Australian Taxation Department v Glen William Petherbridge Nos. SCGRG 96/2034, SCGRG 96/2035 Judgment No. 6070 Number of Pages 7 Criminal Law Taxation Offences

[1997] SASC 6070

IN THE SUPREME COURT OF SOUTH AUSTRALIA

NYLAND J

Criminal law - taxation offences - sentencing - prosecution appeal against sentence - respondent convicted without penalty on charge of failing to lodge tax returns and convicted - fine of $300 imposed on charges of failing to comply with an order to lodge outstanding returns - tariff not brought to attention of sentencing magistrate - no power to convict without penalty under the Crimes Act 1914 - sentences manifestly inadequate. Taxation AdministrationAct 1953 ss8C, 8H, 8G; Crimes Act 1914 s4K; Taxation Laws Amendment Act 1984 ; Criminal Law (Sentencing) Act 1988 s15; Justices Act 1921 s75(2), referred to. Commissioner of Taxation v Hagidimitriou (1985) 123 LSJS 63; Collins v Denton [1986] 85 FLR 139; Krenn v Klitscher (1986) 43 SASR 199, applied. R v Tait
(1979) 46 FLR 386; R v Wilton (1981) 28 SASR 362; Higgins v Fricker (1992) 63 ACrimR 473; Walsh v Guimelli [1975] WAR 114; Mulcahy v Clark [1991] TasR 115; Sarney v Rizidis [1987] 85 FLR 130; R v Osenkowski (1982) 30 SASR 212; Laxton v Justice (1985) 38 SASR 376, discussed.

ADELAIDE, 21 November 1996 (hearing), 26 March 1997 (decision)

#DATE 26:3:1997

#ADD 1:4:1997

Appellant Australian Taxation Department:

Counsel: Mr M Loftus

Solicitors: DPP (Cwlth)

Respondent Glen William Petherbridge:

n Person

Appeals allowed.

NYLAND J

1. In this case there are two prosecution appeals against sentence. The first appeal arises out of a complaint by Craig Lawson, an officer of the Australian Taxation Office. That complaint alleged three counts of failing to comply with the requirement of the Commissioner of Taxation to furnish income tax returns for the financial years ended 30 June 1993, 1994 and 1995, contrary to the provisions of s8C(1)(a) of the Taxation Administration Act1953 (the Act).

2. The second appeal arises out of a complaint by Lynton Harold Greaves which charged the respondent with five counts of failing to comply with a court order to furnish to the Commissioner of Taxation with income tax returns for the financial years ended 30 June 1988, 1989, 1990, 1991 and 1992, contrary to the provisions of s8H of the Act.

3. On 29 August 1996, the respondent appeared before a stipendiary magistrate in the Magistrates Court at Adelaide. He pleaded guilty to all the charges against him. Mr Lawson attended before the magistrate to prosecute both complaints. With respect to the first complaint he told the court that a final notice had been issued to the respondent at his last known residential address on 28 March 1996, requiring him to lodge income tax returns for the years ended 30 June 1993, 30 June 1994 and 30 June 1995, by 2 May 1996. He said the required income tax returns had been furnished to the Commissioner of Taxation on 28 August 1996, that is, the day immediately preceding the hearing of the complaint. He also told the court that the respondent had five relevant prior convictions dating from a hearing on 5 August 1993. The existence of the prior convictions meant that the charges before the court carried a maximum penalty of $4,000 each. When questioned by the learned magistrate as to his reasons for the lateness of his income tax returns the respondent replied to the effect that following the break up of his marriage his state of mind had been such that he had disregarded his taxation obligations. Subsequent travel between States looking for employment had exacerbated this. In mitigation, he pointed out that the returns in question had been lodged, that all other outstanding income tax returns were in the process of being prepared and that he was in the process of trying to put his affairs in order.

4. The learned stipendiary magistrate took into account the fact that the returns had been lodged, that the respondent had pleaded guilty at the first appearance before the court and that he was taking steps to bring all of his taxation obligations up to date and convicted the respondent without penalty.

5. Mr Lawson also appeared for the Australian Taxation Office with respect to the second complaint. He told the court that the respondent had been convicted on 5 August 1993 on five counts, each of which alleged a failure to comply with the requirement of the Commissioner of Taxation to furnish income tax returns for the financial years ended 30 June 1988, 30 June 1989, 30 June 1990, 30 June 1991, 30 June 1992, contrary to s8C(1)(a) of the Act. On that occasion, the respondent had been fined one sum of $700 pursuant to s4K of the Crimes Act 1914. The presiding magistrate at that time had made orders pursuant to s8G of the Act, that the outstanding returns be lodged within 28 days of service of the orders. At the date of the hearing of this complaint, that is, 29 August 1996, none of the required income tax returns had been furnished to the Commissioner of Taxation. Each of these counts carried a maximum penalty of $5,000 and/or 12 months imprisonment. As with the earlier complaint, the respondent's explanation for his tardiness related to the break up of his marriage and travel between States. He told the court however that the returns in question were in the process of being prepared. On this complaint the learned stipendiary magistrate recorded convictions with respect to each of the counts and pursuant to the provisions of s4K of the Crimes Act1914, imposed one penalty of $300. In addition, the respondent was ordered to pay $89 court fees and was allowed six months in which to pay that sum.

