Commissioner of Taxation v Baffsky
[2001] NSWCCA 332
•7 September 2001
NEW SOUTH WALES COURT OF CRIMINAL APPEAL
CITATION: COMMISSIONER OF TAXATION v BAFFSKY [2001] NSWCCA 332
FILE NUMBER(S):
60279/01
HEARING DATE(S): 8 August 2001
JUDGMENT DATE: 07/09/2001
PARTIES:
Commissioner of Taxation (Appellant)
Wayne Baffsky (Respondent)
JUDGMENT OF: Spigelman CJ Simpson J Einfeld AJ
LOWER COURT JURISDICTION: District Court
LOWER COURT FILE NUMBER(S): 01/12/0049
LOWER COURT JUDICIAL OFFICER: Backhouse DCJ
COUNSEL:
T A Game SC / M M Cinque (Appellant)
B Cross (Respondent)
SOLICITORS:
Commonwealth DPP (Appellant)
Martin Ricci (Respondent)
CATCHWORDS:
CRIMINAL LAW - sentencing - revenue offence against Commonwealth - factors to be considered in exercising the discretion to dismiss a charge without proceeding to conviction - Crimes Act 1914 (Cth), s16A and s19B.
LEGISLATION CITED:
Companies (Tasmania) Code
Crimes Act 1900 (NSW)
Crimes Act 1914 (Cth)
Crimes (Sentencing Procedure) Act 1999 (NSW)
Criminal Appeal Act 1912 (NSW)
Income Tax Assessment Act 1936 (Cth)
Quarantine Act 1908 (Cth)
Taxation Administration Act 1953 (Cth)
DECISION:
Questions in the Stated case answered as follows: 4(I) (a) No
(b) Yes
4(II)(a) No
(b) Decline to Answer
(c) No
(d) No
4(III)(a) Yes
(b) No
(c) No
4(IV) Decline to Answer
4(V) No.
JUDGMENT:
IN THE COURT OF
CRIMINAL APPEAL60279/01
SPIGELMAN CJ
SIMPSON J
EINFELD AJFriday 7 September 2001
COMMISSIONER OF TAXATION v Wayne BAFFSKY
The Respondent pleaded guilty to two charges of failing to furnish an income tax return contrary to s8C(1)(a) of the Taxation Administration Act 1953 (Cth). He was convicted at St James Local Court and fined the one amount of $800 for the two offences. He appealed to the District Court arguing that the circumstances of the case were such that it was appropriate to apply the provisions of s19B of the Crimes Act 1914 (Cth) (“the Act”) and dismiss the charges against him. Her Honour Judge Backhouse found that the circumstances were such that s19B should be applied and quashed the convictions against the Respondent.
Following an application by the Appellant, her Honour submitted several questions of law to the Court of Criminal Appeal for determination pursuant to s5B of the Criminal Appeal Act 1912 (NSW).
Held
per Spigelman CJ, Simpson J and Einfeld AJ agreeing
Application of s19B
1 The application of the discretion in s19B of the Act consists of two stages. The first is the identification of one or more of the factors identified in s19B(1)(b). The second stage is the determination that, having regard to the factor or factors so identified, it “is inexpedient to inflict any punishment” or to reach the other conclusions for which s19B provides.
2 Section 16A(2) of the Act identifies the matters that must be taken into account in exercising the second stage of the discretion in s19B. Cobiac v Liddy (1969) 119 CLR 257 discussed; Jones v Morley (1981) 29 SASR 57, Aikman v Bourne (1992) 63 ACrimR 467, McQuestin v Australian Securities Commission (1993) 2 TasR 30 referred to.
Stated Case Questions: Whether irrelevant matters taken into account?
3 The Respondent’s professional status as a barrister falls within the definition of “antecedents” which is used in both s19B(1)(b)(i) and s16A(2)(m). Cobiac v Liddy, Jones v Morley referred to.
4 The effect of a conviction on the Respondent is relevant to personal deterrence under s16A(2)(k), the issue of adequacy of punishment under s16A(2)(j) and the application of the test of “inexpediency”. McQuestin v Australian Securities Commission, Morrison v Peers (1995) 87 LGERA 39, Thorneloe v Filipowski [2001] NSWCCA 213 referred to.
5 The issue of bankruptcy as hardship can fall either under “antecedents” or under s16A(2)(k) in assessing the need to “adequately punish” the offender “for the offence”.
6 Contrition is expressly referred to in s16A(2)(f).
7 Reduced motivation falls within “health or mental condition” in s19B(1)(b)(i). It also falls within “physical or mental condition” in s16A(2)(m). In addition, it is encompassed by “antecedents”.
8 Her Honour did not take into account a consideration in the form of reduced motivation owing to bankruptcy.
9 The Respondent’s maintenance of his relationship with his son falls within the meaning of “character” in s19B(1)(b)(i). It is also encompassed by “antecedents”.
10 No submission on the part of the Appellant was addressed to whether “substantial interstate travel for work” was a relevant matter and therefore it is not appropriate to answer this question.
Stated Case Questions: Were relevant matters not taken into account?
11 Section 19B formulates a test of whether punishment is “inexpedient”. The Appellant’s proposition that s19B is not available under revenue legislation unless “exceptional circumstances” are found to exist is not supported by authority. Kelton v Uren (1981) 27 SASR 92, Federal Commissioner of Taxation v Wormald International Australia Pty Ltd (1985) 17 ATR 129, O’Brien v Norton-Smith (MR) Pty Ltd (1995) 83 ACrimR 41 referred to.
12 The Commissioner submitted that the result itself was such as to reveal error. The summary statement of facts contained in the Stated Case does not permit the Court to determine this issue.
13 Her Honour failed to have regard to the issue of delay on the basis of matters which were not relevant to that consideration. Her Honour erred in this regard.
14 Her Honour’s references to the liabilities owing indicate that she did take the amounts owing into account.
15 Though general deterrence is not expressly listed in s16A(2), it is a relevant consideration for sentencing in Commonwealth offences. R v Paull (1990) 20 NSWLR 427, DPP v El Karhani (1990) 21 NSWLR 370, R v Sinclair (1990) 51 ACrimR 418 referred to.
