Jones v The Commissioner of Taxation - [2019] WASC 325

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   JONES -v- THE COMMISSIONER OF TAXATION [2019] WASC 325
CORAM:   HILL J
HEARD:   26 AUGUST 2019
DELIVERED          :   10 SEPTEMBER 2019
FILE NO/S:   SJA 1130 of 2018
BETWEEN:   LEE MATTHEW JONES
Appellant
AND
THE COMMISSIONER OF TAXATION
Respondent

ON APPEAL FROM:
For File No:   SJA 1130 of 2018
Jurisdiction              :   MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram:   MAGISTRATE G SMITH
File Number             :   PE 12157 of 2018 - PE 12189 of 2018

Catchwords:

Criminal law - Application for extension of time to file appeal - Appeal against sentence - Failure to give a document to Commissioner of Taxation - 33 offences - Global fine of $24,000 - Whether manifestly excessive - Turns on own facts

Legislation:

A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 31-5
Criminal Act 1914 (Cth), s 16A
Criminal Appeals Act 2004 (WA), s 14(2), s 39, s 40(1)(e), s 41(4)(a)
Taxation Administration Act 1953 (Cth), s 8C

Result:

Application for extension of time allowed
Application for leave to appeal allowed
Appeal dismissed

Category: B

Representation:

Counsel:

Appellant	:	In person
Respondent	:	Mr J Johnston

Solicitors:

Appellant	:	In person
Respondent	:	Director of Public Prosecutions (Cth)

Case(s) referred to in decision(s):

Abeyakoon v Brown [2011] WASCA 63; (2011) 211 A Crim R 338
Bell v Carrier [2018] WASC 169
Bourdon v McAlpine [2016] WASC 200
Budget Nursery Pty Ltd v Commissioner of Taxation (Cth) (1989) 42 A Crim R 81
Eastough v The State of Western Australia [No 2] [2010] WASCA 88
Hamilton v Commission of Taxation (Cth) [2007] SASC 165; (2007) 68 ATR 375
Harding v Moreland [2006] WASC 8; (2006) 159 A Crim R 370
HPS Transport Pty Ltd v Australian Taxation Office (Unreported, SASC, 12 December 2003)
Lancaster v The Queen [1989] WAR 83
Lawson v The State of Western Australia [No 2] [2018] WASCA 204
McMillan v Bierwirth [1987] 49 SASR 403; (1987) 19 ATR 914
Miller v Byrne [2016] WASC 236
Noble v The Queen [2018] NSWCCA 253
R v Ferrer-Esis (1991) 55 A Crim R 231
Samuels v Western Australia [2005] WASCA 193; (2005) 30 WAR 473
Talisco Pty Ltd v Sarney (1987) 18 ATR 420
Vlahov v Federal Commissioner of Taxation (1993) 26 ATR 49
Wallam v Dent [2008] WASC 170
Wilson v The State of Western Australia [2010] WASCA 82
Wimbridge v The State of Western Australia [2009] WASCA 196
Winmar v Clark [2015] WASC 314

HILL J:

On 23 March 2018, the appellant pleaded guilty to 33 charges of failing to give a document to the Commissioner of Taxation (Commissioner) when and as required pursuant to a taxation law. Each of the charges related to the appellant's failure to lodge a goods and services return for 33 separate quarterly periods from 1 July 2008 until 30 September 2016. The magistrate imposed a global fine of $24,000 in relation to these offences.
The appellant appeals against the fine imposed on the grounds that first, the learned magistrate failed to take into account that he was unaware that the relevant statements had not been lodged and second, that the fine imposed was manifestly excessive.
For the following reasons, I would grant an extension of time to appeal against the decision of the learned magistrate. While I consider that the learned magistrate made an error of law in not specifically referring to the plea of guilty as a matter he was required to take into account in exercising his sentencing discretion, I consider that the sentence imposed by the learned magistrate was appropriate in all of the circumstances and that no substantial miscarriage of justice has occurred. For this reason, while I would grant leave to appeal, I would dismiss the appeal.

