Hookham v The Queen

[1994] HCATrans 228

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl48 of 1993

B e t w e e n -

MARK ERNEST HOOKHAM

Applicant

and

THE QUEEN

Respondent

Application for special leave

to appeal

BRENNAN J
DAWSON J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

Hookham 1 4/3/94

AT SYDNEY ON FRIDAY, 4 MARCH 1994, AT 9.30 AM

Copyright in the High Court of Australia

MR J.M. SPENDER, QC:  May it please Your Honours, I appear

for the applicant. My learned friend,

MR D.B. McGOVERN, appears with me. (instructed by

Thorntons)

MR M. ROZENES, QC:  May it please the Court, I appear with

my learned friend, MR P.A. JOHNSON, for the

respondent. (instructed by the Commonwealth

Director of Public Prosecutions)

BRENNAN J:	Mr Spender.
MR SPENDER:	If Your Honours please. Your Honours, before

going to the argument which I believe orally may be

put briefly, may I correct one matter, Your Honour,

which appears in the application book and that

appears at page 28. Your Honours will see that at

page 28, around about line 30, that the deponent,

my instructing solicitor says that he had been:

pending before the Court of Criminal Appeal at

informed by Wendy Elder the Criminal List

present are some twelve cases involving
consideration of the scope and application of

Section 21B ..... of the Crimes Act 1914 in

connection with offences against Commonwealth

Revenue Laws. Of these pending cases at least two involve applications for reparation orders

each in excess of $700,000 one involving

approximately $590,000 and of the balance all

but one involve amounts of the order of

approximately $300,000.

And he also says that he is:

informed by Heather Armstrong the Officer of

the Commonwealth DPP having carriage of the

present case that she is personally aware of

Taxation is seeking reparation orders - some 20 cases where the Commissioner of

In fact, Your Honours, the Commonwealth Director of Public Prosecutions has advised that Wendy Elder is the clerk of the court at St James Local Court and

that the 12 cases are pending before the St James

Local Court and have been adjourned pending

resolution of this case. We have a letter to that

effect which I am happy to provide Your Honours

but, perhaps, that is all that need be noted.

BRENNAN J: Yes.

MR SPENDER:  Your Honours, the principal argument and the

principal question in this case is whether a person

Hookham 4/3/94

who is deemed by section 8Y of the Taxation

Administration Act to have committed a taxation offence is deemed the deemed failure of a taxpayer

company to remit group tax, that is, he is deemed

to have committed that offence and may be made

liable by reason of that deemed offence and the
operation of section 21B of the Crimes Act to make
good the default of the taxpayer company down to

the last penny of his personal assets.

This is an outcome which it is perfectly

competent of the Commonwealth Government to impose

no matter how unjust it might at first sight

appear, indeed, one might say, upon any view of

things, but if it is to be imposed, in our

submission, it must be imposed by language which is

unambiguously clear. The question for

determination requires an examination of two
provisions: section 8Y(l) and (2) of the Taxation
Administration Act and section 21B of the Crimes

Act.

Your Honours will have in the submissions and

before Your Honours the terms of section 8Y(l) and

(2) which provide, as Your Honours see, by 8Y(l):

Where a corporation does or omits to do an act

or thing the doing or omission of which
constitutes a taxation offence, a person (by

whatever name called and whether or not the

person is an officer of the corporation) who

is concerned in, or takes part in, the

management of the corporation shall be deemed

to have committed the taxation offence and is

punishable accordingly."

That appears, Your Honours, in paragraph 3 of the

written submissions. Your Honours will note that

the net is cast very widely indeed. The

respondents, in their written submissions, have

drawn attention to section 8Y(2) and that appears

in paragraph 2 of their written submissions, and

that provision reads in these terms:

In a prosecution of a person for a taxation

offence by virtue of subsection (1), it is a

defence if the person proves that the person -

(a) did not aid, abet, counsel or procure the

act or omission of the corporation concerned;

and

(b) was not in any way, by act or omission,

directly or indirectly, knowingly concerned

in, or party to, the act or omission of the
corporation.

