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22 Jan 2008
Appeal Status
Not appealed

Orders for discovery

2008 case note - General discovery by each party was ordered but confined to a particular forestry partnership.

TRA decision number 03/08


General discovery by each party was ordered but confined to a particular forestry partnership.


The Commissioner had sought an order for discovery. At the Directions Hearing the taxpayer sought an order that the general discovery sought by the Commissioner should not be made and if one is to be made, then the taxpayer also seeks discovery from the Commissioner.

The substantive proceedings concern an alleged tax avoidance arrangement involving a forestry partnership.

Taxpayer's Submissions:

  • The Commissioner's application for discovery is an interlocutory application and therefore the onus is on the Commissioner to establish that the order is justified. (Regulation 12(5) of the Taxation Review Authorities Regulations 1998 (TRAR)). This has not been established.
  • A discovery order in the context of a dispute which has been fully subject to Part IVA procedures is inconsistent with section 138G (Evidence exclusion rule) of the Tax Administration Act (TAA).

Commissioner's Submissions:

  • The scheme and purpose of the legislation supports the litigant's entitlement to general discovery.
  • Section 138G (Evidence exclusion rule) does not affect the Commissioner's right to general discovery.
  • There is no onus of proof in respect of whether the Commissioner is entitled to general discovery as it is a matter of law.


The TRA agreed with the Commissioner and ordered general discovery by each party but confined it to one partnership as agreed between the parties.

Discovery is essential to ensuring that the necessary evidence is before the Authority. If any tax legislation sought to remove a litigant's right to discovery this intention would have been expressed clearly and not left to inference.

It is inconsistent with the encouragement of openness in the TAA not to order discovery. This is particularly so as the Commissioner is entitled to establish what documents are in the possession of the taxpayer and whether the taxpayer was forthcoming and open during the disputes process.

To understand the impact of the evidence exclusion rule on discovery a distinction needs to be drawn between particular discovery and general discovery. Particular discovery allows a party to obtain a court order for discovery of specified documents or a class of documents. The evidence exclusion rule needs to be taken into account when making such an order. With regard to general discovery the evidence exclusion rule is not a bar to obtaining this. No court order is required for general discovery and no requirement that discovery must be necessary prior to a party having discovery obligations.

Under the District Court Rules 1991, the defendant has the right to require general discovery. The requirement of necessity, which applies to particular discovery does not apply to general discovery unless an order is sought under R 319. The evidence exclusion rule is therefore not applicable to routine general discovery under the Rules.

His Honour stated that for the evidence exclusion rule to operate in the manner envisaged in the TAA general discovery is required. This is because, as it is not possible for the party receiving general discovery to know what documents are going to be discovered, in the ordinary course the application of the evidence exclusion rule cannot be ascertained. General discovery is therefore necessary before the application of s138G can even be determined. General discovery is entirely consistent with full disclosure as it enables an assessment of whether there has been such full disclosure.

General discovery being allowed is consistent with the purpose of a Commission of Inquiry, being to establish the correct position from the available evidence.

General discovery is essential to achieve the purpose of the TRA, being to determine challenges in accordance with the law and taking into account all available and admissible evidence.

There is nothing in TRA regulations or in any other statutory provision which makes general discovery before the TRA an interlocutory application.

Taxation Administration Act, 1994; District Court Rules; Taxation Review Authorities Regulations 1998; Taxation Review Authorities Act 1994