6. The prosecution has appealed against the sentence imposed with respect to each of these complaints on the ground that the sentence is manifestly inadequate.

7. In support of his argument , Mr Loftus, who appeared for the appellant, relied on the decision in Commissioner of Taxation v Hagidimitriou (1985) 123 LSJS 63. That case was also concerned with the appropriate penalty to be imposed with respect to offences pursuant to s8C of the Act. In that case, Zelling J heard 15 appeals which had arisen as a result of a complaint by the Commissioner of Taxation relating to the inadequacy of the penalties. It was suggested that the Magistrates Court had not increased penalties for offences against this section following the increase in penalty provided by the 1984 Taxation Laws Amendment Act. Zelling J said at p65: "However I make it clear both in this case and in the other fourteen that hereafter magistrates should, for a first offence, where the offence is a run-of-the-mill offence, in order to keep some correlation with penalties in other States, and also to give effect to the manifest policy of the 1984 Act, impose in what I might call run-of-the-mill cases of first offences a fine of something between $250 to $500. That is not intended to fetter the discretion of magistrates. There will obviously be some cases both below and above that figure, but a figure of that magnitude should be regarded as a starting point from which one either increases or reduces the fine because of the circumstances of the particular case.For offences which have a previous offence under the repealed s223, the fines should in my opinion be of the order of $500 to $1,000, with the same qualifications as I have just expressed.

Where the defendant is convicted of two offences which are relevant offences under s8B, then the penalty range should be of the order of $1,000 to $2,000."

8. Mr Loftus acknowledged, however, that the prosecutor had not brought this decision to the attention of the sentencing magistrate. It is therefore necessary to consider the effect of that omission upon this appeal. This issue was considered in R v Tait (1979) 46 FLR 386. Their Honours, Brennan, Deane and Gallop JJ said at p389: "It would be unjust to a defendant to expose him to double jeopardy because of an error affecting his sentence, if the Crown's presentation of the case either contributed to the error or led the defendant to refrain from dealing with some aspect of the case which might have rebutted the suggested error. The Crown has been said not to be concerned with sentence (see eg Lawrence J in Paprika Ltd v Board of trade [1994] 1 KB 327 at 332), but when a statutory right of appeal is conferred upon the Crown, that proposition must be more precisely defined. It remains true that the Crown is required to make its submissions as to sentence fairly and in an even-handed manner, and that the Crown does not, as an adversary, press the sentencing court for a heavy sentence. The Crown has a duty to the court to assist it in the task of passing sentence by an adequate presentation of the facts, by an appropriate reference to any special principles of sentencing which might reasonably be thought to be relevant to the case in hand, and by a fair testing of the defendant's case so far as it appears to require it. If the proposition that the Crown is not concerned with sentence was ever construed as absolving the Crown from this duty, it cannot be so construed when a Crown right of appeal against sentence is conferred. The Crown is under a duty to assist the court to avoid appealable error. The performance of that duty to the court ensures that the defendant knows the nature and extent of the case against him, and thus has a fair opportunity of meeting it. A failure by the Crown to discharge that duty may not only contribute to appealable error affecting the sentence, but may tend to deprive the defendant of a fair opportunity of meeting a case which might ultimately be made on appeal. It would be unjust to a defendant, whose freedom is in jeopardy for the second time, to consider on appeal a case made against him on a new basis - a basis which he might have successfully challenged had the case against him been fully presented before the sentencing court. ...

Although the existence of error is the common ground which entitles the appellate court to intervene in appeals by the Crown and by a defendant (cf. R v Butler [1971] VR 892; R v Liekefett; Ex parte Attorney-General [1973] QdR
355) there would be few cases where the appellate court would intervene on an appeal against sentence to correct an alleged error by increasing the sentence if the Crown had not done what was reasonably required to assist the sentencing judge to avoid the error, or if the defendant were unduly prejudiced in meeting for the first time on appeal the true case against him."

