R v MacPherson

[1995] QCA 19

IN THE COURT OF APPEAL [1995] QCA 019

SUPREME COURT OF QUEENSLAND	C.A. No. 239 of 1994
Brisbane
Before	Fitzgerald P. Davies J.A. Pincus J.A.

[R. v. MacPherson]

T H E Q U E E N
v.

GRAHAM JOHN MACPHERSON (Appellant)

FITZGERALD P.

DAVIES J.A. PINCUS J.A.

J udgment delivered 23/02/1995

JOINT REASONS FOR JUDGMENT FITZGERALD P. AND DAVIES J.A., SEPARATE REASONS FOR JUDGMENT PINCUS J.A., ALL CONCURRING AS TO

T HE ORDER MADE.

APPEALS AGAINST CONVICTIONS ALLOWED.

CATCHWORDS:	CRIMINAL LAW - fraudulent false accounting - whether false entries by an employee in his/her employer's books with intent to defraud the Commissioner of Taxation offends s. 441(b) of the Criminal Code
CONSTITUTIONAL LAW - whether by virtue of s. 109 of the Constitution, s. 441(b) of the Criminal Code has no operation with respect to false entries by an employee in his employer's books with an intent to defraud the Commissioner of Taxation
Counsel:	J Jerrard Q.C. with him M. Conrick for the Appellant P.A. Keane Q.C. with him R. Martin for the Crown
Solicitors:	Legal Aid Office for the Appellant Director of Prosecutions for the Crown
Date/s of Hearing:	29 September 1994

JOINT REASONS FOR JUDGMENT - FITZGERALD P. AND DAVIES J.A.

Judgment delivered 23/02/1995

The appellant has appealed against convictions in the District Court on 24 May 1994 on 24 counts of fraudulent false accounting contrary to sub-s. 441(b) of the Criminal Code. The charges alleged false entries in cheque books belonging to his employer with intent to defraud. The jury, which found the appellant guilty of the charges, made a special finding under s. 624 of the Code that the false entries were not made with intent to defraud his employer, but with intent to defraud the Commissioner of Taxation.

After considerable vacillation, the appellant's grounds of appeal were limited to complaints related to the trial judge's directions to the jury and submissions that: (i) R. v. Jackson (No. 2) (1976) Qd.R. 177 was wrongly decided and false entries by an employee in his or her employer's books with intent to defraud the Commissioner of Taxation do not offend sub-s. 441(b) of the Code: see also Code, s. 643; and, alternatively

(ii) by virtue of s. 109 of the Commonwealth Constitution, sub- s. 441(b) of the Code has no valid operation with respect to false entries by an employee in his or her employer's books with an intent to defraud the Commissioner of Taxation.

It was common ground that a false entry by an employee in his or her employer's books with the intention of deceiving or misleading the Commissioner of Taxation is an offence by sub-ss. 8T(b) and (e) of the Taxation Administration Act 1953 as amended (Cth). By s. 8V of that Act, the maximum penalty for such an offence is a fine of $5,000.00 or imprisonment for 12 months or both; the maximum penalty for an offence against sub-s. 441(b) of the Code is imprisonment for 10 years.

The oral argument in this Court was substantially confined to the constitutional point, and it is convenient to deal with that first, assuming for that purpose that Jackson (No. 2) was correctly decided.

The respondent sought to draw a distinction between the two offences, one State and one Commonwealth, on the basis that the former requires an intent to defraud and the latter an intent to mislead or deceive: see Tan v. R. (1979) W.A.R. 149, 153, 156- 157. At most, this means that an intent to mislead or deceive can exist without an intent to defraud; an intent to defraud cannot be established without an intent to mislead or deceive. Conduct involving an intent to defraud the Commissioner of Taxation which offends sub-s. 441(b) of the Code will necessarily offend sub-ss. 8T(b) and (e) of the Taxation Administration Act, which provides a lesser maximum penalty for such conduct than the Code.

Until 1984, the Income Tax Assessment Act 1936 as amended (Cth) included a Part VII, "Penal Provisions and Prosecutions". A possible conflict between sub-s. 441(b) of the Code and a provision then in Part VII of the Income Tax Assessment Act, sub-s. 231(1), was considered in Jackson v. R. (1974) 131 C.L.R. 42, which held that the two provisions were not inconsistent.

Part VII of the Income Tax Assessment Act was repealed by the Taxation Laws Amendment Act 1984 (Cth), which also inserted a new Part III, "Prosecutions and Offences", in the Taxation Administration Act. Part III consists of Division 1 "Preliminary", Division 2 "Offences", Division 3 "Prosecution of Taxation Offences", Division 4 "Prescribed Taxation Offences", Division 5 "Services of Summons for Prescribed Taxation Offences, and Division 6 "Setting Aside etc. of Conviction or Order on Application of Commissioner". Division 2 is subdivided into Subdivision A "Failure to comply with taxation requirements", Subdivision B "Offences relating to statements, records and certain other Acts", Subdivision BA "Offences relating to tax file numbers" and Subdivision C "Miscellaneous".