Hookham 4/3/94

So that if one looks to sections 8Y(l) and (2) one sees that wh~t they provide is this, that:

a corporation does or omits to do an act or

thing the doing or omission -

to do that act or thing -

constitutes a taxation offence, a person (by

whatever name called and whether or not the

person is an officer of the corporation), who

is concerned in, or takes part -

words of very wide import -

in, the management of the corporation shall be

deemed to have committed the taxation offence

and is punishable accordingly.

That is to say as if he had in fact committed the

offence.

It will be observed, Your Honours, that the provision is not confined to directors or tho·se who

exercise executive or controlling functions.	The
net is cast wide and is subject only to the exculpatory provisions of section 8Y(2) which,
amongst other things, state that if you are:

indirectly, knowingly concerned in, or party

to, the act or omission -

complained of that you have no defence, and one can
imagine various examples such as a subordinate who

is instructed not to send a cheque in for group tax, who is instructed by a senior officer, who

obeys that instruction would then be concerned in

the offence for the purposes of section 8Y.

If one turns, Your Honours, to section 21B of

the Crimes Act.	The provisions of section 21B are
relevantly set out in paragraph 3 of the written

submissions and that provides that, "Where a person

is convicted" of an offence against a law of the

Commonwealth, and then goes on to refer to an order

under section 19B which we may put to one side for

present purposes:

the court may, in addition to the penalty, if

any, imposed upon the person, order the

offender -

(a) to make reparation to the Commonwealth or

to a public authority under the Commonwealth,

by way of money payment or otherwise, in

respect of any loss suffered, or any expense

incurred, by the Commonwealth or the

Hookham 4 4/3/94

authority, as the case may be, by reason of

the offence -

that is, by reason of the offence itself; not by

reason of any deemed offence, and then by (d) there

is a provision:

to make reparation to any person, by way of

money payment or otherwise, in respect of any

loss suffered by the person as a direct result

of the offence.

And one can imagine postal offences where there has

been the theft of mail, a person has lost something

directly as a result of that and the Commonwealth

has suffered a loss and may be put to expense and
would have a recoupment available to it under (c),

and the individual would have a recoupment

available to him for the direct loss under (d).

Now, if the loss is not suffered by reason of the offence, no jurisdiction exists to make a

reparation order. And "reparation" in its ordinary

meaning, to take the Macquarie Dictionary

definition of it, means "the making of amends for

wrong or injury done", and one would think that

ordinarily this is directed to making reparation

for something which one does oneself, not for

making reparation for something which has been done
by someone else and for whose actions or omissions

you are deemed to be criminally liable.

Your Honours, we would make these submissions on

the interpretation of these provisions.

DAWSON J: Obviously what you are saying, Mr Spender, you

are saying that if any loss was suffered it was
suffered by reason of the offence of the

corporation - - -

MR SPENDER:  Of the corporation, precisely.

DAWSON J: Not by reason of the deemed offence of the

MR SPENDER: There could be many individuals who are

concerned in the management or take part in the

management of a corporation. Each of those could

have a deemed criminal liability under section 8Y.

If the Commonwealth argument is correct, each of

those individuals is liable to a reparation order

for the whole of the loss suffered. But those are

deemed criminal liability, Your Honour. The

actuality of the matter is that the transaction

which leads to the loss by the Commonwealth is the

failure of the company to remit group tax.

DAWSON J:	I follow.
Hookham	4/3/94

MR SPENDER: For that failure other individuals are deemed

to be criminally liable.	One can understand the
policy reasons behind that proposition.	But what

the Crown argues, what the Commissioner for

Taxation argues is that section 21B, which has been

around for many decades in the Crimes Act, may be

used as a means of reparation against the

individual resources of anybody who has been

prosecuted under the deeming provisions of

section 8Y of the Taxation Administration Act. If

that is an outcome which is to be available to the

Commonwealth, in our submission, it is an outcome

which can only be achieved by the clearest possible

language.