16 Her Honour’s references to the fact that s19B is not generally seen to be appropriate with respect to this kind of offence and that the offence was not “trivial”, are such that it can not be concluded that her Honour failed to take general deterrence into account. Cobiac v Liddy, Kowald v Hoile (No. 2) (1976) 14 SASR 314, Lanham v Brake (1983) 34 SASR 578, Aikman v Bourne, McQuestin v Australian Securities Commission referred to.
Second offence
Both offences were triggered by the Respondent’s failure to furnish a return on exactly the same day as required by a single notice issued with respect to two financial years. In these circumstances it was open to her Honour to consider the two offences together in exercising the s19B discretion.
Orders
Questions in the Stated case are answered as follows:
4(I) (a) No;
(b) Yes;4(II) (a) No;
(b) Decline to Answer;
(c) No;
(d) No;
4(III) (a) Yes;
(b) No;
(c) No;
4(IV) Decline to Answer;
4(V) No.
IN THE COURT OF
CRIMINAL APPEAL60279/01
SPIGELMAN CJ
SIMPSON J
EINFELD AJFriday 7 September 2001
COMMISSIONER OF TAXATION v Wayne BAFFSKY
JUDGMENT
SPIGELMAN CJ: The Court has before it a case stated by her Honour Judge Backhouse QC pursuant to s5B of the Criminal Appeal Act 1912. Her Honour has submitted several questions of law for determination by this Court arising out of an appeal to the District Court by Wayne Baffsky, the Respondent in this Court, against the severity of sentences imposed on him at St James Local Court on 10 January 2001.
The Respondent was charged with two offences of failing to furnish an income tax return contrary to s8C(1)(a) of the Taxation Administration Act 1953 (Cth). Set out in the stated case are relevant facts found by her Honour relating to the charges against the Respondent. These are:
“(i)On or about 3 May 2000 at Bondi Junction in New South Wales the appellant failed to furnish income tax returns for the years ended 30 June 1998 and 30 June 1999 to the Commissioner of Taxation, as he was required to do on or before 2 May 2000 by a notice issued on 4 April 2000, pursuant to section 162 of the Income Tax Assessment Act 1936.
(ii)The appellant made an application to the Commissioner on 28 April 2000 for an extension of time to lodge the required income tax returns. This request was refused by the Commissioner on 28 April 2000, who noted that the appellant had received a reminder letter before the notice issued.
(iii)The appellant furnished returns for the years ended 30 June 1998 and 30 June 1999 to the Commissioner of Taxation on 9 January 2001.
(iv)The tax which is payable by the appellant on his 1998 income tax return is $5,559.07.
(v)The tax which is payable by the appellant on his 1999 income tax return is $76,974.28.
(vi)The appellant was involved in a motor vehicle accident on 17 July 1998, which had the effect of aggravating an existing back ailment and also reduced his motivation.
(vii)The appellant was made bankrupt by the Commissioner of Taxation in January or February 2000. He has reached an agreement with his trustee in bankruptcy whereby he pays the Commissioner approximately $1,330.00 each month.
(viii)The appellant has been working interstate on a regular basis from at least June 2000 to the present time.
(ix)The appellant has devoted time to maintaining a relationship with his son, after the appellant separated from his son’s mother.
(x)The appellant has engaged in volunteer work in the past, in both legal and non-legal capacities.
(xi)The appellant has expressed contrition and remorse for the offences.”
In the Local Court the Respondent pleaded guilty to the two charges. He was convicted and fined one amount of $800 for the two offences. The maximum penalty for the first offence to which the Respondent pleaded guilty was a fine of $2,200; a fine of $4,400 was the maximum for the second. The Respondent appealed to the District Court.
On sentence, Backhouse DCJ considered whether the circumstances of the case were such that it was appropriate to apply the provisions of s19B of the Crimes Act 1914 (Cth) (“the Act”) and dismiss the charges against the Respondent. Section 19B says, relevantly, that:
“(1) Where:
(a)a person is charged before a court with an offence against the law of the Commonwealth; and
(b)the court is satisfied, in respect of that charge or more than one of those charges, that the charge is proved, but is of the opinion, having regard to:
(i)the character, antecedents, cultural background, age, health or mental condition of the person;
(ii)the extent (if any) to which the offence is of a trivial nature; or
(iii)the extent (if any) to which the offence was committed under extenuating circumstances;
that it is inexpedient to inflict any punishment, or to inflict any punishment other than a nominal punishment, or that it is expedient to release the offender on probation;
the court may, by order:
(c)dismiss the charge or charges in respect of which the court is so satisfied …”
Her Honour referred to a number of factors in her consideration of the s19B application. She came to the conclusion that:
“Having regard to all those matters to which I have mentioned in the course of these reasons, I quash the conviction in respect of each of those offences and deal with the matter under 19(B) of the Commonwealth Crimes Act.”
In the stated case, her Honour summarised the process by which she came to the conclusion that s19B should be applied. She annexed her reasons for judgment which “listed the matters which I took into account” and referred to the following specific factors:
“(3)(ii)I indicated that I did not have recourse to that section on the basis that the offences were trivial.
(iii)I indicated I took into account the appellant’s lack of prior convictions and his positive good character, as indicated by the four character references, from members of the legal profession, which were before the court. Each spoke of him as a person of good character and, particularly, that he had, in the past, volunteered his services in both legal and non-legal capacities.
(iv)I also took into account the appellant’s age, forty-five years, and his health, he having been involved in a motor vehicle accident in 1998 in which he had exacerbated an existing back injury, and which had caused him a substantial degree of interference with his professional practice and lifestyle. I also took into account the aggravation to his back injury had reduced his motivation.
(v)I noted my concern that the appellant had not taken more prompt action in complying with the Notice issued by the Commissioner on 4 April 2000 but accepted that the appellant did make an application for an extension of time on 28 April 2000, which was ultimately refused on 28 April 2000. I also accepted it appeared that the appellant had been interstate on quite a regular basis during the period from at least June 2000 to the date of hearing.