Sections 8T and 8V are in Subdivision B, which contains a comprehensive statement of conduct with respect to documentation which is material for tax purposes which is an offence.

R. v. Loewenthal ex p. Blacklock (1974) 131 C.L.R. 338 provides considerable support for the appellant's submission that, insofar as sub-s. 441(b) of the Code purports to apply to a false entry by an employee in his or her employer's books with an intent to defraud the Commissioner of Taxation, it is pro tanto invalid: see per Menzies J. at pp. 342-343 and Mason J. at pp. 346-347; Barwick C.J. (pp. 339-340) and Jacobs J. (pp. 348- 349) agreed with both.

However, the respondent submitted that the opposite conclusion was required by McWaters v. Day (1989) 168 C.L.R. 289, in which all current members of the High Court delivered a joint judgment in which Blacklock was considered and distinguished.

McWaters held that there was no inconsistency between sub-s. 16(1)(a) of the Traffic Act 1949 as amended and sub-s. 40(2) of the Defence Force Discipline Act 1982 (Cth). Both provisions created offences in relation to driving a vehicle under the influence of liquor or a drug, but the Commonwealth legislation operated only when the vehicle was driven on "service land", and the driver was a "defence member or a defence civilian" and "incapable of having proper control of the vehicle". Not surprisingly, it was held that the State Act was not inconsistent with the Commonwealth Act which, because it was "supplementary to, and not exclusive of the ordinary criminal law ... [did] not deal with the same matter or serve the same purpose as laws forming part of the ordinary criminal law" (p. 299); "... the purpose of the Discipline Act is to create a disciplinary code for the promotion of the efficiency, good order and discipline of the defence forces and no more" (p. 297). Support for these views was found in the Court's decision, earlier in the same year, in Re Tracey; ex parte Ryan (1989) 166 C.L.R. 518. There, after consideration of the material constitutional provision, s. 51(vi), "a majority of the Court found that the Discipline Act was to be interpreted so as to ensure that the military disciplinary code it enacted was cumulative upon and not exclusive of the ordinary criminal Law" (McWaters at p. 297). At p. 298, it was added:

"As is implicit in the judgments in Re Tracey ..., the Discipline Act does not seek to do other than enact a system of military law in accordance with the traditional and constitutional view of the supplementary function of such law."

As earlier stated, that supplementary "traditional and constitutional function" was "a disciplinary code for the promotion of the efficiency, good order and discipline of the defence forces and no more" (p. 297).

Once that was established, the contrast with Blacklock, and the present case, is clear. In Blacklock, "there was no similar basis for concluding that the Commonwealth law was intended to operate as an additional, rather than a replacement, set of rights and duties" (p. 298). On the contrary, the basis of Blacklock was that the sections of the Commonwealth law there material were "intended to be exhaustive statements of criminal liability" (p. 297).

Earlier, in a statement of general principle which is applicable to this matter, the Court in McWaters said, at p. 296:

"It is true that a difference in penalties prescribed for conduct prohibited by Commonwealth and State laws has been held to give rise to inconsistency between those laws for the purposes of s. 109: Hume v. Palmer; Ex parte McLean; Reg. v. Loewenthal; Ex parte Blacklock. Equally, a difference between the rules of conduct prescribed by Commonwealth and State laws might give rise to such inconsistency. But the mere fact that such differences exist is insufficient to establish an inconsistency in the relevant sense. It is necessary to inquire whether the Commonwealth statute, in prescribing the rule to be observed, evinces an intention to cover the subject-matter to the exclusion of any other law: Ex parte McLean; Blacklock; Reg. v. Winneke; Ex parte Gallagher; University of Wollongong v. Metwally. In the words of Dixon J. in Ex parte McLean:

'The inconsistency does not lie in the mere coexistence of two laws which are susceptible of simultaneous obedience. It depends upon the intention of the paramount Legislature to express by its enactment, completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed.' "

A broad description has been given above of Part III, especially Division 2, of the Taxation Administration Act. Its plain intention is to provide common rules, operating throughout Australia, which it considers appropriate to proscribe and punish conduct inimical to the implementation and enforcement of the tax legislation.

It is an exhaustive statement on such matters, to or from which "the legislation of a State can neither add or subtract" - Blacklock at p. 342.

In our opinion, sub-s. 441(b) of the Code therefore had no valid operation in relation to the appellant's conduct.

The appeals should be allowed.
REASONS FOR JUDGMENT - PINCUS J.A.
Judgment delivered 23/02/1995

I have read the joint reasons of the President and Davies J.A. and agree with their Honours' conclusion. The question, arising under s. 109 of the Commonwealth Constitution, is whether s. 441(b) of the Criminal Code validly applies to the making of false entries with intent to defraud the Commissioner of Taxation. The appellant's argument is that it does not, because Commonwealth legislation deals with the relevant subject matter: s. 8T of the Taxation Administration Act 1953 creates offences which include making a record of any matter in such a way that it does not correctly record and explain the matter, with the intention of deceiving or misleading the Commissioner of Taxation.