Application for extension of time, Notice of Appeal and Leave to Appeal

The appellant filed his notice of appeal on 9 November 2018. The appeal was not brought within time and the applicant requires an extension of time within which to appeal.
The appellant filed an affidavit in support of his application which set out the reasons for his delay in filing the appeal.[1] In summary, on 17 April 2018, he sent documents to commence the appeal by facsimile. The number the documents were sent to is the facsimile number of the Supreme Court of Western Australia and the transmission report indicates that the documents were transmitted.[2]
[1] Affidavit of Lee Matthew Jones sworn 14 March 2019.
[2] Affidavit of Lee Matthew Jones sworn 14 March 2019, Attachment 2.
In August and October 2018, the appellant contacted the Supreme Court to find out about the progress of the appeal and was informed that it had not yet been listed.[3] On 17 October 2018, he contacted the court again and was informed that there was no record of the documents having been received. The appellant resent the documents on 22 October 2018 and faxed additional documents on 9 November 2018, which is the date the court has recorded as the commencement date of the appeal.[4]
[3] Affidavit of Lee Matthew Jones sworn 14 March 2019, Attachment 1.
[4] Affidavit of Lee Matthew Jones sworn 14 March 2019, Attachment 1.
Under the original notice of appeal, there was one ground of appeal, namely that he was unaware the statements were not lodged. On 1 March 2019, Acting Justice Strk ordered the notice of appeal be amended to add as a second ground of appeal that the fine imposed by the magistrate was manifestly excessive.
The appellant requires leave to appeal.[5] The court must not give leave to appeal on a ground of appeal unless it is satisfied the ground has a rational and logical prospect of succeeding.[6]
[5] Criminal Appeals Act 2004 (WA), s 9(1).
[6] Criminal Appeals Act 2004 (WA), s 9(2); Samuels v Western Australia [2005] WASCA 193; (2005) 30 WAR 473.
On 15 April 2019, Acting Justice Strk ordered that the application for an extension of time to appeal, as well as the application for leave, to appeal be heard together with the appeal.

The facts

The appellant is a builder and was registered in accordance with the provisions of div 25 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act). As a result, he was required by s 31‑5 of the GST Act to give a GST return each quarter to the Commissioner.
The charges alleged that the appellant had committed offences under s 8C(1)(a) of the Taxation Administration Act 1953 (Cth) (Administration Act). This section provides that a person who refuses or fails, when and as required under or pursuant to a taxation law to do so, to give any information or document to the Commissioner commits an offence.
On 28 February 2018, the appellant was charged with 33 counts related to his failure to give the Commissioner a GST return for the 33 quarterly periods from 1 July 2008 to 30 September 2016.
At the time of the hearing before the magistrate, the outstanding GST returns had been lodged by the appellant.[7]
[7] ts 2 – 3 (24 December 2018).

Proceedings before the magistrate

The appellant appeared in person before the magistrate on 23 March 2018. He informed the magistrate that he wanted to plead guilty to the 33 charges[8] and pleas of guilty were entered.[9]
[8] ts 2 (24 December 2018).
[9] ts 2 – 3 (24 December 2018).
The prosecutor then read the statement of facts namely that the GST returns for the periods September 2008 to September 2016 had not been lodged by the statutory due dates and that all returns were received on 5 March 2018. The prosecutor noted that the administrative penalty that had been foregone was $23,370.[10] The basis for this calculation was not in evidence before the learned magistrate.
[10] ts 3 (24 December 2018).
The magistrate, after noting that the maximum penalty for each of the charges was 'alarmingly high', asked the appellant what he would like to say about the matter.[11] The appellant said that he was a builder. He stated that he was not aware the GST returns or activity statements had not been lodged. He explained that until 2006, his then wife did all of the bookkeeping for the business. He had been to an accountant to do his tax returns and had no idea that he had not lodged activity statements until 'probably, six months ago, probably less, three months ago'.[12] He explained his personal circumstances namely that his marriage had broken down, he had three children to support and was left with a significant amount of debt. He said that he had just started to get back on track. In relation to the activity statements, he explained that his original accountant had retired and he had seen a new accountant who had got him 'back on track'.[13]
[11] ts 4 (24 December 2018).
[12] ts 4 (24 December 2018).
[13] ts 6 (24 December 2018).
The learned magistrate put to the appellant that it was his responsibility to file the necessary documents which the appellant accepted.[14]
[14] ts 5 (24 December 2018).
The learned magistrate then proceeded to sentence the appellant. He stated:[15]
[I]n this court, in this tax list, we hear hard luck stories one after the other. Lots of people who, you know, they wish they weren't in this position, there's something gone wrong in their life. They didn't anticipate that this sort of thing would happen or that they would find themselves facing such big fines. But, unfortunately, the obligation is to get the returns done, and I don't consider when I impose a global fine, it should really be any less than the administrative penalty, in this case and also in many other cases. So the fine that I'm imposing, which is a global fine, is one of $24,000, which is only just over the administrative penalty. And the order for costs is in the amount of $122.35. And no other orders are needed, because all the returns have now been filed.
[15] ts 6 - 7 (24 December 2018).

