A Duck v Peter Papaioanou
[2013] ACTMC 12
•16 AUGUST 2013
A. DUCK v PETER PAPAIOANOU
[2013] ACTMC 12 (16 AUGUST 2013)CRIMINAL LAW – Fail to furnish tax return
Criminal Code Act 1995 (CTH) s6.2
Taxation (Administration) Act 1953 (CTH) 8C; 8C (1)(a); 8C(1B).
Treasury Legislation Amendment (Application of Criminal Code) Act (No.1) 2001 (CTH).
Ambrose v. Edmonds-Wilson (1988) 48 SASR 514; 92 FLR 429; 19 ATR 1217; (1988) 88 ATC.
Caratti v Morrow [2001] WASCA 151.
Donovan v Deputy Commissioner of Taxation (WA) (1992) 105 ALR 661.
Deputy Commissioner of Taxation v Hugo John De Vonk [1995] FCA 1715.
de Vonk v Deputy Commissioner of Taxation of the Commonwealth of Australia (1995) 59 FCR 203.
No.
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Magistrate: Chief Magistrate Walker
Magistrates Court of the ACT
Date: 16 August 2013
IN THE MAGISTRATES COURT OF THE )
NO. CC 40183 of 2012
)
AUSTRALIAN CAPITAL TERRITORY )
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BETWEEN: A. DUCK
Informant
AND: PETER PAPAIOANOU
Defendant
DECISION
Magistrate:Chief Magistrate Walker
Date:16 August 2013
Place:Canberra
The charges
The defendant is charged with 29 counts of failing to lodge an approved form contrary to section 8C (1)(a) of the Taxation (Administration) Act 1953 between 29 October 2004 and 29 October 2011.
The offences are charged as continuing offences from various dates as follows: 29 October 2004, 1 March 2005, 29 April 2005, 29 July 2005, 29 October 2005, 1 March 2006, 29 April 2006, 29 July 2006, 31 October 2006, 1 March 2007, 1 May 2007, 31 July 2007, 30 October 2007, 29 February 2008, 29 April 2008, 29 July 2008, 29 October 2008, 4 March 2009, 29 April 2009, 29 July 2009, 29 October 2009, 3 March 2010, 29 April 2010, 29 July 2010, 29 October 2010, 1 March 2011, 29 April 2011, 29 July 2011 and 29 October 2011.
The offence carries a maximum penalty of 50 penalty units or imprisonment not exceeding 12 months, or both, and is one of absolute liability. Pursuant to s 6.2 of the Criminal Code Act 1995 (Cth) this means that there are no fault elements for any of the physical elements of the offence. That is the defendant’s state of mind is not relevant to proof of the offence.
The Issue
What was in issue between the parties is whether the exception detailed in subparagraph 8C (1B) is available to the defendant on the facts. That subparagraph states:
“subsection (1) does not apply to the extent that the person is not capable of complying with the relevant paragraph”.
The evidence
There was little dispute about much of the evidence. I find the following facts.
i.The defendant is a self-employed painter and has been for the last 16 or 17 years. In 1997 he saw an accountant by the name of Mr Mark Hayes in Wollongong Street, Fyshwick. Mr Hayes left that firm in 1999. The defendant had no further dealings with Mr Hayes.
ii.The defendant was registered for GST electronically on 10 June 2000 under the trading name Kavlotic Painting.
iii.That registration was effected by what appears to be Mr Hayes new partnership, Stephens Hayes and Associates of Deakin West.
iv.The defendant did not direct registration for GST and was unaware that he had been so registered.
v.Registration resulted in a requirement for the defendant to furnish quarterly business activity statements.
vi.The defendant received forms relevant to the dates of alleged offences which he was required to furnish.
vii.The requirement arose “under a taxation law”.
viii.The defendant did not understand what the forms were for or that he was required to furnish them. He thought they may have been related to income tax as opposed to business activity.
ix.Despite not being a sophisticated businessman, the defendant was, and is, under no particular disability, either mental or physical.
x.Throughout the period the subject of the charges the defendant experienced personal problems and was stressed by both these and his taxation obligations.
xi.The defendant took no steps to find out what he was required to do about the forms received by him. He did not return them as required.
The prosecution challenged the credibility of the defendant. The challenge relied upon evidence contrary to the defendant’s claim that he had no appreciation of the nature of the correspondence received by him, including a letter sent by the defendant to the ATO. This letter, although undated, clearly predates 9 September 2008, the date referred to in the letter by the defendant as a date he was due to appear in court in relation to other tax matters. The relevant portion of this letter appears on the last page in which the defendant wrote:
“I am desperately pleading to both the magistrates Court and the Australian Taxation Department for one final extension to be granted so I can finalise my seven years of BAS”.
However, ultimately the question of credibility was relevant only as to the defendant’s state of mind which, in light of the application of the law detailed below, is not a matter which influences the outcome of these proceedings.
Submissions
The defendant submitted that he was not capable of complying with the obligation to furnish the business activity statements because firstly, he did not know that he was registered and therefore had an obligation to do so and secondly, because he did not understand the forms and considered that they were not applicable to his situation. He submits that did not have an obligation to obtain advice. He submits that “not capable” sets a lower threshold than “impossible”.
The prosecution submits that “not capable” reflects an actual inability to comply, for example as a result of serious illness or the destruction of records, rather than merely as a result of hardship, inconvenience, carelessness or delinquency. Further, it submits that what the defendant was actually seeking to rely upon is an honest and reasonable mistake of fact and that this defence is unavailable in respect to an offence of absolute liability by virtue of section 6.2 of the Code.