Now, against that, if I may put that in

summary, what we would put to Your Honours on this

matter, first, that the act or omission leading to

the loss, that is to say the non-payment of group

tax, is the company's act or omission. It is by

reason of that act or omission that the loss is
suffered, and it is straining the language to say
that it is by reason of any other act or omission.

It is not by reason of a deemed criminal offence.

Secondly, that the deemed offence is a

statutory fiction or construct and is limited to

the deeming of the offence itself. The director's

actual culpability is never in issue as he is

deemed culpable - - -

DAWSON J: What is the offence? The offence is - - -

MR SPENDER:  Failure by the company to remit group tax,

Your Honour.

DAWSON J:  So he is deemed to be - if he is deemed to be

guilty of that offence, is he deemed to be the

company?

MR SPENDER:  No, Your Honour. He is deemed to be guilty of

that offence, that is anyone who is concerned in or

takes part - - -

DAWSON J:  I know that, but what is the offence that he is

deemed to be - - -

MR SPENDER:  He is deemed to be guilty - - -

DAWSON J: Guilty of failing to send in the money.

MR SPENDER:  - - - of the company's offence, which is the

company's offence of failing to send in the money.

DAWSON J:  You can only do that one of two ways; he is

either deemed to be the company for that purpose or

Hookham 6 4/3/94

he has deemed himself to have failed to

send in the money~

MR SPENDER:  No, Your Honour. With great respect what the

section says is that	he is deemed to have committed
the offence himself.	Of course, what it says is
that a person:

who is concerned in, or takes part in the

management of the corporation shall be deemed

to have committed the taxation offence -

it does not deem him to have done the act itself.

It does not deem him to have omitted to do the act

nor does it deem him to be the company.	What it
does is simply to say, "You are concerned,

therefore we are going to deem a statutory fiction"

and a statutory fiction is - or the statutory construct is that you shall be deemed to have

committed the offence.

TOOHEY J: That rather overlooks the terms of the charge,

does it not, Mr Spender? The charge is failing to

pay to the Commissioner of Taxation the amount of

deductions.

MR SPENDER:	Your Honour, that is the way in which - - -
TOOHEY J:	The operation of section 8Y then deems the individual to have failed to - in terms of the
charge - to have failed to have made the deduction,
or to have paid to the Commissioner of Taxation the
amount of deductions -

MR SPENDER: That, Your Honour, is the way in which the

charge is expressed, and let us assume for present

purposes that it is correctly expressed.

TOOHEY J: Well, it is not a matter of the way in which it

is expressed, is it? It is the charge of which the

applicant was convicted.

MR SPENDER: That you are a person who is concerned in or

took part in the management of a corporation which

omitted, not you omitted, which omitted to do an

act or omission which constitutes an offence.

BRENNAN J:  Then you are deemed to have committed that

offence yourself.

MR SPENDER:  You are deemed to have committed that offence,

everyone is deemed to have committed that offence.

BRENNAN J:  And to be punishable accordingly.

MR SPENDER: That is so, Your Honour, yes.

Hookham 7 4/3/94

BRENNAN J:  Now, that means you are to be punishable as though you had committed that offence.

MR SPENDER: Precisely, Your Honour.

BRENNAN J: 

Now, if you had committed the offence of not

remitting the money, you can be punished as though
you had not remitted the money.

MR SPENDER: That is so, Your Honour.

BRENNAN J: Cadit quaestio.

MR SPENDER: But that, Your Honour, is only for the purpose

of section 8Y.

BRENNAN J:	Of course.
MR SPENDER:	It has no bearing upon section 21B.

BRENNAN J: Unless 21B is relevant to the question of

punishment.

MR SPENDER:  21B, Your Honour, picks up the notion of

reparation. What it says is that if you are

convicted for a federal offence then, if there has

been loss suffered, you may be ordered to make a

reparation order, if the offence for which you have been convicted, if it is by reason of that offence, that loss has been suffered.