Application for an extension of time

The principles on which this court will grant an extension of time are well known. The statutory timeframe within which to commence appeals (of 28 days) must be taken seriously and it should not be taken for granted that an extension of time will be granted.[16]
[16] Eastough v The State of Western Australia [No 2] [2010] WASCA 88 [12].
Before granting an extension of time, particularly where there has been a significant delay, it is necessary for the appellant to show that there are exceptional circumstances unless the appellant can demonstrate there will be a miscarriage of justice if an extension is not granted.[17]
[17] Bourdon v McAlpine [2016] WASC 200 [6] citing Lancaster v The Queen [1989] WAR 83, 85 (Malcolm CJ).
In Wimbridge v The State of Western Australia, Buss JA identified five factors which are relevant to the decision whether to exercise the discretion to extend time:[18]
First, the nature and extent of the delay. Secondly, the reasons for delay. Thirdly, the proposed grounds of appeal and their merit. Fourthly, the prejudice to the applicant if an extension of time is not granted. Fifthly, the prejudice (if any) to the State or the Crown if an extension of time is granted. These factors are not intended to be an exhaustive statement of the relevant considerations. No doubt, in a particular case, there may be additional factors.
[18] Wimbridge v The State of Western Australia [2009] WASCA 196 [45].
Dealing with each of these factors in turn, in this case the extent of the delay is significant – a delay of approximately 200 days. The appellant has provided an explanation for the delay in an affidavit sworn in support of the application for an extension of time. The explanation is essentially that the appeal was not filed due to an administrative error in that he had faxed the documents to the court but was not informed they had not been received (despite him following up the court for a listing date) until six months later.
In relation to the merits of the appeal, this factor alone is generally not sufficient to justify the grant of an extension of time. In most cases, it is necessary for the appellant to show more.
In relation to prejudice, the only prejudice that the appellant will suffer if an extension of time is refused is that he will be required to pay the fine imposed by the learned magistrate. Finally, in relation to the final element, the respondent conceded, quite properly in my view, that it would not suffer any prejudice if an extension of time were granted.
In summary, apart from the merits of the appeal, the factors relevant to the exercise of the discretion to grant an extension of time do not provide a strong case for the exercise of the discretion in favour of the appellant. For this reason, if the appeal has no merit, the extension of time sought should be refused. Accordingly, it is necessary to consider the merits of the appeal.

Legal Principles: Appeal against sentence

The principles relevant to an appeal against sentence were summarised in Wilson v The State of Western Australia[19] as follows. Sentencing is a discretionary exercise. For this reason, an appellate court can only intervene if the appellant demonstrates that the learned magistrate made either an express or an implied error. An express error is acting on a wrong principle, for example by mistaking the law or facts, or taking into account an irrelevant matter or failing to take into account a relevant consideration. An implied error arises where the end result is so unreasonable or unjust that the court must conclude that a substantial wrong has occurred. Finally, an appellate court cannot substitute its own opinion for that of the sentencing court merely because the appellate court would have exercised the sentencing discretion differently.
[19] Wilson v The State of Western Australia [2010] WASCA 82 [2].

