Robinswood Pty Ltd v Deputy Commissioner of Taxation for the Commonwealth of Australia
[2003] WASCA 325
•18 DECEMBER 2003
ROBINSWOOD PTY LTD & ORS -v- DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA [2003] WASCA 325
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASCA 325 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:4/2003 | 2 OCTOBER 2003 | |
| Coram: | TEMPLEMAN J MILLER J EM HEENAN J | 18/12/03 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Appeal from dismissal of application for orders nisi for prohibition, certiorari and mandamus and application for injunction dismissed Applications for leave to appeal from order striking out portions of defences dismissed | ||
| A | |||
| PDF Version |
| Parties: | ROBINSWOOD PTY LTD (ACN 008 844 488) MADDELIENE CARATTI VENETIAN NOMINEES PTY LTD GRANGEFIELD NOMINEES PTY LTD EXCELCO MINING PTY LTD (ACN 057 723 412) MINE EXEC PTY LTD DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA |
Catchwords: | Administrative law Application for injunction, certiorari and constitutional writs Appeal from dismissal of application for order nisi Application for leave to appeal from orders striking out portion of defences Action for recovery of unpaid tax and civil penalties Significance of conviction of a related party for a criminal offence for conspiracy to defraud the Commonwealth in relation to taxation affairs Doctrine of double jeopardy and its relation to claims for the recovery of civil penalties Association or identity between individuals or officers of corporations when recovery proceedings for civil penalties taken against the corporations Application for prerogative relief to prevent continuation of proceedings in this Court |
Legislation: | Crimes Act (Clth) (1914) Income Tax Assessment Act (1936) (Clth) Judiciary Act (1903) (Clth) Jurisdiction of Courts (Cross-Vesting) Act (1987) (Clth) Supreme Court Act 1935, s 25 Taxation Administration Act (Clth) |
Case References: | ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 Austral Pacific v Airservices Aust (2000) 203 CLR 136 Caratti v The Queen (2000) 22 WAR 527 Deputy Commissioner of Taxation v Robinswood Pty Ltd & Ors (2001) 24 WAR 284; [2001] WASC 191 Felton v Mulligan (1971) 124 CLR 367 Hamilton v Whitehead (1988) 166 CLR 121 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 Mudge v Attorney General (Victoria) [1960] VR 43 Pearce v The Queen (1998) 194 CLR 610 R v Hoar (1981) 148 CLR 32 R v Murray; Ex parte Commonwealth (1916) 22 CLR 437 Re Anderson; Ex parte Bateman (1978) 53 ALJR 165 Re McBain; Ex parte Catholic Bishops Conference (2002) 209 CLR 372 The Queen v Gray; Ex parte Marsh (1985) 157 CLR 351 Yorke v Lucas (1985) 158 CLR 661 Ahern v The Queen (1988) 165 CLR 87 APRA v Holloway (2000) 35 ACSR 27; [2000] FCA 1245 ASC v Forem-Freeway Pty Ltd (1999) 30 ACSR 339 Australian Competition & Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169; [2002] FCA 559 Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238; (1997) 145 ALR 38 Australian Competition & Consumer Commission v Commercial and General Publications Pty Ltd (No 2) [2002] FCA 1349 Australian Competition & Consumer Commission v Dimmeys Stores Pty Ltd [1999] FCA 1175 Australian Competition & Consumer Commission v Murray (No 2) [2003] FCA 47 Australian Securities and Investments Commission v Hosken (1999) 9 TasR 25; 153 FLR 37 Cachia v Isaacs [1985] 3 NSWLR 366 Carr v Finance Corporation of Australia (No 1) [1980-81] 147 CLR 246 Connolly v Meagher (1906) 3 CLR 682 Department of Revenue Montana v Kurth Ranch 511 US (1994) Eviston v DPP [2001] IEHC 4; [2002] 1 ILRM 134 Gerakiteys v The Queen (1984) 