Consideration
10. The prosecution provided me with an excerpt of the explanatory memorandum to the 1984 amendments to the Taxation Administration Act 1953 (Cth). Unfortunately, it provides little assistance as to what is meant by “not capable” except to the extent that it states that “self-incrimination” would not be a defence to a charge under section 8C. It is, however, significant to note that the amendment in 1984 which introduced the notion of capacity as an element of the offence replaced the earlier formulation of the “just and reasonable excuse” defence. This has been interpreted as allowing more limited scope for exculpation (see Ambrose v. Edmonds-Wilson (1988) 48 SASR 514; 92 FLR 429; 19 ATR 1217; (1988) 88 ATC; Donovan v Deputy Commissioner of Taxation (WA) (1992) 105 ALR 661; Deputy Commissioner of Taxation v Hugo John De Vonk [1995] FCA 1715 and Caratti v Morrow [2001] WASCA 151).
11. A further amendment in 2001 (Treasury Legislation Amendment (Application of Criminal Code) Act 2001 (Cth)) extracted the exception of “not capable” from the offence provision itself into a separate subparagraph with a view to clarifying where the burden of proof lay in light of implementation of the Code. The explanatory memorandum to the amending legislation provides no further assistance as to the interpretation of this term.
12. In the decision of Ambrose, Bollen J of the South Australian Supreme Court found the offence to be one of absolute liability even prior to the 2001 amendment. At 517, His Honour stated:
“... The phrase “to the extent that the person is capable of doing so” in section 8C of the Act must take its meaning and operation from the section itself considered in the light of the objects of the whole act. Section 8C is a section designed to compel people to do things lawfully required of them pursuant to a “taxation law”...
and later on the same page,
“I do not think that the phrase refers at all to “the person’s knowledge or state of mind. I agree with the submission of counsel for the appellant that “the language of the Taxation Amendment Act and the Income Tax Regulations leads to the conclusion that his knowledge of the requirement was not necessary”.
13. Those observations were in the context of knowledge as to whether or not the relevant notices had been served, they having been served upon Mr Ambrose’s accountant rather than his own address and in circumstances in which the accountant did not tell his client that he had received the notice. Mr Ambrose had communicated with the accountant who had told him that “everything was under control”.
14. His Honour went on to observe at page 518:
“But in section 8C Parliament allows for some amelioration of harshness. A man cannot be held responsible if he has no capacity to do that which is required of him. He cannot be held responsible if he is required to do more than he has the capacity to do. Of course, one can see the force of the argument that a man has no capacity to respond to that of which he is ignorant. But this is one of those cases in criminal law where in effect the agent’s knowledge is knowledge of the person charged. Once the idea or scheme of service other than personal or other than at the home or “business place” of a person is acknowledged, then attributed knowledge or irrelevance of knowledge must follow. The phrase is directed to capacity to do something and not to knowledge of the requirement to do it. The respondent had the capacity to respond.”
15. This matter is of course not on all fours with the Ambrose decision as that was a case of an individual being aware of an obligation in a general sense but relying on an agent to discharge it, rather than being unaware of the obligation in the first place, however his Honour’s remarks about a person’s knowledge being irrelevant to capacity are nonetheless pertinent.
16. The phrase has been considered in respect to the abrogation of the privilege against self-incrimination by the same provision. In the decision of de Vonk v Deputy Commissioner of Taxation of the Commonwealth of Australia, (1995) 59 FCR 203 of Justice Carr in the Federal Court of Australia (appealed unsuccessfully in Deputy Commissioner of Taxation v Hugo John De Vonk [1995] FCA 1715), His Honour observed:
“... The word “capable” in this context must mean “having the ability, power or fitness the some... activity” (the new shorter Oxford English dictionary) or “having the ability, strength” (the Macquarie dictionary).”
17. It is clear that the legislature has imposed a strict system of compliance with response to the requirements of the ATO. There was a question raised by the defendant as to whether the requirement should have arisen given that he did not authorise, and was not aware of, his registration for GST. However, this does not found a defence within the section. The act of registration gives rise to the requirement to lodge the approved forms. There was no argument before me that the requirement to furnish the approved forms was not “under or pursuant to a taxation law”. In these circumstances, the only defence available to the offence is an inability to comply. Had the defendant both not known he was registered and not received the notices, a situation of impossibility would have arisen; that is not the case here.
18. The rationale behind this strict approach is no doubt the need to enforce a system which is the very lifeblood of the nation. Without citizens’ compliance with the obligation to pay taxes, essential services could not be provided to the community.
19. The provision has the potential to produce hardship and places a significant burden of responsibility on an individual. One might view the Ambrose decision in that light. Nonetheless, it is quite clear that that was the intention of the legislature, which intention has been confirmed by judicial consideration.
20. Whilst the defendant was ignorant of his legal obligations, his failure to comply was the result of inaction rather than incapacity. Against this factual background, I am satisfied that the prosecution has proved beyond reasonable doubt that the defendant was capable of compliance with the requirement to furnish an approved form on each of the occasions charged.
21. I find the offences proved.
I certify that the preceding 21 paragraphs are a true copy of the Reasons for Judgment of her Honour, Chief Magistrate Walker.
Associate: S.S.Kemaken
Date: 16 August 2013
Counsel for the Informant: Ms Tucker
Solicitor for the Informant: Office of the Commonwealth Director of Public Prosecutions
Counsel for the Defendant: Ms. T.Warwick
Solicitor for the Defendant: Mr. Jackson
Date of hearing: 30 July 2013
Date of judgment: 16 August 2013
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