Our leaders falling far short of Justice Logan’s ‘model requirements’

The Australian, November 8, 2017

Suddenly and simultaneously, ethics has become a major issue for corporations, politicians and the public service.

Around the country, ordinary people are getting fed up with large corporations who are playing the tax haven game and politicians who don’t study the parliamentary requirements before standing for election. And among the legal fraternity, the Federal Court’s Justice Logan has triggered a long overdue debate about what it means to be a model litigant.

The small business community does not understand the legal niceties of being a “model litigant” but they know something is seriously wrong as they watch the court attitudes of the Australian Taxation Office towards honest taxpayers.

Let’s start with corporations channelling profits into tax havens which have been highlighted by the ABC revelations about Bermuda. Those corporations that have subsidiaries in well known tax havens need to detail why they are there. The community is simply not going to stand for Australian or international companies that borrow to the eyeballs to divert profits to tax havens or use other mechanisms that are simply not acceptable. While our tax office has a culture problem in the small business area, it is doing a good job bringing taxation morality to the larger company sector. We are part of an international movement that is requiring better behaviour from international corporations.

Members of our federal parliament were tripped up by a high court that has suddenly begun reading what the constitution says and/or intended to say. The community wants its politicians to begin to act like “model” parliamentarians.

Leaving aside entry requirements, our federal and state politicians have been acting in ways that are far short of the model requirements set out by Justice Logan in his remarkable address. We have watched lies and half truths in energy matters leaving huge bills for the community; billions wasted in duplicated activities between the states and Canberra and a public service that is not embracing the new technologies that are slashing costs in the private sector leaving areas of the public sector as a high cost island.

The remarks of Mister Justice Logan in the federal court urging the Crown to act as a “model litigant”, particularly dealing with small cases, has created enormous controversy in legal circles.

Many lawyers now realise that many of their clients in public service have no idea of their “model litigant” obligations to the community.

Chief executives, politicians and senior public servants should also study Justice Logan’s words because they apply much more widely than simply Crown prosecutions and the taxation commissioner.

Logan first reminds us of the words of the 1912 Chief Justice Griffith:

“I am sometimes inclined to think that in some parts — not all — of the Commonwealth, the old-fashioned traditional, and almost instinctive, standard of fair play to be observed by the Crown in dealing with subjects, which I learned a very long time ago to regard as elementary, is either not known or thought out of date. I should be glad to think that I am mistaken”.

More than 100 years later Logan continues: “The ‘standard of fair play to be observed by the Crown in dealing with subjects’ to which Griffith CJ referred was not, in 1912, a new subject.

Part of the constitutional history of the United Kingdom and, thus, derivatively, our own, was oppressive, unlawful behaviour by the Crown in the 17th century in the imposition, collection and recovery of taxes and a resultant and vicious civil war leading to regicide and not a republican ideal but military dictatorship.”

The later restoration of the monarchy was on terms that evolved into the constitutional separation of powers, legislative, judicial and executive and what we have come to know as the Westminster system of responsible government, each feature of which is to be found in the Australian Constitution.

The standard of fair play expected of the Crown and its officers in litigation is a standard in keeping both with the avoidance of behaviours that, in an extreme form, led to the civil war and with the later constitutional settlement. Once this heritage is understood, the requirement for its observance is, or should be, as Griffith CJ stated, “elementary”.

Maybe we should make our directors, politicians and public servants read those words regularly. Just this week I learned that the tax office is at it again. This time they wrote to a taxpayer and said all he had to do was to pay the amount owing and there would be no penalties or interest. He believed the letter and paid them by taking out big mortgages. Then back they come back saying that letter was a nonsense. He must pay the penalties and interest because they have found a law that does not bind them to their written word. Words fail me.

Perhaps I am optimistic but I think if we combine the High Court judgment with the statement from Justice Logan we have the beginning of a new era driven by the courts.

Out of the community anger over the above issues may come a better country but if I am wrong get set for a community revolt that will extend beyond the ballot box. There is a lot of deep anger out there.

Footnote: The Taxation case that triggered the words of Justice Logan caused this email to be sent to me:

“I am writing to thank you for your article in The Australian newspaper dated November 1, with the heading “Federal Court Judge warns tax commissioner”.

“I am the Michael Shord that you refer to in your column. I have been arguing for a fair go with the Taxation Department for over 5 years now and finally have people listening.

“In the past, I have written to three Prime Ministers; every member of Parliament connected to the Taxation office; all the Liberal Party Senators here in Perth (even went to their offices); I have driven over to Canberra in an attempt to get an interview and finally I contacted my liberal MP here in Mandurah. With out exception, they all or at least their staff fobbed me off.

So to read your article was a pleasant relief.”

It says it all. That’s why there is community anger.