O'Brien v ADC Sport Pty Ltd

[1988] TASSC 58

Serial No 57/1988
List “A”

COURT:  SUPREME COURT OF TASMANIA

CITATION:              O'Brien v ADC Sport Pty Ltd [1988] TASSC 58; A57/1988

PARTIES:  O'BRIEN, Eric Robert
  v
  ADC SPORT PTY LTD

FILE NO/S:  LCA 121/1988
DELIVERED ON:  6 December 1988
JUDGMENT OF:  Underwood J

Judgment Number:  A57/1988
Number of paragraphs:  18

Serial No 57/1988

List "A"

File No LCA 121/1988

ERIC ROBERT O'BRIEN v ADC SPORT PTY. LTD.

REASONS FOR JUDGMENT  UNDERWOOD J

6 December 1988

1. This is a motion to review penalty imposed upon conviction of three offences contrary to the Taxation Administration Act, s8C. The complaint alleged that on three occasions the defendant failed to furnish information to the Deputy Commissioner of Taxation as required and within the time specified by a written notice served on it. The first matter of complaint alleged that, by notice dated the 21 January 1988, the Deputy Commissioner of Taxation required the defendant, within seven days, to furnish him with information whether, in November 1987, the defendant carried on the business of a wholesale merchant or manufacturer and whether there had been sales of goods during that month. The other two matters of complaint were in identical form but related to notices dated the 17 March 1988 and the 14 April 1988 requiring information concerning the months of January 1988 and February 1988 respectively.

1. The defendant did not appear in the court below and the matter was determined ex parte. The prosecutor relied on the Taxation Administration Act, s8ZL which provides that a statement in a complaint is prima facie evidence of the matter stated and called no evidence. He summarised the contents of the complaint and said:

"To date [19 September 1988] the information has not been supplied ......... There are no prior matters. The taxpayer is ..... a wholesaler/retailer of sports goods. The average sales tax payable on each month is approximately $207."

1. Without giving reasons the learned magistrate imposed a single fine of $150 with respect to the whole complaint and ordered payment of costs. The applicant's motion is based on the single ground that the penalty is manifestly inadequate in the circumstances of the case.

1. The Taxation Administration Act, s8E prescribes the penalties for a breach of s8C. It provides that for a first offence the maximum penalty is $2,000, for a second or subsequent offence, $4,000 and for a third or subsequent offence which the Commissioner has elected not to treat as a prescribed offence, $5,000 or 12 months' imprisonment or both. Section 8B defines a previous conviction as:

   "8B(2) [Previous convictions] For the purposes of this Subdivision, a person who is convicted of an offence against section 8C or sub–section 8D(1) or (2) (in this sub–section referred to as the 'subsequent offence') shall be treated as having been previously convicted of a relevant offence (in this sub–section referred to as the 'earlier offence') if –

   (a)the person was convicted of the earlier offence on an occasion earlier than, but not more than 5 years earlier than, the person's conviction of the subsequent offence; or

   (b)the person is convicted of the earlier offence and the subsequent offence before the same court at the same sitting and the earlier offence was committed –

   (i)at a time or on a day earlier than, but not not more than 5 years earlier than, the subsequent offence; or

   (ii)       at the same time, or on the same day, as the subsequent offence."

1. Application of that definition to the present case shows that, contrary to the prosecutor's statement to the learned magistrate, the conviction on the first matter of complaint was a prior conviction for the purposes of the second and third matters of complaint and, convictions on the first and second matters of complaint were prior convictions for the purposes of the third matter of complaint. The respondent was therefore liable to a maximum penalty of $4,000 on conviction of the second and third matters.

1. Researches of learned counsel for the applicant discovered only three reported decisions of a Supreme Court of a State which considered the appropriate level of penalties for breaches of s8C. From one of them, TheFederal Commissioner of Taxation v Viergiver & Ors (1985) 16 ATC 930 at p931, I adopt the following description of the scheme of the sales tax legislation:

"The scheme of the sales tax legislation requires those taxpayers, who come within the ambit of the legislation, to lodge monthly returns with the Commissioner of Taxation (hereinafter referred to as the Commissioner). These returns must be lodged within 21 days of the conclusion of a particular month. The complaints separately alleged that the respondent failed to furnish (within seven days of the date of the appropriate notice) information with respect to the months of October and November 1984 and the months of January and February 1985. It is important to emphasise that the offence is not the failure to lodge the monthly sales tax returns on or before the expiration of 21 days – it is the subsequent failure to comply (within seven days) with a notice from the Commissioner calling upon the taxpayer to supply the relevant information."