DAWSON J:  What you really say is the offence is clear

enough, that was the company - - -

MR SPENDER:  No question about that, Your Honour. The

company was guilty of an offence.

DAWSON J: There was no loss caused by the deemed offence.

MR SPENDER: Precisely, Your Honour.

DAWSON J: Unless you say it is a deemed loss, and that is

not what the section of the Crimes Act says.

MR SPENDER: Precisely, Your Honour, precisely.

BRENNAN J:  I think we understand that argument, Mr Spender.

Because it is not the only argument you have, is

it?

MR SPENDER:  It is the only argument, Your Honour, that we

wish to address in our oral submissions.	In that
respect, we would draw Your Honour's
attention - - -

DAWSON J:  You do not want to say that reparation is not

punishment?

Hookham	4/3/94
MR SPENDER: Reparation, Your Honour, is in effect

punishment, but is not so expressed. It is a debt

which is recoverable by the Crown, even though

failure to pay the debt does not give rise to any

liability for imprisonment. Reparation is, of

course, effectively a form of - shall we say it is

an adjunct which is given to the Court for certain

purposes.

DAWSON J:  I would have thought you might have said that

"punishable accordingly" is the sum total of what

section 8Y(l) provides for, and it does not extend

to reparation.

MR SPENDER: It does not, Your Honour, it does not. Because

reparation comes under section 21B of the

Crimes Act, and I put to Your Honours that the

framers of that provision would have been somewhat

surprised for it to be given the reach that the

Commissioner for Taxation puts to it. And if we

could add very briefly, Your Honours, these points:

first, we draw Your Honours' attention to what was said by Mr Justice Gibbs in Murphy's case which is

referred to in paragraph 7 of the written

submission, where His Honour, in a stronger case,

was clearly of the view, in our submission - was

certainly of great doubt that where a person was

deemed to be the owner of goods, a far stronger
case, then in such case he should have a reparation

order made against him, and said that he was not

going to make an order without hearing further

argument on the subject.

BRENNAN J: Will you just show us where that appears in

Justice Gibbs' judgment because the order at the

end - - -

MR SPENDER: Yes, Your Honour. It appears at the very end

at page 200 of the judgment at 47 ALJR at 198, and

what he says is this, on the right-hand column of

page 200 about point 6. He says that he was asked

to order the defendants jointly pay the amount

evaded, and it seemed to him:
as at present advised, that a person who is
found guilty in a customs prosecution of
offences against the Act is a person who is
"convicted" within the section, and that the has not been paid the evaded duty. Relief of
this kind was not sought in the statement of claim -
et cetera.	As to the second defendant:

and in this submission reliance was placed

upon section 182 of the Act, under which any

Hookham 9 4/3/94

person authorized by the owner to act as his

agent in relation to any goods for any

purposes of the Act, shall for such purpose be

also deemed to be the owner of such goods and
shall be personally liable for any ~enalties

recoverable under the Act in the same manner

and to the same extent as if he were

principal. I am not prepared to hold, in the

absence of argument, that the effect of this

section is that an agent is liable for the

duty which would have been payable by the

owner of the goods.

As we say, Your Honours, a stronger question. If we could just sum up very briefly, Your Honours.

We would refer also to what His Honour

Mr Justice Dixon said in Lean v Brady as to the need in deeming provisions, where you were deemed

to pick up the taxation liabilities for others, for
these to be expressed in the clearest possible

terms, and it is the reasons why, if the argument

is appealing to Your Honours, leave should be

granted.

It is first of all that an erroneous and

Draconian interpretation of the law should not be allowed to stand, with the widespread consequences

that it may have. Second, that the interpretation

of section 21B, which is put forth on behalf of the

Crown, would apply to many other cases, for example

Customs offence which was before His Honour

Mr Justice Gibbs. Third, 21B now continues in

parallel with new provisions which have been
introduced but which do not touch the situation but

which illustrate the injustice of 21B, because

under that you can get no contribution or indemnity

from others whereas, under the provisions which

have been introduced for other purposes in the allowed.