At first sight the appellant's contention appears to have some strength: the matter charged under the State provision, so long as one adds in the ingredient specially found by the jury - that the false entries were made with intent to defraud the Commissioner of Taxation - appears much the same, in substance, as at least one of the offences defined by s. 8T.

McWaters v. Day (1989) 168 C.L.R. 289 was relied on by the respondent, but the true explanation of that case is that the Defence Forces disciplinary code is regarded as being a special category; the court took from re Tracey (1982) 150 C.L.R. 113 the doctrine that the Defence Forces Discipline Act 1982:

"...was to be interpreted so as to ensure that the military disciplinary code it enacted was cumulative upon and not exclusive of the ordinary criminal law..." (297)

There is no similar doctrine established as to the collection of offences created by Division 2 Subdivision B of Part III of the Taxation Administration Act 1953.

They have to do with penalising acts calculated to interfere with the proper administration of taxation laws. More narrowly, the field being covered may be defined as that in which records are kept or dealt with in such a way as to create difficulties in the administration of those laws.

It is not contended that the field of operation of the Commonwealth law, however defined, is too narrow to include the conduct the subject of the convictions; the argument is rather that the offence of doing the things mentioned in the State statute with intention to defraud is significantly different in kind from anything dealt with by the Commonwealth statute.

It has been held that the creation of a Commonwealth
offence of stealing, in particular circumstances, does not
necessarily exclude the operation of a State offence of robbery:
Flanders [1976] Qd.R. 153, O'Brien [1981] W.A.R. 305.
Similarly, a Commonwealth offence of larceny can leave room for
the operation of a State offence of "joy-riding", even where

offenders in the latter category are deemed to be guilty of

larceny: Clixby v. Weston (1988) 15 N.S.W.L.R. 35.

But in Kelly v. Shanahan, ex parte Shanahan [1975] Qd.R. 215, a Commonwealth offence of stealing Commonwealth property was held to exclude the operation of a State offence of stealing, so far as it related to Commonwealth property. And a similar result ensued in a decision about escaping from prison:

Gregory [1983] 3 N.S.W.L.R. 172.

The argument for the respondent is that making (to put it simply) a false record with the intention of deceiving or misleading the Commissioner is substantially different from the State offence because the latter requires proof of intent to defraud and that depends on the proposition that in an important way the latter offence is the narrower. It was contended that one could be guilty of an offence under the Commonwealth statute by proof of, among other things, an intention to deceive or mislead the Commissioner, whether or not the intention was or was not to induce the Commissioner to take a particular course;

proof of intent to defraud, it was contended, depends on showing an intention to induce a course of action: Balcombe v. De Simoni (1972) 126 C.L.R. 576 at 593.

The point then is, to put it shortly, whether the possibility of disinterested deception or misleading should be held to make a difference. It is conceivable that a person would make a false record to deceive the Commissioner, but not with the idea of causing the Commissioner to, for example, issue an assessment different from that which would otherwise have been issued.

Such a case would, one would think, be quite rare, and the
distinction sought to be the basis of preserving the operation
of the State statute is not one of much practical significance.
The point may be expressed by saying that the Commonwealth
statute applies when it appears that the intention was to induce
the Commissioner to take a particular course of action, as well
as when it does not so appear, whereas the State statute, it is
argued, applies only in the former case. It was sought by the
respondent to persuade us to treat the alleged distinction as
critical, partly, it was said, because the decision of the High
Court in Jackson (1976) 134 C.L.R. 42 should be applied. It
will be noted that the Commonwealth legislation there dealt with
was much less comprehensive than, and generally did not
resemble, that presently in issue. But more importantly the
distinction now relied on was not, and could not have been, made
in the earlier case; there the Commonwealth section expressly
included any person who "...by any fraud...avoids or attempts to
avoid assessment or taxation...".

Looking at the matter more broadly, the Commonwealth legislation presently in issue, unlike that in Jackson, covers in a detailed and comprehensive way a variety of acts, relating to accounts and records, of such a kind as to disadvantage or potentially disadvantage the Commonwealth. If the respondent's argument is right, then those guilty of a particular species of such conduct remain liable to be prosecuted, and subjected to a considerably heavier penalty, under State law. To solve the problem posed, one has to impute to the Commonwealth legislature an intention with respect to a point on which there was most unlikely to have been any deliberation; one looks for a result appealing to commonsense, and that is, in my opinion, that it is unlikely that the legislature intended that there should remain available, with respect to records bearing on taxation, the alternative criminal remedy under State law.

I agree that the appeals should be allowed and the convictions quashed.