R v TANG - [2005] SASC 499

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Criminal Appeal)
R v TANG
Judgment of The Court of Criminal Appeal
(The Honourable Justice Debelle, The Honourable Justice Besanko and The Honourable Justice Anderson)
22 December 2005
CRIMINAL LAW - APPEAL AND NEW TRIAL AND INQUIRY AFTER CONVICTION - APPEAL AND NEW TRIAL
Defrauding the Commonwealth – appeal and application for leave to appeal on two grounds against conviction – application for leave to appeal against sentence – whether judge erred in direction as to elements of offence – whether verdict unreasonable – whether sentence manifestly excessive – income under-declared by $300,000 – application for leave to appeal against conviction granted in respect of ground 1, otherwise refused – application for leave to appeal against sentence refused – held, direction correct – appeal dismissed.
Crimes Act 1914 s 29D, referred to.
Beazley v Steinhardt (1999) 106 A Crim R 21; Lovelace v Director of Public Prosecutions [1954] 3 All ER 481; McLeod v Buchanan [1940] 2 All ER 179; R v Perre (1986) 41 SASR 105; R v Van Nhan Nguyen & Huu Duc Phan [1997] 1 VR 386, considered.

R v TANG
[2005] SASC 499
Court of Criminal Appeal: Debelle, Besanko and Anderson JJ

DEBELLE J. This is an application for leave to appeal against both conviction and sentence. As the issues were in narrow compass, the Court heard full argument indicating that it would consider the application for leave and, if leave was granted on any ground, would determine the appeal.
The applicant was convicted after a trial by jury of the offence of defrauding the Commonwealth contrary to s 29D of the Crimes Act 1914 (Cth). (Although s 29D has been repealed, it operated in respect of offences committed before 24 May 2001.) It was alleged that the appellant had defrauded the Commonwealth by causing a restaurant business called “Lemon Grass Bistro” to declare to the Commissioner of Taxation income for the year ending 30 June 1998 less than the income in fact earned by the business in that financial year. The applicant was sentenced to a period of imprisonment for three years. The judge ordered that she be released after serving 12 months of that sentence upon her entering into a recognisance in the sum of $1,000 to be of good behaviour for 18 months. The applicant applies for leave to appeal against both the conviction and the sentence.
The Prosecution Case
There were five partners in the business. The applicant was the wife of one of those partners. The prosecution case was that the applicant was the bookkeeper for the business; that she was responsible for providing information to the accountant for the business who prepared the income tax returns for the partnership business; and that the applicant had provided the accountant false financial information which understated the income of the business. The understated income was alleged to be approximately $306,000. A search by officers of the Australian Federal Police and the Australian Taxation Office had disclosed two sets of accounts for the business. One stated less than the true income and it was provided to the accountant. The other had not been given to the accountant and stated the true income, which was higher than that in the other accounts. Dishonest attempts to avoid income tax by understating income amount to the offence of defrauding the Commonwealth contrary to s 29D of the Crimes Act: Beazley v Steinhardt (1999) 106 A Crim R 21 at 27.
Ground 1
The first ground of appeal is that the trial judge had erred in his directions to the jury upon what was required to prove that the applicant had caused the business to declare less than its true income. The relevant part of the direction was in these terms:
I told you that the second element that the Crown or prosecution must prove beyond reasonable doubt is that the accused caused a false return to be submitted to the Australian Taxation Office. Ladies and gentlemen, that does not mean that the prosecution must prove that it was actually the accused who sent it to the ATO, nor does it mean that the prosecution must prove she signed it. She will have caused a false return to have been submitted if action or conduct on her part had the effect of the Australian Taxation Office’s receiving a return which was a false return. Here, of course, the prosecution says she supplied the spreadsheet, even though it was incomplete, and she answered queries from Mrs Leow about the return. Mr Tremaine has said that Ms Leow did not rely on information supplied by the accused, that you may have a doubt about that, but that she relied on banking records supplied by the AFP who seized them. Of course, to that the prosecution would say that the banking records do not accurately reflect the business income of the bistro.