Application to adduce fresh evidence

On 25 July 2019, the respondent filed an application to adduce additional evidence on the appeal pursuant to the Criminal Appeals Act 2004 (WA) s 40(1)(e) and s 41(4)(a). The respondent sought to adduce two affidavits: first, an affidavit of Hugh Patrick Kershaw Kopsen dated 24 July 2019 which annexed the criminal record of the appellant and second an affidavit of Joshua David Lucas dated 22 July 2019 which annexed a number of documents setting out certain tax information of the appellant.
The respondent initially sought to adduce this evidence only in the event that the court determined it was appropriate to allow the appeal and to re‑sentence the appellant. However, in oral submissions, the respondent sought to adduce the evidence in any event on the basis that the evidence was relevant to the matters before this court.
Section 39(1) of the Criminal Appeals Act provides that an appeal court must decide an appeal on the evidence and material that were before the lower court. Pursuant to s 39(3) of the Criminal Appeals Act, this does not affect the power of the court to admit evidence pursuant to s 40.
Section 40(1)(e) confers on the court the power to admit 'any other evidence' for the purpose of dealing with the appeal. This power is not expressly limited or confined.
For the reasons which follow, it is my view that the learned sentencing magistrate made an error of law in failing to refer to the appellant's please of guilty. On this basis, I will allow the respondent's application to adduce fresh evidence and admit both affidavits into evidence on the appeal.

Disposition of Appeal

Ground 1: Failure to take account of a relevant consideration

The first ground of appeal alleges, in essence, that the learned magistrate failed to take into account the fact that the appellant was unaware that the GST quarterly statements had not been lodged.
As noted above, the offences for which the appellant was convicted was a breach of s 8C(1)(a) of the Administration Act. This is an offence of absolute liability[20] – that is, there is no mental or fault element for any of the elements of the offence. The elements of the offence are first, that documents were required to be given to the Commissioner of Taxation under a taxation law, and second, these documents were not given. The only defence available to an accused is that they were not capable of complying with the obligation.[21]
[20] Administration Act, s 8C(1A).
[21] Administration Act, s 8C(1B).
Section 16A(1) of the Crimes Act 1914 (Cth) (Crimes Act) provides that, in determining the sentence to be passed in respect of a person for a federal offence, a sentencing court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence. The matters which the court is required to have regard to when sentencing the appellant for these offences are set out in the Crimes Act s 16A(2). These include the nature and circumstances of the offence,[22] whether the offence formed part of a course of conduct,[23] the plea of guilty,[24] the deterrent effect of the sentence (both personal[25] and general[26]), as well as the character, antecedents and means of the appellant.[27]
[22] Crimes Act, 16A(2)(a).
[23] Crimes Act, 16A(2)(c).
[24] Crimes Act, 16A(2)(g).
[25] Crimes Act, 16A(2)(j).
[26] Crimes Act, 16A(2)(ja).
[27] Crimes Act, 16A(2)(m).
The appellant submitted that he was not aware that GST returns or activity statements had not been filed and that this was due to his then accountant's failure to lodge them. Courts have previously noted that the fact that the delay may be due to an omission by an accountant is not a significant mitigating factor.[28] This is because under the legislation, the taxpayer is responsible for the lodgement of all documents required by the Commissioner of Taxation, including quarterly activity statements or GST returns, and to absolve the taxpayer from such responsibility would defeat the purpose of the legislation. I respectfully agree with these comments.
[28] Talisco Pty Ltd v Sarney (1987) 18 ATR 420; Hamilton v Commission of Taxation (Cth) [2007] SASC 165; (2007) 68 ATR 375.
The appellant also submitted that the learned magistrate erred in fact by referring to tax returns as opposed to activity statements.
It is apparent from the exchange between the learned magistrate and the appellant that the appellant raised the fact that he was unaware that the GST quarterly statements had not been lodged. This fact was not, however, referred to by the learned magistrate in sentencing the appellant. Notwithstanding this, I do not accept that the failure by the sentencing magistrate to expressly refer to this matter in his sentencing remarks means that this factor was not taken into consideration by his Honour. While the language used by his Honour during the hearing is not always precise, it is clear from the offences that the appellant was charged with that the complaints concerned the failure to lodge GST returns or quarterly activity statements. It is clear from a review of the transcript that his Honour understood the appellant was not aware the GST returns had not been filed. I also note that in sentencing an accused, the court is not required to specifically refer to each of the matters in s 16A(2) of the Crimes Act.[29]
[29] R v Ferrer-Esis (1991) 55 A Crim R 231, 237.
In supplementary written submissions, the appellant referred me to s 286‑75(1A) of the Administration Act. Section 286‑75 sets out the administrative penalties that apply if a tax payer does not provide a return or statement to the Commission on time. Subsection 1A provides that:
However, you are not liable to an administrative penalty under subsection (1) if:
(a) you engage a registered tax agent or BAS agent; and
(b) you give the registered tax agent or BAS agent all relevant taxation information to enable the agent to give a return, notice, statement or other document to the Commissioner in the approved form by a particular day; and
(c) the registered tax agent or BAS agent does not give the return, notice, statement or other document to the Commissioner in the approved form by that day; and
(d) the failure to give the return, notice, statement or other document to the Commissioner did not result from:
(i)intentional disregard by the registered tax agent or BAS agent of a taxation law; or
(ii)recklessness by the agent as to the operation of a taxation law.