9. The matter was further considered in R v Wilton (1981) 28 SASR 362. That case was concerned with the suspension of a sentence in the situation in which counsel for the Crown had not raised any objection to such an order. The court held that normally the Crown should be permitted only in exceptional circumstances to raise on an appeal against sentence contentions which were not put to the sentencing judge. King CJ indicated his agreement with the aforesaid remarks in R v Tait (supra) and said (at p363): "A prosecution appeal, like a convicted person's appeal, against sentence, is a challenge to the exercise by the sentencing judge of the discretion vested in him to determine the appropriate sentence within the limits prescribed by law. The principles upon which an appellate court will interfere with the exercise of a judicial discretion are well settled. There will be no such interference unless the exercise of the discretion has miscarried by reason of some relevant mistake of law or fact or by reason of the judge taking into account some extraneous factor or failing to give any or adequate consideration to a material factor. If the sentence is manifestly disproportionate to the crime considered in the light of all the relevant circumstances, the appellate court will infer that the exercise of the sentencing discretion has miscarried in some way although the precise error cannot be identified. The appellate court does not, however, interfere because it considers that the sentence is more severe or less severe than the judges of the appellate court would have imposed. An appeal against sentence by the prosecution, moreover, raises considerations which are not present in an appeal by a convicted person."

10. The court in that case held, however, that the Crown should be permitted to raise on appeal the question of the propriety of the suspension of the sentence as counsel for the Crown had had little or no warning at the time of sentence that suspension was contemplated. It would therefore have been unreasonable to expect counsel in such circumstances to be heard in opposition to a non-custodial sentence.

11. Similarly, in Higgins v Fricker (1992) 63 ACrimR 473 at 475, the court held that the prosecution was not precluded from appealing a sentence it considered manifestly inadequate merely because the prosecutor had failed to make submissions in relation to sentence at trial. Mullighan J said at p477: "I do not discern any support for Mr Barrett's contention from those cases. Here there was no agreement between the prosecution and the defence. The prosecutor did not agree to stand mute. There was no plea bargain."

12. In this case, it would seem clear that the learned stipendiary magistrate was unaware of the tariff referred to in Commissioner of Taxation v Hagidimitriou (supra). Although the prosecutor did not mention this decision to the magistrate, there is no suggestion that he in any way misled the learned stipendiary magistrate. There would not seem to be any reason why the prosecutor would have thought that the magistrate would do other than apply the appropriate tariff.

13. There is a further difficulty with respect to this particular sentence. The learned stipendiary magistrate, having recorded a conviction, failed to impose any penalty at all upon the respondent. In Walsh v Guimelli [1975] WAR
114, the Full Court of Western Australia heard an appeal in which the magistrate had "cautioned" the respondent on charges relating to selling an obscene paper. The court held that there was no statutory provision empowering the magistrate to refrain from imposing a penalty after conviction. The court said (at p117):"In our opinion, the fact is that the magistrate having convicted the defendants decided to impose no penalty or any other form of order in lieu of a penalty. There was thus, in each case, a conviction without a sentence. Unless authorised by statute, this means that the magistrate has not finally determined the complaint and would be subject to mandamus to compel him to do so. Lord Kenyon CJ said in R v Harris (1797) 7 TR 238; 101 ER
952, following R v Vipont (1761) 2 Burr 1163; 97 ER 767, that a 'conviction is in the nature of a verdict and judgment and the judgment is an essential point in every conviction, let the punishment be fixed or not'. See also Oke's Magisterial Synopsis, 14th ed,p84, Paley on Summary Convictions, 9th ed, pp534-7, where these decisions are cited. In Halsbury's Laws of England, 3rd ed, vol11, p97, it is said that a mandamus will lie to magistrates who decline to adjudicate in matters within their province. They will be considered to have declined jurisdiction ... when they have failed to pass sentence and thus have not disposed of a case'. In R v Norfolk Justices; Ex parte DPP [1950] 2 KB 588 at 571; [1950] 2 All ER 42, Humphreys J said that 'a court of summary jurisdiction does not complete the hearing of an information merely by convicting, because that leaves in the air, without any judgment upon the matter one way or the other, the most important part of a hearing, namely, the sentence of the court'."