(vi)I took into account, as a matter of hardship suffered by the appellant, the fact that he was made bankrupt at the suit of the Commissioner in January or February 2000, resulting in his reaching agreement with his trustee in bankruptcy to pay a sum in the order of $1,300.00 per month.
(vii)I also took into account the financial obligations which the appellant has in respect of his son and the fact that, notwithstanding his difficulties, the appellant has found time to maintain his relationship with his son.
(viii)I also took into account the fact that the appellant has indicated contrition and remorse to the court.”
The stated questions are as follows:
“4(I)Did I err in law in determining that it was inexpedient to inflict any punishment on the respondent in respect of the first offence by:
(a)taking into account matters irrelevant to the exercise of my sentencing discretion in relation to an offence against section 8C Taxation Administration Act 1953; and/or
(b)failing to take into account or give sufficient weight to relevant matters in the exercise of that discretion.
(II)If the answer to question (I)(a) is ‘yes’ were those matters:
(a)reduced motivation on the part of the respondent following his car accident;
(b)substantial interstate travel for work;
(c)the respondent’s maintenance of his relationship with his son notwithstanding a divorce; and/or
(d)the respondent’s reduced motivation owing to his bankruptcy due to his failure to pay provisional tax.
(III)If the answer to question (I)(b) is ‘yes’ were those matters:
(a)the length of the respondent’s delay in complying with the notice;
(b)the amount of tax owing; and/or
(c)general deterrence.
(IV)Did I err in law in categorising the circumstances before me as satisfying recourse to the provisions of section 19B Crimes Act 1914?
(V)Did I err in law in determining that it was inexpedient to inflict any punishment on the respondent in respect of the second offence:
(a)for the same reasons as in respect of the first offence; and/or
(b) by failing to take into account the fact that it was a second offence.”
Questions 4(II) and 4(III) set out specific matters which may, if answered in a particular way, satisfy the questions posed, respectively, in Questions 4(I)(a) and 4(I)(b). However, they are not stated to be exhaustive. In certain respects the Commissioner submitted that a positive answer to Questions 4(I)(a) and 4(I)(b) could be given for reasons other than those set out in Questions 4(II) and 4(III).
There is a distinction between Questions 4(I)(a) and 4(I)(b). The latter, but not the former, makes reference to the weight which her Honour gave to considerations. Submissions asserting that insufficient weight have been accorded to particular factors must always be treated with reserve by appellate courts, so as not to interfere impermissibly with the exercise of a discretion reposed in a first instance judge. Nevertheless, an appellate court may, in appropriate circumstances, intervene on this basis. (Note the reference to “giving undue weight to any circumstance or matter” in House v The Queen (1936) 55 CLR 499 at 507-8.)
Irrelevant Considerations
Section 19B(1)(b) itself consists of two stages. First is the identification of a factor or factors of the character specified in subparagraphs (i), (ii) and/or (iii) of the paragraph. The second stage is the determination that, having regard to the factor or factors so identified, it “is inexpedient to inflict any punishment” or to reach the other conclusions for which the paragraph provides.
The issues raised under Question 4(I)(a) reflect these two stages. Are the matters which her Honour took into account capable of being characterised as falling within one of the subparagraphs? With respect to any matter for which the answer is in the negative, was that matter relevant to the determination by her Honour of the issue of inexpediency?
The New South Wales legislation, formerly s556A of the Crimes Act 1900 and now found in s10 of the Crimes (Sentencing Procedure) Act 1999, sets out the three paragraphs in substantially similar form as they appear in s19B(1)(b). However, in New South Wales there is an additional, wide-ranging factor as s10(3)(d):
“any other matter that the court thinks proper to consider.”
With respect to the first stage, s19B is, therefore, more confined than the equivalent State provision. The second stage of the process, i.e. the determination of “inexpediency”, arises in the same terms in both the Commonwealth and the State statutes.
The scope of relevant considerations is determined by s16A of the Act which provides:
“(1) In determining the sentence to be passed, or the order to be made, in respect of any person for a federal offence, a court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence.
(2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court:
(a)the nature and circumstances of the offence;
(b)other offences (if any) that are required or permitted to be taken into account;
(c)if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character – that course of conduct;
(d)the personal circumstances of any victim of the offence;
(e)any injury, loss or damage resulting from the offence;
(f)the degree to which the person has shown contrition for the offence;
(i)by taking action to make reparation for any injury, loss or damage resulting from the offence; or
(ii)in any other manner;
(g)if the person has pleaded guilty to the charge in respect of the offence – that fact;
(h)the degree to which the person has co-operated with law enforcement agencies in the investigation of the offence or of other offences;
(j)the deterrent effect that any sentence or order under consideration may have on the person;
(k)the need to ensure that the person is adequately punished for the offence;
(m)the character, antecedents, cultural background, age, means and physical or mental condition of the person;
(n)the prospect of rehabilitation of the person;
(p)the probable effect that any sentence or order under consideration would have on any of the person’s family or dependants.
(3) Without limiting the generality of subsections (1) and (2), in determining whether a sentence or order under subsection 19B(1), 20(1) or 20AB(1) is the appropriate sentence or order to be passed or made in respect of a federal offence, the court must have regard to the nature and severity of the conditions that may be imposed on, or may apply to, the offender, under that sentence or order.”
Section 16A(1) extends between “determining the sentence to be passed” to encompass “the order made”. Section 19B provides for an order. That s16A encompasses such an order is confirmed by the express reference to s19B(1) in s16A(3). The scope of considerations relevant to the exercise of the power in s19B(1) encompasses each of the matters identified in s16A(2). These matters arise at what I have described as the second stage.
Other than by reason of the applicability of s16A, s19B(1)(b) is, relevantly, in the same terms as the equivalent South Australian legislation considered by the High Court in Cobiac v Liddy (1969) 119 CLR 257. In that case the High Court by majority upheld the exercise by the magistrate of the discretion. The majority consisted of a joint judgment of Barwick CJ, Kitto and Owen JJ and a separate judgment of Windeyer J.