Can I summarise those matters again, the four elements. One, the false tax return was submitted. Two, that the accused caused a false return to be submitted, in the sense which I’ve just explained it. Three, that as a consequence of submitting the false return the economic interest of the Commonwealth was put at risk or imperilled, to use the word that’s been used during the trial, and four, that the accused intended that a false return would be submitted, that is that she knew the return understated the total business income of the bistro and she acted dishonestly in causing the false return to be lodged with the Australian Taxation Office. And, as I said, ‘dishonest’ is a plain English word. Whether or not the alleged conduct was dishonest is for you to decide having regard to the standards of ordinary decent people.
The applicant contends that the judge erred in that he did not direct the jury that the appellant could not have caused the business to declare less than its true income unless there was evidence of a request or direction by her to do so or that the applicant had made some request or been a party to some agreement to lodge the return. The question whether the judge correctly directed the jury on the elements of the offence involves a question of law. I would, therefore, grant leave to appeal. However, for the reasons which follow, I would dismiss the appeal.
The submission misconceives the meaning of “causing” in this context. “Cause” may have many different applications and meanings. Its meaning will depend on the context in which it appears. There will be occasions when the words “cause” or “causing” require that there be evidence of some kind of express or positive mandate: see, for example, McLeod v Buchanan (1940) 2 All ER 179 per Lord Wright at 187 and Lovelace v Director of Public Prosecutions (1954) 3 All ER 481. However, “cause” and “causing” may denote a less active meaning. One meaning of “cause” is to be the cause of, to effect, to bring about: see Oxford English Dictionary. In the particulars of this offence, the verb “cause” is used in the expression “causing Lemon Grass Bistro to declare to the Commissioner of Taxation” less than the true income of the business. In that context, it means to effect or to bring about the declaring of less than the true income of the business. It is possible to bring about a result either by failing to do something or by asking a person to do something. It is, therefore, possible to cause the income of a business to be understated in an income tax return by failing to provide one’s accountant with all the necessary information. It does not require some kind of direction to the accountant to do so. Nor is it necessary that the applicant’s actions be the sole cause. Expressed another way, one can cause events to occur by either acts or omissions. An income tax return will not truly state income if all the income is not disclosed to the person preparing the return. That is what occurred in this case. The criticism of the direction therefore fails.
It was contended that the judge had erred in not directing the jury that the applicant could not be convicted unless the partners had adopted the return by signing and lodging it. This contention must also fail. The partners had adopted it by signing it and arranging for it to be lodged electronically. More importantly, the submission fails to recognise the applicant is not charged with lodging an income tax return which understated the true income of the firm but, instead, is charged with causing the income to be understated in the return which was lodged on behalf of the business. The question was whether she conducted herself in such a way, by either acts or omissions, which had the consequence that the return lodged on behalf of the partnership failed to state the true income. The material part of the direction was in these terms:
She will have caused a false return to have been submitted if action or conduct on her part had the effect of the Australian Taxation Office receiving a return which was a false return.
That direction was in the circumstances entirely correct.
For these reasons the applicant fails on the first ground of appeal.
Ground 2
The next ground is that the verdict is unreasonable and that the jury should have had a reasonable doubt that the applicant caused the understatement of income because the accountant had used her own method to prepare the return. The applicant submits that, as the accountant who had prepared the income tax returns had not relied on the figures in a spreadsheet provided to her and that as the accountant had used her own method of adding deposits recorded in bank statements as well as cash on hand, the jury could not have been satisfied beyond reasonable doubt that the applicant was guilty.
The prosecution led evidence to establish that there was a fraudulent scheme not to ring up some cash sales on business days so that the sales figures provided to the accountant understated the true income. It is unnecessary to go into all of the details of that evidence. It is sufficient to note the following.
First, the applicant gave the accountant some financial information and later confirmed the amount stated in the return as income. Next, the business kept two sets of accounts. In the trial those accounts were called the “higher set of accounts” and “the lower set of accounts”. They recorded the income for the month of June 1998. The lower set of accounts recorded an income lower than the higher set of accounts for a period of 12 out of 21 days. The higher set of accounts was discovered in the course of the execution of search warrants on the homes of two of the partners of the Lemon Grass Bistro. The prosecution also led evidence proving that the applicant was the bookkeeper for the business and so responsible for maintaining the lower set of figures. That evidence included evidence of a handwriting expert.