14. This decision was followed in Mulcahy v Clark [1991] TasR 115 which dealt with a number of offences pursuant to the Social Security Act 1947 (Cth). The court concluded that the magistrate had fallen into error by recording a conviction without penalty as the Crimes Act 1914 did not permit him to take that course. Zeeman J said at p116: "However, in a court of petty sessions, when a magistrate announces in open court that he convicts a person charged, there is then a conviction, although no sentence may then be imposed. It is trite to say that the learned magistrate had the power to convict the respondent. The applicant's submission is that the learned magistrate did not have the power to merely convict. The submission was that having convicted, it was then incumbent upon him to make some sentencing order in addition to the reparation order which he made. In the light of the conclusions reached by the learned magistrate that the respondent ought to be convicted but that no punishment ought to be imposed, the applicant submitted that it was incumbent upon him to proceed under the Crimes Act 1914 (Cth), s20. It is undoubted that in the circumstances of this case, it would have been open to the learned magistrate to release the respondent upon his giving security to comply with conditions of the type referred to in s20(1)(a)(i) and (ii). The matter raised by the applicant is a jurisdictional question, namely, having reached the conclusions which he did, was the learned magistrate entitled to convict and then make no form of order other than the reparation order, or was he required to proceed under s20 or in some other manner. I reject the submission that the learned magistrate ought to be taken as having proceeded under the Crimes Act1914, s19B(1). The heading to that section indicates that it relates to the discharge of offenders without proceeding to conviction. The ActsInterpretation Act 1901 (Cth) s15AB(2)(a), enables me to use that heading in the ascertainment of the meaning of the section. The heading properly indicates the area of operation of the section which is borne out by its subject matter. In this case the learned magistrate did proceed to conviction so the section has no application."

15. Section 15 of the Criminal Law (Sentencing) Act 1988 provides a statutory basis in this State for convicting without penalty. The predecessor of that section was s75(2) of the Justices Act 1921. This section only applies, however, to State offences. Although there are a number of sentencing options included in the Crimes Act 1914, there is no provision therein which empowers a court to convict without penalty. The learned stipendiary magistrate therefore erred in law when she failed to impose any penalty upon the respondent with respect to the s8C offences. The appropriate penalty with respect to a breach of that section is a fine. The order made by the magistrate indicates that she considered this to be an appropriate case to take a lenient view of the offending. Pursuant to the provisions of s4K of the Crimes Act 1914, I will impose one penalty to reflect all of the matters on that complaint. I impose a fine of $1,200.

16. The magistrate, having recorded a conviction with respect to the second complaint, applied the provisions of s4K of the Crimes Act 1914 and imposed one penalty of $300. This complaint related to breaches of s8H of the Act and concerned a failure to comply with orders requiring the returns to be lodged. In that situation, in the normal sequence of events, it would seem appropriate to treat the tariff in Commissioner of Taxation v Hagidimitriou (supra) as the starting point for imposition of penalty although one would expect a sentence with respect to a s8H offence to be greater than that imposed with respect to an earlier s8C offence. That was the view expressed by Olsson J in Krenn v Klitscher (1986) 43 SASR 199.In Collins v Denton [1986] 85 FLR 139, von Doussa J referred to Krenn v Klitscher (supra). He agreed with Olsson J's general observation that the proper application of s8H will, in general, result in the penalty for a s8H offence being greater than the penalty imposed on a preceding s8C offence. He went on to point out, however, that the court ought to nevertheless have regard to the particular circumstances of the case and he referred to a number of matters which might justify a lower penalty than that imposed for the earlier conviction. They included: "(a) The steps taken by the taxpayer to comply with the court order.

(b) Whether those steps became frustrated in their fulfilment by negligent inactivity on the part of another person, for example, a tax agent.

(c) Whether there was a marked alteration in the taxapayer's particular circumstances, such as a change to his health or financial position, between the two relevant periods.

(d) Whether the taxpayer had complied, though belatedly, with the court order prior to the hearing of the s8H matter.

(e) The amount of tax payable, if any, in respect of the return in question; if necessary, the imposition of a penalty could be deferred temporarily to enable the Commissioner to assess a return filed at the last moment."

17. In Sarney v Rizidis [1987] 85 FLR 130, von Doussa J considered an appeal against penalty relating to a s8H offence. In that case, a magistrate had imposed a fine of $300. His Honour was not persuaded that in the particular circumstances of that case the penalty imposed represented an idiosyncratic view of the offence nor that it was so disproportionate to the seriousness of the offence as to shock the public conscience as would require the court to interfere on appeal: see R v Osenkowski (1982) 30 SASR 212 and Laxton v Justice (1985) 38 SASR 376. He did, however, describe the fine imposed as "low". The significant difference between the circumstances of that case and the present is that in the former the return had been furnished prior to the plea of guilty. That offender had to some degree been let down by his accountant, and had taken some active steps towards compliance with the order.In this case, the magistrate's remarks, although brief, indicate that she was influenced towards leniency as the respondent had taken steps to rectify the situation in order to comply with the order. Even taking a benevolent approach to the offending of the respondent, I have come to the conclusion that the penalty imposed was manifestly inadequate in the circumstances of the case and it must be corrected on appeal. I consider, however, that it is appropriate to apply the provisions of s4K of the CrimesAct 1914. With respect to the second complaint there will be a fine of $1,500.

18. For the reasons which I have expressed, both appeals will be allowed for the purposes of substituting the penalties to which I have just referred. This will require the respondent to pay a total sum of $2,700 plus court fees. I will hear the respondent with respect to time to pay.