Of relevance to the issues raised in this case is the treatment in the two majority judgments of one factor that was taken into account by the magistrate and which, in the event, the High Court determined had been permissibly taken into account. This factor was that the offender in that case who was 72 years old, had to look after his 87 year old sister who lived with him. The joint judgment said, at 265:
“There is room at least to doubt whether this last consideration was relevant either on the question of character or antecedents: but the case was not at any stage presented in argument on the footing that the learned magistrate took into account extraneous or irrelevant considerations in exercising his discretion.”
However the Court went on to hold that the conduct relating to the older sister was permissible to be taken into account on the issue of inexpediency. The Court said at 265:
“In our opinion, the magistrate was entitled to consider whether, having regard to the age of the appellant in the circumstances which included the penalties which he had resolved to impose on the other charges, penalties which included the fact that he would be disqualified for the rest of his life from driving a motor car, and having regard also to the fact that to send the appellant to gaol would subject him to distress by reason of his being there by prevented from caring for his aged sister, it was expedient to take the course described in s4(1)I rather than to convict him. In our opinion, there was material on which the magistrate could exercise his discretion in the manner in which he did.”
Windeyer J said at 276:
“The position of his aged sister was perhaps a matter which went more to the expediency of not sending him to gaol, and thus leaving her uncared for, than a matter comprehended by the statutory list of things which were to be regarded. But I see no reason for excluding from his ‘antecedents’ the fact that he was living with and caring for his sister, a woman of eighty-six years.”
His Honour went on to hold at 277 that the offender’s “good behaviour” in this respect could be considered “among his antecedents”.
The joint judgment in Cobiac v Liddy establishes that the list of relevant considerations for determining the issue of “expediency” is broader than the list of matters specifically listed as factors to which the court must have regard.
The breadth of the discretion is confirmed in the judgment of Windeyer J where his Honour said, at 276:
“… the magistrate must be of opinion that the exercise of the power is expedient because of the presence and effect of one or more of the stated conditions, namely character, antecedents, age, health or mental condition. One of these by itself, or several taken together, must provide a sufficient ground for a reasonable man to hold that it would be expedient to extend the leniency which the State statute permits. The Act speaks of the court exercising the power it confers ‘having regard to’ the matters it states. I read that as meaning more than merely noticing that one or more of them exists. Its, or their, existence must, it seems to me, reasonably support the exercise of the discretion the statute gives. They are not mere pegs on which to hang leniency dictated by some extraneous and idiosyncratic consideration. But they are wide words. None of the matters they connote is necessarily to be regarded in isolation from the others, or apart from the whole of the circumstances of the offender and the offence.”
This last reference to the “whole of the circumstances of the offender and the offence” opens up a wide range of factors as relevant to the exercise of the statutory discretion. It appears that his Honour, like the judges who signed the joint judgment, did not take a narrow view of the scope of relevant considerations, notwithstanding his Honour’s reference the need for one or other of the specified factors to themselves be of sufficient significance to justify the finding of the expediency.
There may be a difference in approach between the joint judgment and that of Windeyer J. (See Paterson v Fenwick (1994) 115 FLR 462 at 468-469). Windeyer J appears to apply a test that one of the specified matters must of itself justify the finding of inexpediency, but that in determining that question the full range of relevant considerations may be taken into account. The joint judgment proceeds on the basis that any matter relevant to the issue of expediency can be taken into account in the ultimate exercise of the discretion, whether or not that factor itself falls within one of the facts and matters specified in the respective subparagraphs of 19B(1)(b).
As a practical matter, there may be little difference between the two approaches because of the reference Windeyer J made to the “whole of the circumstances of the offender and the offence”, together with the broad approach his Honour took to the scope of “antecedents”.
Windeyer J’s reference to the relevance of “the whole of the circumstances of the offender and the offence” has been reflected in a number of subsequent decisions. (See e.g. Aikman v Bourne (1992) 63 ACrimR 467 at 470 per Cox J; McQuestin v Australian Securities Commission (1993) 2 TasR 30 at 36-37 per Underwood J.)
The broad approach to the word “antecedents” adopted by Windeyer J in Cobiac v Liddy, left open in the joint judgment, was subsequently adopted and extended by King CJ, with whom Jacobs and Mohr JJ agreed, in Jones v Morley (1981) 29 SASR 57at 63-65:
“The word ‘antecedents’ is ‘as wide as can be conceived’; R v Vallett [[1951] 1 All ER 231], per Lord Goddard CJ at p232. It s certainly wide enough to include all aspects, favourable and unfavourable, of an offenders background, past life, personal, family, social, employment and vocational circumstances, and of his current way of life and its inter-action with the lives and welfare of others. The hardship caused to others by a sentence of imprisonment, however, is not generally (although it may be in exceptional cases …) a relevant consideration for the sentencing judge … and I do not think that even the wide term ‘antecedents’ can comprehend the predicament of a person other than the offender if it is considered precisely as the impact of the contemplated sentence on the other person … . Nevertheless there are matters arising out of the dependency of the other person which may form part of the offender’s antecedents. He is entitled to credit for the self-sacrifice of unselfishness involved in his care for another. The domestic background is undoubtedly part of the antecedents. The distress which he will experience in leaving the dependent person uncared for is also to be considered … . Although not part of the offender’s antecedents, the impact of imprisonment on the dependent person has a bearing on the expediency of sending the offender to prison. The Court has to consider whether the character, antecedents, age, health or mental condition of the offender render it expedient to exercise the powers specified in the section. This depends upon ‘the whole of the circumstances of the offender and the offence: Cobiac v Liddy, at p276. A given set of antecedents may render it inexpedient to send an offender to gaol when considered in one context of circumstances, but not in another. In considering whether the matters listed in the section render it expedient to exercise the statutory powers, it is open to the Court, in my opinion, to compare the usefulness of the offender’s way of life and the harm to another which it averts, with the futility of a term in prison.” (Most references omitted; emphasis in original)
The breadth of the considerations that arise in this regard was emphasised by King CJ on the facts of the case before the Court, when his Honour said at 65:
“There are, moreover, mitigating aspects of his antecedents. He has experienced the death of a mother and two brothers, one from suicide. His two sisters and another brother reside elsewhere and the appellant has been left to care for an aged father who is almost totally blind and who is dependent upon him in a variety of ways.”