153 CLR 317 Gray v Motor Accident Commission (1998) 196 CLR 1; [1998] HCA 70 Green v United States (1957) 355 US 184 H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159 Hayes v Weller [No 2] (1988) 50 SASR 182 Hudson v United States (1997) 522 US 93 King-Brooks v Roberts (1991) 5 WAR 500 Mill v The Queen (1988) 166 CLR 59 R v Barton (1980) 147 CLR 75 R v Button [1848] 11 QB 929 R v Carroll (2002) 77 ALJR 157; 194 ALR 1 R v Darby (1981) 148 CLR 668 R v Dowding (2000) 159 FLR 204; [2000] VSC 439 R v Hamzy (1994) 74 A Crim R 341 R v Inland Revenue Commissioners; Ex parte National Federation of Self-Employed and Small Business Ltd [1982] AC 617 R v Kontos (1997) 140 FLR 101; [1997] QCA 206 R v Metal Trades Employers Association; Ex parte Amalgamation Engineering Union (1951) 82 CLR 208 R v Secretary of State for War [1891] 2 QB 326 Sambasivam v Public Prosecutor, Federation of Malaya [1950] AC 458 Savage v Teck Explorations Limited, unreported; FCt SCt of WA; Library No 7285; 16 September 1988 State of Western Australia & Anor v Bond Corporation Holding Ltd (1991) 5 WAR 40 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 TPC v TNT Australia Pty Ltd (1995) 17 ATPR 40,161 (41-375) United States v Halper (1989) 490 US 435 United States v La Franca [282 US] 568 Verrier v Director of Public Prosecutions [1967] 2 AC 195 Wilson & Ors v Metaxas [1989] WAR 285 WorkCover Authority of New South Wales (Insp Lacey) v George Weston Foods Ltd [2000] NSWIR Comm 19 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : ROBINSWOOD PTY LTD & ORS -v- DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA [2003] WASCA 325 CORAM : TEMPLEMAN J
- MILLER J
EM HEENAN J
- MADDELIENE CARATTI
VENETIAN NOMINEES PTY LTD
GRANGEFIELD NOMINEES PTY LTD
EXCELCO MINING PTY LTD (ACN 057 723 412)
MINE EXEC PTY LTD
Appellants
AND
DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA
Respondent
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Catchwords:
Administrative law - Application for injunction, certiorari and constitutional writs - Appeal from dismissal of application for order nisi - Application for leave to appeal from orders striking out portion of defences - Action for recovery of unpaid tax and civil penalties - Significance of conviction of a related party for a criminal offence for conspiracy to defraud the Commonwealth in relation to taxation affairs - Doctrine of double jeopardy and its relation to claims for the recovery of civil penalties - Association or identity between individuals or officers of corporations when recovery proceedings for civil penalties taken against the corporations - Application for prerogative relief to prevent continuation of proceedings in this Court
Legislation:
Crimes Act (Clth) (1914)
Income Tax Assessment Act (1936) (Clth)
Judiciary Act (1903) (Clth)
Jurisdiction of Courts (Cross-Vesting) Act (1987) (Clth)
Supreme Court Act 1935, s 25
Taxation Administration Act (Clth)
Result:
Appeal from dismissal of application for orders nisi for prohibition, certiorari and mandamus and application for injunction dismissed
Applications for leave to appeal from order striking out portions of defences dismissed
Category: A
Representation:
Counsel:
Appellants : Mr J A Davies
Respondent : Mr S Owen-Conway QC & Mr R E Lindsay
Solicitors:
Appellants : Dawson Davies
Respondent : Australian Government Solicitor
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Case(s) referred to in judgment(s):
ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559
Austral Pacific v Airservices Aust (2000) 203 CLR 136
Caratti v The Queen (2000) 22 WAR 527
Deputy Commissioner of Taxation v Robinswood Pty Ltd & Ors (2001) 24 WAR 284; [2001] WASC 191