I note that pursuant to subsection (1B), a taxpayer that wants to rely on this subsection bears the evidential burden of establishing these matters.
In my view, this section does not assist the appellant. This is for two primary reasons. First, it only applies to administrative penalties not criminal charges. Second, there was no evidence before the learned magistrate which established that the appellant had given his accountant all relevant documents for each of the 33 periods prior to the time the activity statements were due to be filed and that his accountant had failed to file the documents on time.
In my view, there is no merit in ground 1.

Ground 2: Sentence was manifestly excessive

Before turning to a consideration of the sentence imposed by the learned magistrate, given that the appellant is self‑represented, I reviewed the magistrate's reasons carefully to see whether any error was apparent in his reasons.
I note that the learned magistrate failed to refer to the fact that the appellant had pleaded guilty at the earliest opportunity. This was a mandatory matter which, pursuant to the Crimes Act s 16A(2)(g), the magistrate was required to take into account in sentencing the appellant. There is no statutory or general requirement for a sentencing judge to set out the reduction of the sentence which is attributable to a plea of guilty. Accordingly, the failure by his Honour to specify what discount has been allowed for a plea of guilty does not, without more, demonstrate an error of law.[30]
[30] Harding v Moreland [2006] WASC 8; (2006) 159 A Crim R 370.
However, a failure to refer to the plea of guilty is ordinarily an indication that the sentencing judicial officer has overlooked it.[31] In my view, the failure by the learned magistrate to refer to the appellant's plea of guilty is an error of law in the exercise of his sentencing discretion.
[31] Noble v The Queen [2018] NSWCCA 253 [10]; Winmar v Clark [2015] WASC 314 [26].
The fact that an error has been made in sentencing does not mean that the sentencing discretion should be exercised afresh. This does not automatically follow. This is because s 14(2) of the Criminal Appeals Act applies to sentencing appeals.[32] That is, if no substantial miscarriage of justice has occurred, this appeal should be dismissed.
[32] Abeyakoon v Brown [2011] WASCA 63; (2011) 211 A Crim R 338 [32]. See also Bell v Carrier [2018] WASC 169 [22].
In Wallam v Dent, Jenkins J said:[33]
I have been unable to find any decision which directly construes s 14(2) in the context of a sentencing appeal. The governing criteria should be that contained in the Act itself; that is, whether the judge hearing the appeal considers that, despite the error in the court below, the appeal ought to be dismissed because no substantial miscarriage of justice has occurred. In the context of a sentencing appeal this will usually require the sentencing court to consider what the appropriate penalty would have been for the offence if no error had been made in exercising the sentencing discretion at first instance. If a lower sentence ought to have been imposed at first instance then the Appeal Court would not be able to exercise the discretion in s 14(2) to dismiss the appeal because no substantial miscarriage of justice had occurred. If, on the other hand, despite the error made in the lower court, the same sentence ought to have been imposed then the discretion in s 14(2) would, in the usual case, be exercised.
[33] Wallam v Dent [2008] WASC 170 [31]. See also Miller v Byrne [2016] WASC 236 [39].
That is, in order to consider whether there has been a substantial miscarriage of justice, it is necessary for this court to consider whether a different sentence should have been imposed by the learned magistrate. I now turn to consider this.
Courts across Australia, including in Western Australia, have consistently held that the starting point in sentences for offences of this type is the statutory administrative penalty that would otherwise apply for the offences.[34]
[34] Vlahov v Federal Commissioner of Taxation (1993) 26 ATR 49 52; McMillan v Bierwirth [1987] 49 SASR 403; (1987) 19 ATR 914, 404 ‑ 405; Budget Nursery Pty Ltd v Commissioner of Taxation (Cth) (1989) 42 A Crim R 81, 85.
The reason for this approach was summarised by Jacobs J in McMillan v Bierwirth as follows:[35]