These authorities clearly indicate the breadth of the considerations relevant to the determination of inexpediency. For purposes of Commonwealth offences that breadth is confirmed by s16A(2). It is the matters identified in that subsection which a court exercising the power in s19B(1) must take into account.
Commissioner’s Submissions
The general thrust of the submissions by counsel for the Commissioner, with respect to Question 4(I)(a), was based on the proposition that her Honour approached the decision under s19B as if she were exercising a general unconfined sentencing discretion. By reason of my conclusion that s16A(2) applies to the exercise of the power under s19B(1), this criticism of her Honour’s general approach should be rejected. The discretion was not unconfined in the sense that her Honour had to apply a test of “inexpediency”. Nevertheless, the scope of relevant considerations is the same as that which applies to the general sentencing discretion for Commonwealth offences.
When making the decision for which s19B calls a court must first identify a factor or factors which are within the respective subparagraphs of 19B(1)(b). Thereafter, a court must have regard to this factor or these factors. Finally a court must take into account the matters set out in s16A.
The issue before this Court, with respect to Questions 4(I)(a) and 4(II) is whether or not an error of law occurred by reason of the taking into account of considerations irrelevant to the exercise of the discretion which s19B(1)(b) confers. The questions do not raise any other error of law. It is only if her Honour took into account considerations irrelevant to the exercise of the power she was exercising, that a positive answer to the question actually before the Court is permissible.
As I have noted above, with respect to this particular question, no issue of inappropriate weight arises. The issue is whether or not any of the considerations taken into account were not permissible to be taken into account. By reason of s16A(2), a matter which is not relevant under one of the subparagraphs of s19B(1)(b), may be relevant to the issue of inexpediency. For the reasons which follow Question 4(I)(a) should be answered: “No”.
Status as a Barrister
The Commissioner submitted that her Honour placed weight on the fact that the Respondent was a barrister and, on its own, this is not a factor which could lead to the favourable exercise of the discretion. Her Honour did refer to the Respondent’s professional status. It does not appear that she placed any significant reliance on it. It does not appear that any submission was made to her referring to the possibility that the recording of a conviction may impinge upon the continuation of his right to practice. Any threat to the Respondent’s right to practise could transform the moderate fine actually imposed into a substantial penalty.
The professional status of an offender is within the broad approach to “antecedents” to which I have referred. This word is used in both s19B(1)(b)(i) and s16A(2)(m). Furthermore, the effect of a conviction on the offender is a material consideration when exercising the s19B discretion. It arises both with respect to personal deterrence under s16A(2)(j) and on the issue of adequacy of punishment under s16A(2)(k). It arises generally on the application of the test of “inexpediency”.
The effect upon a captain of a ship of a recorded conviction for an environmental offence has been taken into account in deciding whether or not to exercise the statutory discretion under State legislation. (See e.g. Morrison v Peers (1995) 87 LGERA 39 at 42; see generally Thorneloe v Filipowski [2001] NSWCCA 213 at [57]-[112].)
Similarly, in McQuestin v Australian Securities Commission (supra), Underwood J took into account, in the exercise of the discretion not to record a conviction, that a conviction would have an automatic consequential effect of disqualifying the offender from occupying office as a director, under s229(2) of the Companies (Tasmania) Code.
The fact that a person is subject to additional adverse consequences by reason of the recording of a conviction is a relevant consideration in the exercise of the statutory discretion. The reason this is so was stated by Gleeson CJ in R v Ingrassia (1996) 41 NSWLR 447 when his Honour said:
“The essence of s556A is that it empowers a court which considers that a charge has been proved, in certain circumstances, to take certain steps ‘without proceeding without conviction’. The legal and social consequences of being convicted of an offence often extend beyond any penalty imposed by a court.”
It does not appear that the Respondent’s status as a barrister was taken into account by her Honour in this way. There is no reference in the Stated Case to the probability of any disciplinary action. (See O’Brien v Norton-Smith (MR) Pty Ltd (1995) 83 ACrimR 41 at 45-46.) Her Honour’s references to the Respondent’s professional status were not related to any such proposition.
Reduced Motivation Following Car Accident
Question 4(II)(a) asks whether it was irrelevant to consider reduced motivation on the part of the Respondent following a car accident. In par 3(iv) of the Stated Case the sentencing judge stated that she had taken into account that the “aggravation to his back injury”, occasioned by the motor vehicle accident in 1998 “has reduced his motivation”.
Counsel for the Commissioner submitted that such reduced motivation would only be relevant to the exercise of the discretion under s19B if the trial judge had formed the opinion that the Respondent had lost motivation to submit tax returns and that this constituted an “extenuating circumstance” within s19B(1)(a)(iii).
The Respondent submitted that the primary reason for the lateness of the returns was the motor vehicle accident of July 1998 and its consequences. He submitted that her Honour appears to have accepted the significance of the accident “as the prime reason for the offences”. The findings of fact in the Stated Case do not support this submission.
In her judgment, the sentencing judge said that the Respondent:
“… has had a period which it would appear, to extend at least from the date of his accident which was 17 July 1998, where he has had a substantial degree of interference with his normal practice, professional practice and also with his ordinary lifestyle.”
Her Honour also said:
“And finally on this question of hardship, returning to the motor vehicle accident in which he was involved which appears to have been no fault of his, but more importantly it had the effect of aggravating an existing bad back, and pertinently it has apparently reduced his motivation which I think is quite an important factor in this appeal.”
Nothing in her Honour’s reasons suggested that she linked the “reduction in motivation” to the failure to submit tax returns. The reference in the second of the two passages quoted above to “hardship” is equivocal.
The reasons for judgment do not indicate the sense in which her Honour used the term “hardship”. The passage quoted occurs at the end of a paragraph concerned with hardship, in which her Honour made reference to the Respondent’s bankruptcy, his agreement to pay a certain amount per month to the Commissioner, his obligations to his son and, then, the motor vehicle accident which aggravated his bad back and reduced his motivation.