Felton v Mulligan (1971) 124 CLR 367
Hamilton v Whitehead (1988) 166 CLR 121
Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51
Mudge v Attorney General (Victoria) [1960] VR 43
Pearce v The Queen (1998) 194 CLR 610
R v Hoar (1981) 148 CLR 32
R v Murray; Ex parte Commonwealth (1916) 22 CLR 437
Re Anderson; Ex parte Bateman (1978) 53 ALJR 165
Re McBain; Ex parte Catholic Bishops Conference (2002) 209 CLR 372
The Queen v Gray; Ex parte Marsh (1985) 157 CLR 351
Yorke v Lucas (1985) 158 CLR 661
Case(s) also cited:
Ahern v The Queen (1988) 165 CLR 87
APRA v Holloway (2000) 35 ACSR 27; [2000] FCA 1245
ASC v Forem-Freeway Pty Ltd (1999) 30 ACSR 339
Australian Competition & Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169; [2002] FCA 559
Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd (1997) 75 FCR 238; (1997) 145 ALR 38
Australian Competition & Consumer Commission v Commercial and General Publications Pty Ltd (No 2) [2002] FCA 1349
Australian Competition & Consumer Commission v Dimmeys Stores Pty Ltd [1999] FCA 1175
Australian Competition & Consumer Commission v Murray (No 2) [2003] FCA 47
Australian Securities and Investments Commission v Hosken (1999) 9 TasR 25; 153 FLR 37
Cachia v Isaacs [1985] 3 NSWLR 366
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Carr v Finance Corporation of Australia (No 1) [1980-81] 147 CLR 246
Connolly v Meagher (1906) 3 CLR 682
Department of Revenue Montana v Kurth Ranch 511 US (1994)
Eviston v DPP [2001] IEHC 4; [2002] 1 ILRM 134
Gerakiteys v The Queen (1984) 153 CLR 317
Gray v Motor Accident Commission (1998) 196 CLR 1; [1998] HCA 70
Green v United States (1957) 355 US 184
H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159
Hayes v Weller [No 2] (1988) 50 SASR 182
Hudson v United States (1997) 522 US 93
King-Brooks v Roberts (1991) 5 WAR 500
Mill v The Queen (1988) 166 CLR 59
R v Barton (1980) 147 CLR 75
R v Button [1848] 11 QB 929
R v Carroll (2002) 77 ALJR 157; 194 ALR 1
R v Darby (1981) 148 CLR 668
R v Dowding (2000) 159 FLR 204; [2000] VSC 439
R v Hamzy (1994) 74 A Crim R 341
R v Inland Revenue Commissioners; Ex parte National Federation of Self-Employed and Small Business Ltd [1982] AC 617
R v Kontos (1997) 140 FLR 101; [1997] QCA 206
R v Metal Trades Employers Association; Ex parte Amalgamation Engineering Union (1951) 82 CLR 208
R v Secretary of State for War [1891] 2 QB 326
Sambasivam v Public Prosecutor, Federation of Malaya [1950] AC 458
Savage v Teck Explorations Limited, unreported; FCt SCt of WA; Library No 7285; 16 September 1988
State of Western Australia & Anor v Bond Corporation Holding Ltd (1991) 5 WAR 40
Tesco Supermarkets Ltd v Nattrass [1972] AC 153
TPC v TNT Australia Pty Ltd (1995) 17 ATPR 40,161 (41-375)
United States v Halper (1989) 490 US 435
United States v La Franca [282 US] 568
Verrier v Director of Public Prosecutions [1967] 2 AC 195
Wilson & Ors v Metaxas [1989] WAR 285
WorkCover Authority of New South Wales (Insp Lacey) v George Weston Foods Ltd [2000] NSWIR Comm 19
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1 TEMPLEMAN J: I have had the advantage of reading in draft the reasons to be published by E M Heenan J. I agree with those reasons. There is nothing I wish to add.
2 MILLER J: I have had the opportunity of reading in draft the reasons for judgment of Heenan J and I agree with those reasons. Accordingly, I would dismiss the appeal from the decision refusing to grant relief sought under s 39B of the Judiciary Act and dismiss the applications for leave to appeal against the orders below striking out portions of the defences in the recovery actions.