As to the other matters which we put to

Your Honours there is nothing that we would wish to

add to the written case which we have put before

Your Honours.

BRENNAN J: Thank you, Mr Spender. Mr Rozenes?

MR ROZENES:  Your Honours, the submissions put by our

learned friend fundamentally misconceive the status

of the applicant upon conviction. He has not been

convicted by some statutory interpretation, but

rather he has been convicted because he is

classically an accessory to the crime of the

company. To demonstrate that, one only needs to

look at section SY to see that notwithstanding the

Hookham 10 4/3/94

fact that subsection (1) has a broad grab at first

instance, in the sense that it picks up all

managers, officers, who are knowingly concerned or involved with the corporation, but before they can

be convicted a defence has to be dealt with, and

the defence is set out in subsection (2).

When you look at subsection (2) what is clear, in our submission, is that what is picked up is the

classic wording of "accessorial liability", almost

word for word comparative to section 5 of the

Commonwealth Crimes Act.

DAWSON J: What about (b), is that not a little wider,

paragraph (b).

MR ROZENES:  Only marginally wider, Your Honour.

DAWSON J: Well, where is the margin?

MR ROZENES:  The difference being that section 5 picks up

both concepts of aiding and abetting and being

knowingly concerned or party to - if I could take

Your Honours perhaps through that.	Do Your Honours
have copies of the Crimes Act?

BRENNAN J:  I do not think we have the Crimes Act as such,

but we have your notes of argument which contains

it.

MR ROZENES:  Firstly, in relation to 8Y(l), it is clear that

what is picked up -

BRENNAN J: We have sections 4K, 4L and 5, is that right?

MR ROZENES: Section 5. Now, 5 picks up "aids, abets,

counsels or procures", almost word for word in A:

or by any act or omission is in any way

directly or indirectly knowingly concerned in,
or party to, the commission of any offence.

TOOHEY J: But section 8Y(l) does not, in terms, require

that a person be knowingly concerned.

MR ROZENES: Exactly. 8Y(l) simply grabs - because what

8Y(l) does, in our submission, is simply reverses

the onus of proof in circumstances involving
corporations and tax matters and then can only
convict if the person is a true accessory to the

offence of the company, with a reversed onus.

TOOHEY J: Well, that is one way of putting it, but it

overlooks the onus of proof.

MR ROZENES:  Yes, there is no doubt about that, Your Honour.

It reverses the onus of proof, but ultimately at

Hookham 11 4/3/94

the end of the day the only person that is

convicted is not the person who is grabbed out of

the corporation, but one who has aided and abetted
the corporation in committing the offence, or been

knowingly concerned in the commission of the

offence by the corporation.

BRENNAN J:  No, the only person who is convicted is one who

has not discharged the onus of proving -

MR ROZENES:  But he is convicted as an accessory,

Your Honour. He does not fall into some -

BRENNAN J:  He is convicted under 8Y(l), is he not?

MR ROZENES:  No, Your Honour. He cannot be convicted of (1)

if he has got a defence under (2).

BRENNAN J:  He can be, because he might not choose to prove

it.

MR ROZENES:  But then he has got no defence under (2), he

seeks not to rely upon a defence.

BRENNAN J: That is right, for whatever reason.

MR ROZENES: Well, it is the downside, Your Honour, of a

number of parts of our criminal law, where the onus

is reversed. I do not applaud the

reversal of - - -

DAWSON J:  You say our criminal law, you mean the

Commonwealth criminal law?

MR ROZENES:  I think there is some interstates as well,

Your Honour. There are a number of reversals of

onus of proof which do not sit comfortably with the

traditional criminal law concepts, and this might

be one of them.

BRENNAN J:  But we are not concerned with the propriety of

reversing an onus of proof. The question, in terms

of analysis, is whether or not those who, though

they are not in truth accessorially liable, have
not been proved to be not accessorially liable, and

the imposition on them of the liability which 21B

would impose.