It may well be that this factor cannot be brought within 19B(1)(b)(iii). That provision does not permit the Court to have regard to “extenuating circumstances”. The provision permits the Court to have regard to “the extent to which the offence was committed under extenuating circumstances”. This subparagraph requires some kind of link between the circumstance said to be extenuating and the commission of the offence. Nothing in her Honour’s reasoning suggests that she made any such finding.
However, the mental state of the offender in terms of reduced motivation could have fallen within s19B(1)(b)(i) which refers to the “health or mental condition of the person”. It would also fall within “physical or mental condition” under s16A(2)(m). Furthermore, the breadth of the word “antecedents”, as set out by King CJ in Jones v Morley quoted above, would encompass this consideration.
It is not appropriate to parse and analyse judgments given on an ex tempore basis by judges of the District Court, who have a considerable caseload. Although it is not clear to me in what sense her Honour was using the term “hardship”, reading her judgment as a whole, I believe her reference to the reduction in motivation can be accepted to be a reference to the “health or mental condition” of the Respondent and/or to his “antecedents”. Accordingly it could be considered under both s19B(1)(b)(i) and s16A(2)(m). I would answer Question 4(II)(a): “No”.
Substantial Interstate Travel for Work
In par 3 of the Stated Case the sentencing judge referred to her concern that the Respondent had not taken “more prompt action” to comply with the notice issued by the Commissioner upon 4 April 2000. It was in this context that her Honour said that she “accepted it appeared that the [Respondent] had been interstate on quite a regular basis during the period from at least June 2000 till the date of hearing”.
No submission on the part of the Commissioner was addressed to Question 4(II)(b). It is not appropriate to answer it.
Relationship with the Respondent’s Son
In par 3(vii) of the Stated Case, the sentencing Judge said:
“I also took into account the financial obligations which the appellant has in respect of his son and the fact that, notwithstanding his difficulties, the appellant has found time to maintain his relationship with his son.”
The Commissioner submitted that the maintenance of his relationship with his son may have been an appropriate subjective matter to take into account generally in determining what penalty to impose, but it was not a relevant matter for purposes of exercising the discretion under s19B.
The Respondent submitted that:
“Her Honour’s reference to this is a relevant finding of fact as to character that does not form the basis of her Honour’s application of s19B.”
This Court is not in a position to determine the weight which her Honour attached to this factor. Paragraph 3 of the Stated Case makes clear that her Honour did take it into account.
The word “character” appearing in s19B(1)(b) should not be given a narrow construction. In her Honour’s judgment the reference to the maintenance of the relationship with his son appears in the paragraph dealing with “hardship” rather than the paragraph expressly dealing with “character”.
Her Honour’s observations were:
“… he also has found the time to maintain - which I think is a good thing - his relationship with his son.”
This appears to me to be a reference to qualities of the Respondent which could fall within the meaning of “character” in the section. In any event, it falls within the broad definition of “antecedents”, to which I have referred above. I would answer Question 4(II)(c): “No”.
Reduced Motivation Owing to Bankruptcy
Her Honour dealt with the issue of bankruptcy in par 3(vi) of the Stated Case where she said:
“I took into account, as a matter of hardship suffered by the appellant, the fact that he was made bankrupt in suit of the Commissioner in January or February 2000, resulting in his reaching agreement with his trustee in bankruptcy to pay a sum in the order of $1,300 per month.”
There was no reference in the Stated Case to her Honour taking into account any aspect of “reduced motivation” arising from the bankruptcy. On my reading of her Honour’s judgment she did not take into account a consideration in the form suggested by this question. Question 4(II)(d) should be answered: “No”.
Bankruptcy as Hardship
As noted above, her Honour said in par 3(vi) that she took into account the issue of bankruptcy “as a matter of hardship”. The Commissioner submitted that this may have been an appropriate matter to take into account in the exercise of a general sentencing discretion, however it was not a matter properly to be taken into account under s19B. The Respondent did not identify in his submissions any particular subparagraph on which he relied in support of the sentencing judge’s reasons.
The general issue of hardship and specific matters said to constitute hardship can, in my opinion, be relevant in two ways. First, as an “antecedent” on the basis of the broad definition of that word, as set out above. They may arise under s16A(2)(k) in an assessment of the need to “adequately punish” the offender “for the offence”.
Question 4(I)(a) should not be answered “Yes” by reason of this matter.
Contrition and Remorse
The Commissioner submitted that “contrition and remorse” was not relevant to the exercise of the discretion under s19B(1)(b). No specific question in this regard is asked in Question 4(II) of the Stated Case. The issue can arise under the general words of Question 4(I)(a).
In the Stated Case, her Honour said in par 3(viii):
“I also took into account the fact that the appellant has indicated contrition and remorse to the Court.”
The Respondent submitted that her Honour did not appear “to consider contrition and remorse in terms of delay”. That is not a pertinent submission. Her Honour states that she took this into account as a relevant consideration.
Contrition is expressly referred to in s16A(2)(f).
Question 4(I)(a) should not be answered “Yes”, by reason of this matter.
Failure to Take into Account Relevant Considerations
Question 4(I)(b) asks whether her Honour failed to take into account or give sufficient weight to certain matters said to be relevant to the exercise of her discretion. Question 4(III) identifies three such matters:
“(a) The length of delay.
(b) The amount of tax owing.
(c) General deterrence.”
The Commissioner’s submissions did not turn only on these three identified matters. No additional matter was referred to, however, the Commissioner did submit that the result was such that her Honour must have failed to take into account, or failed to give appropriate weight to, relevant considerations, including, but not limited to, the three matters, expressly referred to.
Counsel for the Commissioner submitted s19B is not available with respect to prosecutions under revenue legislation unless exceptional circumstances are found to exist and no exceptional circumstances had been established in this case. The absence of exceptional circumstances indicated that the discretion had miscarried in the way submitted.