Other evidence was led proving a reconstruction of the accounts for June showing how the receipts of cash for three weeks in that month exceeded what was disclosed to the accountant. The practice was to disclose all income received by credit card but not to declare all cash income, particularly the cash income received on Fridays and Saturdays of each week. The reconstruction was effected by examining the roll of all receipts in the cash register, meal dockets, a summary of the income and documents written by the applicant. It was evidence on which a jury could readily conclude that the applicant was privy to the fraud and participated in it to the extent of not informing the accountant for the business the full amount of the income. In addition, there was evidence from an actuary which extrapolated the understatement of income for June into an amount which was said to be the approximate amount of the understated income. The jury was entitled to act on that evidence.
The question whether the applicant had caused false information to be supplied to the accountant was plainly a question for the jury to determine and there was a considerable body of evidence on which they could be satisfied beyond reasonable doubt on that issue. This ground also is not arguable. I would refuse leave to appeal on this ground.
Appeal Against Sentence
The application for leave to appeal against sentence is made on the ground that it is manifestly excessive. That contention is based on two grounds. The first is that the judge found that the understated income amounted to $306,000 and sentenced the applicant on that basis. The judge had found that a fraudulent scheme to falsify income for the 1998 financial year existed and the applicant was directly involved in effecting that fraudulent scheme. The judge was satisfied that the amount of the business income not declared was in the order of $306,000. The submission attacked the evidence of the actuary who had extrapolated the understated income for June 1998 into the amount of understated income for the year. It was contended that the extrapolation of the understated income for June 1998 into an annual figure was not a valid exercise. The consequence was that the judge had sentenced on a wrong basis so that the sentence was manifestly excessive.
In the course of sentencing submissions, the prosecution had relied on the evidence of the actuary. The applicant did not adduce any contrary evidence. The judge was entitled to act on the sworn evidence of the actuary, particularly in the absence of any other evidence from the applicant: R v Perre (1986) 41 SASR 105 per King CJ at 105 – 106. The amount of the understated income was not a circumstance of aggravation of this offence but was the proven case for the prosecution. Even if it is regarded as a circumstance of aggravation which must be proved beyond reasonable doubt, the judge was entitled to act upon the sworn evidence of the actuary in the absence of any evidence from the applicant. The applicant has not demonstrated any error in the reasons of the sentencing judge. This ground is not reasonably arguable.
The applicant applies for leave on the further ground that the period to be served should have been shorter than the period of 12 months because of the likely affect of the sentence upon the applicant’s children. The maximum penalty for this offence at the time of its commission was a fine of $110,000 or imprisonment for 10 years or both. The actual period of the sentence which will be served in custody is in fact relatively low. The applicant will be released on 19 April 2006. The children will be cared for by others. The remarks made by the sentencing judge show that he had regard to the fact that any term of imprisonment will have serious consequences for the children of the applicant. It has not been demonstrated that he failed to give adequate weight to that fact. The sentence is quite light given the seriousness of the offending and the penalties which can be imposed. No error has been demonstrated in this respect.
This was a case where consideration of both personal and general deterrence was necessary. I respectfully agree with the remarks of Brooking JA speaking for the Court of Criminal Appeal in R v Van Nhan Nguyen and Huu Duc Phan [1997] 1 VR 386 at 389:
The seriousness of the offence of defrauding the Commonwealth of a large sum of money by not declaring assessable income has in the past, perhaps, not always been sufficiently reflected in the sentence passed. Those who systematically defraud the Revenue of a large sum of money over a substantial period must in general expect a substantial custodial sentence. The deterrent and punitive effects of that sentence should not be unduly diminished by allowing release from custody at an unduly early stage.
It was appropriate for the court in this case to send a clear warning to those who conduct businesses where a large amount of cash is involved that stern penalties will be ordered if income is not fully declared in an income tax return. In my view, the sentence was lenient given the extent of the fraud.
This sentence was, therefore, well within the range of the sentencing discretion. It has not been demonstrated in any respect that the exercise of that discretion has miscarried. I would refuse leave to appeal on this ground.
For all of these reasons, I would grant leave in respect of ground 1 of the application for leave to appeal against the conviction but dismiss the appeal. I would refuse the application for leave in respect of ground 2 of the application for leave to appeal against conviction. I would refuse leave to appeal against sentence.
BESANKO J. I agree with the orders proposed by Debelle J and with his reasons for those orders.
ANDERSON J. I have read the draft reasons of Debelle J. I agree with his reasons and I also agree with the orders proposed by him.