MR ROZENES:  Your Honour, in reality what one here chooses

between is the acceptance of criminal liability
being imposed upon them with the consequent

matters that follow from that, including a term of

imprisonment, but for some reason baulking at the

fact of making restitution. If we are going to be

concerned about anything, we would be concerned

about the fact the legislature has seen fit to

impose criminal sanctions on a person, in the

Hookham 12 4/3/94

circumstances in which Your Honour poses, where he

has seen not fit to exercise a defence that may be

open to him.

BRENNAN J:  How does the Crown, or the prosecution of the

Commonwealth, discharge the onus of proof under

21B, that is the onus oi proof which is involved in

the words "by reason of".

MR ROZENES:  It simply says that on any - once the accused

has been convicted it relies, firstly, of course,

on the fact of conviction. Secondly, it says that

he must have been accessorially liable for the

default of the company. So that he has either -

one would imagine in tax matters it would be a

procuring of the company to omit or to do an act.

BRENNAN J: But non constat. I mean it just does not follow

from the conviction that he is accessorially

liable, does it?

MR ROZENES: With respect, Your Honour, it must, in our

submission, because it cannot be that Parliament
has created an animal which permits a person ·to go

to gaol for doing no more than participating in the management of a corporation, where that corporation

commits a criminal offence. It would mean that

every manager, as my learned friend puts, every
manager, every accountant, every person who has got

something to do with the management of the

corporation and fits in within the broad grab of
subsection (1) is liable to a term of imprisonment

for a default of the company.

Now, we would submit that that cannot be so;

that one must look at the whole of section 8Y as
one and recognize it for what it is, in our

submission, a mere standard accessorial section with a reversed onus of proof. I mean it could

have been expressed in a different way. It could

have been expressed in a classic way "proof whereon shall lie upon him" It has not been. The onus has

been reversed, first, and then the accused has been

given a defence which is in classic accessorial

terms.

DAWSON J:  You seek to draw a distinction between reparation

and punishment in what you are saying.>

MR ROZENES:  I think reparation is not punishment.

Reparation is putting people back - - -

DAWSON J:	Why does it come within 21B?
MR ROZENES:	Because 21B picks up every offence - - -

Hookham 13 4/3/94

DAWSON J:	I am sorry, not 21B, 8Y, and is punishable accordingly?
MR ROZENES:	In our submission, Your Honour, every offence

simply talks about punishment. It never mentions

reparation at all. Reparation is picked up

by 21 - - -

DAWSON J:  When you get a deeming provision, as you do, with

8Y, it prescribes the whole of the consequences of

the deeming, does it not?

MR ROZENES:  It deems that an offence has been committed.

DAWSON J: And the offender is punishable accordingly, but

that is the end of it.

MR ROZENES:  What is being said, in our submission, about

that is that the offender is punishable as if he

had committed the offence in the same way in which

the company can be punished, and the company, we would submit, could clearly be the subject - - -

DAWSON J: But it deems the offence for that purpose a·nd not

for the purpose of reparation under 21B.

MR ROZENES:  Your Honour, it must mean, in our submission,

that every person convicted by a deeming provision

would be amenable to the same punishment that the

principal be amenable to.

DAWSON J: Punishment yes, but reparation no.

MR ROZENES:  But punishment must include, in our submission,

all the collateral matters that go with punishment.

DAWSON J:	I thought you conceded that reparation was - - -
MR ROZENES:	No, no. All I am saying, Your Honour, is that

reparation itself may not be punishment in that

sense, but it clearly is a course that is open, in

our submission, to any sentencing authority to

award reparation in cases, just as it would be to

do any other ancillary matters that surround the

question of punishment. The example in section 5

is the same. Section 5 deems the offender to have

committed the offence of the principal, in a normal

case not involving the Tax Act.