It is impossible, and certainly undesirable, to give any hard and fast guidance, for no two cases are alike, but it seems to me that when a prosecution is launched and a conviction recorded, the sentencing court, in framing a penalty, must consider very seriously the element of general deterrence which cannot adequately be reflected in the statutory penalties, however much they might serve to deter the particular offender; and for that reason alone, if the court is satisfied that a decision to expose the offender to prosecution and conviction, rather than impose the statutory penalties, is in all the circumstances a fair and reasonable decision, one would not expect to find many cases in which it would be appropriate to impose by way of fine an amount which is less than or no more than the statutory penalties that might have been exacted.
[35] McMillan v Bierwirth, 404 – 405.
It has also been held that normally the financial circumstances of the tax payer and the absence of actual dishonesty do not justify a reduction below the administrative penalty.[36]
[36] Vlahov v Commissioner of Taxation, 52; McMillan v Bierwirth, 405.
Similarly, the fact that on the filing of the returns, the appellant had very little additional tax liability does not justify any significant reduction. In contrast, if the prosecution had established the appellant was attempting to evade significant liability by failing to file returns, this would be a circumstance of aggravation.[37]
[37] Hamilton v Commission of Taxation (Cth) [16] citing with approval HPS Transport Pty Ltd v Australian Taxation Office (Unreported, SASC, 12 December 2003) (Martin J).
The length of time over which the offending conduct occurred is relevant to the objective seriousness of the offending and the appropriate penalty.[38]
[38] Vlahov v Commissioner of Taxation, 52.
The evidence before this court is that the administrative penalties that had been foregone by the Commissioner were $23,370.
It is then necessary to take into account the matters set out in s 16A(2) of the Crimes Act. These include the entry of guilty pleas at the earliest opportunity, which attracts a discount and the fact that the appellant had filed the GST returns prior to his appearance before the learned magistrate and that these returns disclosed little or no tax liability, given the existing tax credit the appellant was entitled to. It is also necessary to take account of the number and nature of the charges, namely that there were 33 charges over a period of eight years.
Counsel for the respondent referred me to a number of cases as evidence of current sentencing practices for offences of this nature. Apart from cases where there was evidence of mental health or other unusual personal circumstances, the sentencing practice of the courts is to impose a sentence that exceeds the administrative penalty even when there is a plea of guilty.
Taking each of these matters into account, it is my view that a global fine of $24,000 for the 33 offences was appropriate in all of the circumstances and that a lesser sentence is not warranted. Accordingly, there is no substantial miscarriage of justice in allowing the sentence to stand. On this basis, it is appropriate that I exercise my discretion under s 14(2) of the Criminal Appeals Act to dismiss the appeal.

Other matters

During the course of oral submissions and in his supplementary written submissions, the appellant asserted that in hindsight, he should have pleaded not guilty to the charges.
First, the appellant did not appeal against his conviction. The only appeal was against sentence. Second, the appellant pleaded guilty to the offences. While it is possible for a person to appeal against his conviction after a plea of guilty, the courts will only set aside the plea where the appellant did not understand the charge or intend to plead guilty; where the appellant could not, at law, be guilty of the offence; or where the plea was obtained by improper inducement, fraud or intimidation.[39] There is no evidence which suggests that any of these circumstances apply. Third, as noted above, the offences the appellant was charged with are offences of absolute liability and the appellant did not have a defence to these charges.
[39] Lawson v The State of Western Australia [No 2] [2018] WASCA 204 [17] - [20].

Conclusion

For the reasons that I have given, I would grant an extension of time for leave to appeal until 9 November 2018 and grant leave to appeal but dismiss the appeal.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Research Orderly to the Honourable Justice Hill
10 SEPTEMBER 2019