The authorities on which the Commissioner relied for this wide-ranging proposition do not, in my opinion, support the proposition as advanced to this Court. The formulation of Jacobs J in Kelton v Wren (1981) 27 SASR 92, which was adopted by Yeldham J in Federal Commissioner of Taxation v Wormald International Australia Pty Ltd (1985) 17 ATR 129 and by Wright J in O’Brien v Norton-Smith (supra) differs from that urged on the Court.
Setting aside, as Yeldham J did, the fact that Jacobs J made his observations in a context that s246 of the Income Tax Assessment Act 1936 (Cth) was then in effect (as set out in Kelton v Harris at 93), Jacobs J formulated the test in the following way:
“… there must be something that clearly distinguishes the circumstances of the offence under consideration from the typical offence, or circumstances of an unusual nature personal to the defendant, before [s19B] can be properly invoked in dealing with this particular offence.” (at 93)
and
“There must be something which clearly distinguishes the particular breach of the section under consideration from what may be regarded as a typical breach of the section.”
(ibid)This terminology is not the terminology which the Commissioner urged on the Court in submissions in the present case.
Nothing further is gained from the formulation applied by Wright J in O’Brien v Norton-Smith, to the effect that the conclusion in s19B(1)(b) should only be drawn on the basis of “substantial reasons”. It can readily be accepted that “substantial reasons” are required.
As Windeyer J said, in the context of concluding that the then equivalent of s19B in South Australia applied to the offence under consideration in that case:
“The whole history of criminal justice has shewn that severity of punishment begets the need of a capacity for mercy. …[A] capacity in special circumstances to avoid the rigidity of inexorable law is of the very essence of justice.”
(Cobiac v Liddy (supra) at 269)See also R v Ingrassia (supra) at 449 per Gleeson CJ.
This general policy served by s19B is as pertinent to revenue offences as it is to other offences. The statute formulates a test of whether punishment is “inexpedient”. I do not see any warrant for replacing the statutory formulation with terminology as broad as “exceptional circumstances” in a particular sphere of regulation. This conclusion does not, however, cast any doubt on the importance of giving consideration to issues of seriousness, prevalence, difficulties of detection etc to which I will refer under the heading of “General Deterrence” below.
The Stated Case before the Court consists of a summary of the facts, the judgment and a statement of matters taken into account. The evidence before Backhouse DCJ included a number of documents, including character references, which contained information about the Respondent’s health and conduct. Such matters require qualitative assessment before it can be determined whether they provided a proper basis for the conclusion reached by her Honour. The documents on which her Honour relied are not before this Court. The evidence before her Honour was not annexed to the Stated Case.
This Court cannot, on the basis of a summary statement of facts, infer from the result itself that some error of principle must have occurred. A stated case is not an appropriate procedure to determine the general issue raised by the Commissioner. The three specific matters identified can, however, be determined.
Delay
The Commissioner submitted that the Respondent eventually filed returns nine months after the date of the notice and six and a half months after the letter advising that no further time would be granted. Nothing further was done, the Commissioner submitted, prior to the issue of summons. The returns were filed the day before the Local Court hearing.
In her reasons for judgment, her Honour said:
“… I was concerned as to why he had not taken more prompt action when he did receive notification from the Commissioner, which was in May of this year. He did make an application at that time for an extension of time which was ultimately refused, and it appears that he has been interstate on quite a regular basis during the period, at least June 2000 up until the present time.”
I note that her Honour’s reference to “May of this year” was in error. She should have said “May of last year”. Nothing turns on that.
The Commissioner submitted that these considerations could not explain the delay that has occurred and, by apparently accepting that they did do so, her Honour failed to take into account the extent of delay. In assessing this submission, the Court is confined to the facts in the Stated Case.
Delay was in my opinion a relevant consideration that the Court was obliged to take into account. It falls within the “nature and circumstances of the offence” under s16A(2)(a).
Plainly, her Honour averted to the issue of delay. That does not, however, necessarily mean that she gave it real consideration. The issue is a fine one. Did she conclude that the matter to which she referred meant that delay should be accorded little weight. Alternatively, did she conclude that by reason of the matters to which she referred, the issue of delay was not entitled to consideration? Whilst accepting that her Honour’s reasons should not be read over critically, I have formed the opinion that her Honour took the latter approach and in doing so failed to take into consideration a matter which she was obliged to take into account under s16A(2)(a).
The statement of facts states in par 2(viii) that “The appellant has been working interstate on a regular basis from at least June 2000 to the present time”. Although, no date in June is specified, this absence commenced at least a month after the offence, which was complete on 2 May 2000.
Her Honour referred to the application for an extension of time. On the facts before the Court that application was made on 28 April 2000 and rejected the same day. Compliance with the notice to furnish returns did not occur until 9 January 2001. This was more than eight months after the Respondent’s application for an extension was rejected.
I agree with the Commissioner’s submission that the considerations to which her Honour referred were not such as to deprive the delay which actually occurred of significant adverse weight in the exercise of the statutory discretion. Delay was a pertinent factor in assessing the quality of the offence committed. If the notice had been complied with within a short time after the date specified within it, the offence would appear in a different light from the point of view of s19B.
Her Honour, accordingly, dismissed a relevant consideration for reasons which were, in my opinion, inappropriate. This was not a matter of fact and degree. Her Honour failed to have regard to a relevant consideration on the basis of matters which were not themselves relevant to that consideration.
I would answer Question 4(I)(b) and Question 4(III)(a): “Yes”.
Amount Owing
It was submitted that her Honour failed to take into account the amount of tax owing. Her Honour did refer to the fact that the assessment for the year ended 30 June 1998 had been issued and the amount owing was in the order of “$5,000”. Her Honour expressly referred to the liability of $76,974.28 for the year ended 30 June 1999. Her Honour’s reference to these matters was sufficient to indicate that she did take the amounts owing into account. Question 4(III)(b) should be answered: “No”.
General Deterrence
It was next submitted that her Honour failed to take into account general deterrence with respect to revenue offences. There was no reference to general deterrence in her Honour’s reasons. Her Honour did, however, observe that the use of s19B is “traditionally … not seen to be appropriate for offences under any revenue legislation”. She repeated that such use is “generally not an appropriate course to be taken by the Court in relation to revenue legislation”. The Respondent submitted that this was, in effect, an acknowledgment of the significance of general deterrence in sentencing for these offences.