1. Prior to the 14 December 1984, a failure to forward information required to be furnished under the sales tax legislation attracted a minimum penalty of $4 and a maximum penalty of $200. On the 14 December 1984 numerous amendments to the "taxation laws" (see the Taxation Administration Act, s2) came into force. A new offence was created by the Taxation Administration Act, s.8C, and the maximum penalties prescribed by s.8E substantially increased the penalties previously prescribed for a failure to furnish or lodge information when required to do so. In Viergiver's case the learned magistrate imposed a fine of $200 on each of the four matters of complaint. Noting that the respondent had 11 prior convictions under the repealed legislation and that, the average monthly sales tax payable by the taxpayer was $3,832, O'Loughlin J. allowed the appeal. His Honour did not interfere with the penalty of $200 imposed on the first matter of complaint on the basis that the notice requiring the information was issued three days before s.8C came into effect but, with respect to each of the three remaining matters of complaint his Honour imposed a fine of $1,200. At the same time as his Honour handed down judgment in Viergiver's case he gave judgment in two other similar appeals. In one the respondent had three prior convictions under the repealed legislation and paid an average monthly sales tax of $5,837. His Honour imposed a fine of $850 on the single matter of complaint. In the other, the respondent had two prior convictions under the repealed legislation and paid an average monthly sales tax of $1,564 which his Honour noted was significantly less than the amount paid by the other respondents. On the first matter of complaint which, like Viergiver's case, relied on a failure to comply with a notice issued before the amending legislation came into force, his Honour declined to interfere with penalty. On one of the remaining three matters of complaint he imposed a penalty of $800 and in the case of each of the other two $950. In all cases the penalty was less than the average monthly sales tax paid by the respondent.

1. O'Loughlin J. noted that the Taxation Laws Amendment Act 1984, which introduced Part III, "Prosecutions and Offences" into the Taxation Administration Act, had the effect of substantially increasing the penalty for a failure to furnish information required to be furnished under the income tax legislation as well as the sales tax legislation.

1. His Honour then referred with approval to the Federal Commissioner of Taxation v. Hagidimitriou and Ors (1985) 85 ATC 4539 in which Zelling J set out a tariff, or guidelines, in relation to the range of penalties which ought to be imposed following the relevant amendments in 1984. That case was one of 15 appeals all of which related to a failure to furnish information by way of income tax returns. His Honour said at p4541:

"However I make it clear both in this case and in the other 14 that hereafter magistrates should, for a first offence, where the offence is a run–of–the–mill offence, in order to keep some co–relation with penalties in other States, and also to give effect to the manifest policy of the 1984 Act, imposing what I might call run–of–the–mill cases of first offenders a fine of something between $250 – $500. That is not intended to fetter the discretion of magistrates. There will obviously be some cases both below and above that figure, but a figure of that magnitude should be regarded as a starting point from which one either increases or reduces the fine because of the circumstances of the particular case.

For offenders who have a previous offence under the repealed s.223, the fine should in my opinion be in the order of $500 – $1,000 with the same qualifications as I have just expressed.

Where the defendant is convicted of two offences which are relevant offences under s.8B then the penalty range should be in the order of $1,000 – $2,000."

1. With very great respect to his Honour, it is not the function of the judiciary to state what range of penalties should be adopted in future cases. In the case of statutory offences it is for the legislature alone to specify the appropriate range of penalties. The function of the judiciary is to decide, in accordance with law, each dispute when it is brought before a court for adjudication. Had Parliament intended the range of penalties to be as declared by Zelling J it could have easily done so. Parliament clearly intended that, in each case, the fine would be the sum determined appropriate by the exercise of a judicial discretion, unfettered by statutory constraint except with respect to a maximum sum. By the doctrine of precedent, the common law identifies the matters relevant to the proper exercise of that discretion and the weight that should be attached to each of those matters. I regret that I find myself unable to subscribe to the views of his Honour with respect to an appropriate range of penalties except in so far as they were necessary for the determination of the case before him. His Honour did state that nothing he said was intended to fetter the individual sentencing discretion and the ratio decidendi in Hagidimitriou's case is instructive for his Honour said, also at p4541:

"In the case of Hagidimitriou he was a first offender. He sent his taxation papers to an accountant to prepare his return. The accountant shifted from one address to another and lost the papers. Further, there was no tax payable by Hagidimitriou in relation to the tax year 1983–4 which is the relevant tax year. He in fact received a refund of $1,700. All of these mitigating factors suggest to me that the case of Hagidimitriou is not a case in which I should interfere with the penalty. That appeal is dismissed."