Now, we would submit that in those cases it is

clear that once such a person is so convicted

section 21B must have application to it. He is

then convicted of an offence; whether he gets there

as a principal or gets there as an accessory or

gets there by virtue of a reversed onus provision,

in our submission, makes no difference at all.	The
fact is that he is convicted and therefore

Hookham 14 4/3/94

satisfies the first requirement of section 21B.

The next question - - -

BRENNAN J:  I think we understand your argument-on that,

Mr Rozenes. What do you say about the problem of

recovery by the Commonwealth under the

Taxation Administration Act and the inapplicability

of 21B as a general provision which does not deal

with the specific provisions of the

Taxation Administration Act?

MR ROZENES:  We would submit, Your Honour, that this is

misconceived as a recovery of tax; it is not.	The
Taxation Commissioner has his remedies, and can
exercise them when he sees fit.	The

Tax Administration Act and the Income Tax

Assessment Act make no provision for reparation orders whatsoever. They make provision for the

payment of penalty and even in circumstances where

there is provision made for the payment of penalty,
that is specifically described as not affecting the

Commissioner's right to recover in any event.

The reparation order, we submit, has

absolutely nothing to do with the recovery of

revenue. It is merely restoring a loss to the

Commonwealth.

DAWSON J: It seems to amount to revenue, does it not?

MR ROZENES: Well, only because it is calculated by

reference to - - -

DAWSON J:	- - - the loss of revenue.
MR ROZENES:	The loss of revenue, but it is not the recovery

of revenue, and we would submit that -

DAWSON J:	What is it?
MR ROZENES:	It is a discretionary remedy that is available

where that injured party might not have been had it	to a court to put the injured party into a position
been but for the default of the accused. But it is
a discretionary remedy. The recovery of tax is not
discretionary. If what my friend says is correct,
then every director and every person involved in
the management of a corporation could be the subject of a 21B order, and we say that is not so.
It is only those persons who are criminally
involved in the criminal conduct of the corporation
that are exposed to a 21B order, and then it is
discretionary.

BRENNAN J: Each of them is severally liable to make good

the default.

Hookham 15 4/3/94

MR ROZENES:  As would be any number.of accused who had been

party to a criminal act wh~ch has caused loss to a

third party, yes, Your Honour. And it is a

question of how much should be attributed to any

particular person, or any at all.

DAWSON J: Could you recover it six or seven times over?

MR ROZENES: Well, one would think that a court would be

loathe, Your Honour, to impose -

DAWSON J: But does the section allow it?

MR ROZENES:  It would allow the first recovery, Your Honour.

The second recovery, there might be argument that

no loss at that stage was still extant.

TOOHEY J: There is no reparation to be made, is there?

MR ROZENES:  Then there is no reparation to be made. If the

party is put back into the position in which it

was, the second, third, fourth, fifth and sixth

defendants would probably be saved. But it is not

an uncommon proposition, Your Honours, that

reparation follows conviction for a criminal
offences. There is no reason, in our submission,

why the Commonwealth, through the Commissioner for

Taxation, should be in a different position to any

other injured party merely because there is a

reversed onus provision that picks up the default

indirectly.

There is nothing in the legislation, in our

submission, and nothing in any of the parliamentary
speeches that indicates that there is something

less that attaches to a conviction that is deemed

as opposed to one where the liability is as a

principal. Were it to be otherwise, as we say,

every accessory would be in the position of being

in some special position. We know that is not so

because every Act that deals with accessories says

they shall be punished as if they were the

principal in exactly the same way.

It is illogical, in our submission, that that

should not have attached to it reparation orders

which attach to every other offence and for every

other guise in which the Commonwealth finds itself

except for the taxation position because it is said

that this is a code. Our arguments are in our

submissions; we will not repeat them. But it is

clearly not a code and we adopt what was said by

the presiding judge in the Court of Appeal to that

effect.

Hookham 16 4/3/94

BRENNAN J: Whether or not it is a code, are there

provisions in the Taxation Administration Act which

would be applicable in this case?