General deterrence is not expressly listed in s16A(2). However, the authorities establish that it remains a relevant consideration for purposes of sentencing for Commonwealth offences. (See e.g. R v Paull (1990) 20 NSWLR 427; DPP v El Karhani (1990) 21 NSWLR 370; R v Sinclair (1990) 51 ACrimR 418).
The significance of the conduct regulated by the statute which creates an offence is a consideration to which a sentencing judge must have regard in deciding whether it is “inexpedient” to impose punishment in a particular case. Such matters fall within “the whole of the circumstances … of the offence” to which Windeyer J referred in Cobiac v Liddy at 276 and within “whether it is expedient in all the circumstances”, to which the joint judgment referred at 265. (See also the “whole of the circumstances of the offence” in Kowald v Hoile (No. 2) (1976) 14 SASR 314 at 321 per Zelling J; Aikman v Bourne (supra) at 470 per Cox J; McQuestin v Australian Securities Commission (supra) at 36.
In Lanham v Brake (1983) 34 SASR 578 at 585, Cox J was concerned with the application of s19B(1) in the context of offences of bringing fruit into Australia contrary to the Quarantine Act 1908 (Cth) and the making of a false statement to a Customs Officer, in this respect. His Honour referred to the seriousness of the offence and said at 584:
“This is an area, in my view in which considerations of deterrence must predominate”.
Cox J also said at 585:
“In the case of these quarantine offences, the relevant considerations will include the seriousness of the offence, its prevalence, the obvious difficulty of detecting breaches under disembarking conditions in which its quite impracticable to examine the luggage of every passenger … .”
His Honour concluded at 586 that the magistrate “had insufficient regard to the intrinsic seriousness of this sort of offence.”
With respect to second appeal, involving the importation of chestnuts, Cox J again referred to the seriousness of the offences and concluded at 589:
“In my opinion, the learned Special Magistrate’s s19B orders, interpreted in the light of the facts before him and his own sentencing remarks, show that he must have failed to give sufficient consideration to the seriousness of the offences and the need to impose penalties that will act as a deterrent to others who are minded to commit similar breaches of the quarantine laws”.
On the basis of these authorities, the matters to which the Commissioner referred under the heading “General Deterrence”, are pertinent to the exercise of the statutory discretion. Her Honour made no express reference to any such matter in her judgment. This Court is reluctant to infer that a sentencing judge has failed to take into account a relevant consideration, only because express reference to it does not appear in the reasons. The judgment must be considered as a whole in order to draw any such inference.
Two factors indicate that this Court should not draw the inference in this case. First, her Honour referred on two occasions to the fact that s19B is not generally seen to be appropriate with respect to revenue offences and, in that context, expressly referred to the line of authorities on which the Commissioner relied in this Court, as before her Honour. Secondly, her Honour expressly found that the offence was not a “trivial” one.
I have not found this issue easy to resolve. It would have been desirable that these important considerations were articulated more fully. On balance I am not prepared to conclude that her Honour failed to take the matter into account. I am also unable to conclude, without access to the whole of the materials that were before her Honour, that the result itself showed that her Honour failed to give these considerations appropriate weight.
Question 4(III)(c) should be answered: “No”.
The Application of s19B
Question 4(IV) is in the following terms:
“Did I err in law in categorising the circumstances before me as satisfying recourse to the provisions of s19B Crimes Act 1914?”
The jurisdiction of this Court on a stated case under s5B of the Criminal Appeal Act 1912 is limited to a “question of law”. The question of law which appears to be raised under this particular question is whether only one finding was, in all the circumstances, open. (See for example Attorney-General (NSW) v X (2000) 49 NSWLR 653 at [56]-[63].)
For the reasons outlined above, the summary statement of facts contained in the Stated Case does not permit the Court to answer a question of this kind. The whole of the evidence before the first instance court would have to be annexed to the Stated Case. During the course of argument, counsel for the Commissioner accepted this proposition and did not press for an answer to this question.
The “Second Offence”
The proceedings before Backhouse DCJ were convictions for two offences of failing to furnish an income tax return, when required pursuant to a taxation law, contrary to s8C(1)(a) of the Taxation Administration Act 1953. The requirement was to furnish income tax returns for each of two years pursuant to a single notice issued on 4 April 2000 and to do so on the same day.
In her judgment her Honour said:
“There are indeed two offences in the technical sense, but each failure resulted in an offence and both matters were included in an Information and Summons before the court … .”
The Commissioner submitted that it was apparent from her Honour’s reasons that she failed to take into account that one of the offences was a “second offence”. Presumably the second charge on the Information being the second of the two financial years with respect to which a return was not filed, is the “second offence”. It was submitted that her Honour did not exercise her discretion separately with respect to that offence, taking into account the fact that it was a second offence.
In my opinion this takes an artificial approach to the hearing before her Honour. Her Honour’s reference to the fact that there were two offences “in the technical sense”, reflected the fact that they were both committed in the same constellation of circumstances which her Honour found to be relevant for purposes of exercising the discretion under s19B. Each was, in fact, triggered by the Respondent’s failure to furnish a return on exactly the same day, i.e. on or about 3 May 2000, as required by a single notice, issued to the Respondent with respect to two separate financial years. In these circumstances it was open to her Honour to consider the two offences together for purposes of exercising the s19B discretion. I would answer Question 4(V): “No”.
Conclusion
The answers I propose are:
4(I) (a) No;
(b) Yes;
4(II) (a) No;
(b) Decline to Answer;
(c) No;
(d) No;
4(III) (a) Yes;
(b) No;
(c) No;
4(IV) Decline to Answer;
4(V) No.
SIMPSON J: I agree with the Chief Justice.
EINFELD AJ: I have read the judgment to be delivered by the Chief Justice. I agree with his Honour’s analysis and conclusions. I would answer the questions posed in the same way as his Honour.
**********
LAST UPDATED: 11/09/2001
11
8