3 EM HEENAN J: By orders made on 10 January 2003 in these consolidated actions and transferred proceedings, Wheeler J:
(a) dismissed an application by the applicants in CIV 1480 of 2002 for an order nisi for writs of prohibition, certiorari and mandamus against the respondent, the Deputy Commissioner of Taxation for the Commonwealth (DCT) in proceedings where the applicants were also seeking an injunction, and/or a declaration against the Deputy Commissioner; and
(b) in six actions, the first of which was brought by Robinswood Pty Ltd against the Deputy Commissioner of Taxation for the Commonwealth (CIV 2300 of 1997) and which can be regarded as raising the same issues of principle as the other actions except for that brought by Maddeliene Caratti (CIV 2318 of 1997), struck out certain portions of the defences of each defendant. The variation in the Maddeliene Caratti action (CIV 2318 of 1997) was that her Honour granted this defendant alone leave to re-amend to rely on a special defence, in a revised form, which was, otherwise, struck out of all other defences.
From those orders, the six companies and Mrs Caratti, respectively:
(a) appealed from the decision dismissing the application for orders nisi for prohibition, certiorari, mandamus or other relief; and
(b) seek leave to appeal from the interlocutory decision dismissing, in five cases absolutely, and in the other case with leave to replead, portions of the respective defences to the claims by the DCT.
It is convenient to refer to the companies and to Mrs Maddeliene Caratti who are the applicants for writs of prohibition and other related relief, and who are also, severally, the defendants in the actions brought by the
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- DCT, as the "Caratti parties". The companies, themselves can be termed the "Caratti companies". The DCT is the respondent to the applications for prohibition and other relief, and is the plaintiff in each of the other actions.
4 The applications for writs of prohibition, certiorari,mandamus, and the associated claims for an injunction and a declaration against the DCT were brought under s 39B of the Judiciary Act (1903) (Clth) originally in the Federal Court of Australia. They are claims for relief of a kind within the original jurisdiction of the High Court (Constitution, s 75(v)) which, because of the provisions of s 77(i) of the Constitution is jurisdiction also conferred upon the Federal Court by s 39B(1) of the Judiciary Act. Relief in the nature of writs of prohibition or mandamus under these provisions, and the ancillary writ of certiorari when sought against an officer of the Commonwealth, have in recent times earned the title of "constitutional writs" to emphasise the origin and the special function which they serve under the Constitution and to distinguish them from the prerogative writs of prohibition, mandamus or certiorari, or statutory mandamus (Supreme Court Act, s 16(1)(a) and s 25(9) Mudge v Attorney General (Victoria) [1960] VR 43). There are some important differences in the principles relating to the grant and availability of those remedies.
5 The application by the Caratti parties for these constitutional writs in the Federal Court was transferred to this Court by order of Lee J on 26 March 2002, apparently pursuant to the provisions of subs 5(5) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Clth). It reveals several factors which mean that the current proceedings involve the exercise of federal jurisdiction by this Court. These include, the identity of one of the parties, the DCT, as an officer of the Commonwealth; the resort by the Caratti parties to a species of relief, the constitutional writs, available under s 39B of the Judiciary Act and s 77(v) of the Constitution, the reliance on the provisions of laws of the Commonwealth Parliament, the Crimes Act (1914) and the Income Tax Assessment Act 1936 as the source of the alleged rights or obligations of the DCT in the "matter" in controversy between the parties; and the provisions of s 79 of the Judiciary Act in directing the choice of law applicable. These factors identify these proceedings as involving federal jurisdiction invested in this Court by s 39(2) of the Judiciary Act. It is also possible that the choice of the applicable law in this case, in relation to the proceedings transferred from the Federal Court, may be directed by s 11 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Clth) but nothing appears to turn on this.
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6 Once any part of the proceedings before the court involves federal jurisdiction, the whole of the issues before the court involve and require the sole exercise of that same federal jurisdiction – Felton v Mulligan (1971) 124 CLR 367 per Barwick CJ at 373 – 374; ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 per Gleeson CJ, Gaudron and Gummow JJ at [7], p 571 and Austral Pacific v Airservices Aust (2000) 203 CLR 136. Although receiving little attention in the written submissions or at the hearing before this Court, the federal jurisdiction which is being exercised and the claims by the Caratti parties for constitutional writs mean that the principles and the criteria for the grant of those writs will be slightly different from the principles applicable on applications for prerogative remedies of prohibition, certiorari or mandamus or for statutory mandamus: see Re McBain; Ex parte Catholic Bishops Conference (2002) 209 CLR 372 per Kirby J at [165] - [169] and per Hayne J at [261] - [265]. Before examining these principles more closely, it is necessary to outline the background which has led to the present appeal and the applications for leave to appeal.