MR ROZENES:  No. The only penalties that are available are

monetary penalties and additional penalty, and the

interesting thing about the additional penalty is

that that is calculated, again, by reference to the

tax sought to be avoided, but is not the recovery

of tax. The Act specifically says, "That

notwithstanding the fact that such a penalty has

been imposed.", it does not effect the

Commissioner's ability to nevertheless recover the

tax.

BRENNAN J:  Now, in this case, could the offender, or deemed

offender, be ordered to pay an amount,

corresponding with the 21B amount, under the

provisions of the Taxation Administration Act?

MR ROZENES:	No.
BRENNAN J:	Why not?
MR ROZENES:	Because he has not committed an offence where an additional penalty is able to be imposed.
BRENNAN J:	I see.
MR ROZENES:	The only additional penalties are those

involved with sections 8A and B, this is an offence

under section 221F of the Income Tax Assessment

Act.

BRENNAN J:  I see. So, the Taxation Administration Act

penalty provisions did not have any implication?

MR ROZENES:  No, and if the company was prosecuted there

would be no basis for making a reparation order

under the Taxation Administration Act either and we

would say it would be clear that in such a

circumstance section 21B would be applicable. So

that ~he only real cloud on the horizon - if I

could put it that way - is the fact that this

liability is said to be deemed and we simply say,

"So what?" There are lots of unfortunate ways in

which people can be convicted. A reversal of the onus of proof is one of them, but it does not, in

our submission, devalue the fact of conviction.

BRENNAN J: What do you say about the proposition that in

Murphy's case Mr Justice Gibbs left open this

question and that this is an appropriate case in

which it ought to be determined?

MR ROZENES: Well, His Honour there was dealing at first

instance with a custom's case where there was a

Hookham 17 4/3/94

substantial quantity of evidence which demonstrated

that the customs agent involved wac peripherally

involved, he was there for salary only, no reward,

stood to gain nothing from the criminality. In

other words, all those matters which, in our

submission, are properly to be considered in

exercising a discretion.

BRENNAN J: That may be so, but Justice Gibbs said:

having regard to the circumstances -

he:

would not consider it appropriate -

that is why the question was not determined, but

the question was reserved. Why is not this case an

appropriate case in which the question should be

determined?

MR ROZENES: Well, in our submission, it has been

determined, not by this Court, of course, but. by

the Full Court of New South Wales and of Western

Australia. There is no conflicting authority. In

our submission, the law is clear. The special

leave argument put forward in this case is that out

there in the community the whole of commercial

Australia is concerned that directors, somehow,

will be liable for the tax of their companies. We

say that totally misconceives what it is that the

combination of section SY and section 21B are

designed to do. This is not a revenue collection

exercise, this is convicting people who commit

criminal offences, and then as part of that process seeking orders of reparation, which is done against every other criminal person that is convicted for

an offence against revenue law everywhere else in

Australia.

So, there is no special leave issue, we would

submit, here.	The legislation is clear and
unambiguous.	The words used are understood in

their ordinary usage to connote exactly what we say

they do connote. That where you do something - and

this is the way we would articulate the director's

case here - where a director procures a company to

fail to remit tax, he commits a criminal offence.

It is through his act, his actus reus, that results

in the lost to the Commonwealth. The words of

section 21B are amply wide enough to pick that up

as, in the ordinary usage. He is the person who is responsible for loss to the Commonwealth, and he is

the person who should - all things being equal - be

asked to make a reparation order if it is

appropriate in the particular case to do so, that

Hookharn 18 4/3/94

always being a matter of discretion.	They are our
submissions, may i~ please the Court.

BRENNAN J:  We need not trouble you in reply, Mr Spender.

MR SPENDER: If Your Honour pleases.

BRENNAN J: There will be a grant of special leave to appeal

in this case.

MR SPENDER: If it pleases the Court.

AT 10.10 AM THE MATTER WAS ADJOURNED SINE DIE

Hookham 19 4/3/94