legal professional privilege is valid for the purposes of
withholding information from the committee. While the AGD has intimated a claim
of public interest immunity may exist, no such claim has formally been made. The
Attorney-General has an obligation to both the committee and the Senate to
clearly answer questions or make a public interest immunity claim on grounds
acceptable to the Senate. The committee’s deliberations should not be
prejudiced by the Attorney-General's failure to answer questions or make a
public interest immunity claim.
Based on the evidence that has been provided by the ATO, it is clear
that the Commonwealth is entitled to significant funds from the liquidation—in
the order of at least several hundred million dollars. It is important that the
Commonwealth recover the funds to which it is legally entitled so that these
funds can be reinvested in the Australian community. The High Court established
that there was no legal basis for the Bell Act to prioritise the Western
Australian Government or other creditors over the ATO. This is particularly
important in the current economic climate.
The committee has taken seriously its responsibility to report to the
Senate on the terms of reference for this inquiry by the date agreed by the
Senate. However, the committee has been frustrated by a failure of the Government
to answer many questions regarding the potential existence of a deal between
the Commonwealth and Western Australian governments, to the effect that the
Commonwealth would not challenge the Bell Act and that the Western Australian
Government would be prioritised in receiving Bell Group liquidation funds. This
includes both a failure of departmental officials involved in the matter and
the Attorney-General to respond to the committee's questions in a timely manner.
This represents a significant failure of ministerial accountability. Despite
this, the statements and actions of the Western Australian Government at the
time indicate that such a deal did in fact exist.
2.66 That the Senate reaffirm its commitment to the principles of
ministerial responsibility and accountability regarding the answering of questions
and provision information to the Senate and it's committees in accordance with
the standing orders and other orders of continuing effect, and notes that all
senators, including ministers, are responsible and accountable to the Senate.
2.67 That the committee asks the Senate to insist that the Attorney-General
respond to the committee's questions, noting the failure of the
Attorney-General and officers of the Attorney-General's Department to provide
responses to many of the questions that would enable clear facts to be
established regarding the Commonwealth's actions relevant to this inquiry.
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