Mallan v Lee

The case of *Mallan v Lee* concerned a complaint laid against a company, Telephone Rentals Ltd, and its public officer, Mr. Valleck Cartwright Mallan. The company was charged with contravening section 230 of the *Income Tax Assessment Act 1936-1944* by knowingly and wilfully understating its income in a tax return for the year ended 31 August 1944. Mr. Mallan was charged under section 5 of the *Crimes Act 1914-1946* with being directly knowingly concerned in the commission of this offence. The complaint was laid on 7 June 1948, with the alleged offence occurring on or about 8 December 1944.

The central legal issues before the court were whether the complaint disclosed an offence against Mr. Mallan, and whether the proceedings against him were commenced within the applicable time limit. Mr. Mallan's defence argued that the prosecution was brought under section 5 of the *Crimes Act*, which, given the nature of the penalty under section 230 of the *Income Tax Assessment Act* (a pecuniary penalty only), should be subject to a one-year limitation period under section 21 of the *Crimes Act*. Furthermore, it was contended that section 230 did not create a criminal offence, but rather civil proceedings, and therefore section 5 of the *Crimes Act* could not apply. The prosecution contended that section 230 created an offence, and that section 5 of the *Crimes Act* meant Mr. Mallan was deemed to have committed that offence, making the six-year limitation period under section 230(2) of the *Income Tax Assessment Act* applicable.

The High Court, affirming the decision of the Supreme Court of South Australia, held that section 230 of the *Income Tax Assessment Act* clearly created an offence, irrespective of whether it was classified as criminal or civil in nature. The Court found that section 5 of the *Crimes Act* applied to any "offence against any law of the Commonwealth," and therefore applied to the offence created by section 230. Consequently, the six-year limitation period provided by section 230(2) of the *Income Tax Assessment Act* was the relevant period for commencing proceedings against Mr. Mallan. The Court concluded that the complaint disclosed an offence against Mr. Mallan and that the proceedings were not out of time.