1. I respectfully disagree with those views expressed by O'Loughlin J in Viergiver's case and Millhouse J in The Federal Commissioner of Taxation v Simmons & Ors (1987) 87 ATC 4340 which endorsed the observations of Zelling J with respect to the range of penalties to be applied in future cases. However, for the reasons expressed by O'Loughlin J at p934, I agree that, generally, a failure to lodge a sales tax return is to be regarded as a more serious offence than a failure to lodge an income tax return in the case of a PAYE taxpayer.

1. Consistency in sentencing is essential to the proper administration of justice, per Mason J. (as he then was) in Lowe v The Queen (1984) 154 CLR 606 at pp610 – 611. In the case of a Federal offence such consistency should transcend State jurisdictional boundaries. See R v Jackson: R v Jennett (1972) 4 SASR 81. However, for the reasons I have expressed I find myself unable to adopt the general observations made by the Supreme Court of South Australia with respect to the range of penalties that should be applied in the case of a breach of the Taxation Administration Act, s8C. In Boyd v Peters, FC, 1588, the court declined to review a penalty which did not include any period of licence suspension for an offence of driving a motor vehicle with a blood alcohol concentration in excess of the prescribed limit. The court noted that Parliament had not made a period of licence suspension a mandatory consequence of conviction. Reference was made by the Court to the general principles to be taken into account including the notorious danger of "drink driving", the need to deter others and the fact that licence suspension is an effective deterrent but stressed that it was not appropriate to proscribe any particular range of penalties. This "would involve a failure to recognise that each case falls for determination upon its own facts and to do so would constitute an unjustified restraint upon a discretion expressed by the legislature to be without restraint".

1. In the present appeal due weight should be given to the penalties actually imposed in each of the appeals dealt with in the three South Australian cases I have referred to. The material before the learned magistrate was scanty. Apart from the absence of "prior conviction" and payment of a average monthly sales tax of $207 it amounted to no more than a statement of the elements of the offences and the fact that the required information had not been furnished. Thus, the question of penalty had to be approached on the basis that the only aggravating feature was the failure to furnish the information by the date of the hearing and that there was nothing to mitigate the imposition of a penalty appropriate to the offence. A relevant factor is that, in 1984, Parliament increased the maximum penalty tenfold and provided that a second conviction on the same day constituted a second offence. Although the learned magistrate was entitled to impose a single penalty for all matters of complaint by virtue of the Acts Interpretation Act (Commonwealth), s45B(3), the fine of $150 was equivalent to $50 for each matter of complaint and was in my view manifestly inadequate.

1. The first offence related to a failure to supply the required information for the month of November 1987. The notice requiring such information (which should have been given as a matter of routine not later than the 21 December 1987) was issued on the 21 January 1988. Had the required information been supplied in response to that notice and the tax (if any) paid I would have thought that, having regard to the respondent's average sales tax payments and, the fact that it was a first offence, a fine of $50 would have been within the sentencing discretion. However, the continued failure to furnish the information in the face of further requests issued on the 17 March 1988 and the 14 April 1988 with respect to the months of January and February 1988 was an aggravating circumstance which, in the absence of any mitigating feature warrants the imposition of a fine of $150.

1. The same observations apply with greater force to the second and third matters of complaint in respect of which an appropriate penalty is $200 in each case.

1. I am not unmindful that those penalties are less than those imposed in the South Australian cases but it must be stressed that each appeal calls for individual consideration and, in the present case, the low level of average sales tax paid and the fact that the respondent had not previously appeared in a court and been convicted of a breach of s8C or its equivalent under the repealed legislation is significant.

1. Accordingly, I would allow the appeals, set aside the penalty and in lieu thereof impose a fine of $150 on the first matter of complaint and $200 on each of the other two matters of complaint.

1. On the same day the learned magistrate determined this matter he heard and determined three other similar complaints. In each case the complainant filed and served a motion to review the penalty on the ground that it was manifestly inadequate in the circumstances of the case. All four motions were heard by me and, although separate matters, the principal arguments were common to all four. Accordingly, what I have said as a matter of general principle in this appeal applies with equal force to the other three motions to review.