Background
7 There are six actions which have been brought in this Court by the DCT for the recovery of alleged undeducted and unpaid employer PAYE deductions and for civil penalties which have been consolidated with each other. These are the six actions in which the DCT is plaintiff and in which Mrs Maddeliene Caratti and five Caratti companies are the defendants (Actions CIV 2300 of 1997; CIV 2318 of 1997; CIV 2320 of 1997; CIV 2321 of 1997; CIV 2322 of 1997 and CIV 1126 of 1998). These six actions have also been consolidated with cause No CIV 1480 of 2002 in which Mrs Caratti, the five Caratti companies and a sixth Caratti company, Zel Nominees Pty Ltd, are seeking constitutional writs, an injunction and a declaration against the DCT. It is this last cause which, as already described, was transferred to this Court from the Federal Court of Australia.
8 The relief sought by the applicants in CIV 1480 of 2002, at the risk of undue brevity, is to prevent the DCT from pursuing his recovery claims in this Court insofar as they include claims for civil penalties for the non-deduction or non-remission of the PAYE instalments which are alleged to be owing by the plaintiff in the six recovery actions and in another recovery action against Zel Nominees Pty Ltd. Both in the defences of the Caratti parties which were struck out by the order of Wheeler J, and in the claims for constitutional writs and other relief under s 39B of the Judiciary Act, the Caratti parties asserted that the
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- DCT was unable to recover or pursue the recovery of civil penalties for the non-deduction or remission of the PAYE tax instalments because, to do so, would place Mrs Caratti and each of the Caratti companies in a situation of "double jeopardy". They also relied on the provisions of s 221NB of the Income Tax Assessment Act (1936) (IATA), which at the times material to these proceedings applied, to contend that the DCT is prevented from recovering such civil penalties.
9 With regard to the applications for constitutional writs and other relief under s 39B(1) of the Judiciary Act, Wheeler J held that there was no arguable entitlement to prohibition, mandamus or certiorari or other relief and that, for this reason, the application, even at the order nisi stage, should be dismissed. With regard to the six civil recovery actions, her Honour held that none of the five Caratti companies had any arguable case to defend the claims brought by the DCT on those grounds and, therefore, struck out those parts of their defences which raised issues of "double jeopardy" or pleaded a special defence relying on s 221NB of the Income Tax Assessment Act. However, with regard to Mrs Maddeliene Caratti, the defendant in the remaining recovery action, her Honour doubted that there was any defence on either of those grounds but, because of circumstances involving Mrs Caratti, which did not apply in relation to any of the other five defendants, her Honour concluded that the complexity of the position meant that it may be arguable that Mrs Caratti had a defence on those grounds and so, in her case, struck out portions of her defence but granted liberty to replead to raise those grounds in a more appropriate fashion.
10 The recovery actions have a long and tortuous history. This can be found in an earlier decision of Wheeler J – Deputy Commissioner of Taxation v Robinswood Pty Ltd & Ors (2001) 24 WAR 284; [2001] WASC 191 which her Honour incorporated in her reasons for decision on the two applications now under consideration. It is also convenient if I incorporate that explanation in these reasons, as it is quite uncontroversial, and add only a short summary.
11 After the recovery actions had been instituted in this Court by the DCT they were stayed, by consent, pending the outcome of a criminal trial. The Director of Public Prosecutions of the Commonwealth (the DPP) presented an indictment in the Supreme Court of Western Australia against Maddeliene Caratti, and her two sons, John Caratti and Alan Caratti, alleging that each of them was a party to a conspiracy also involving Sergio Caratti (deceased), the husband of Mrs Caratti and the father of John and Alan. Sergio Caratti had died before those
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- proceedings were commenced. The conspiracy alleged was to the effect that each of the conspirators had agreed to participate in a course of conduct to defraud the Commonwealth by refusing or declining to deduct and remit various instalments of PAYE tax which should have been deducted from the wages or other remuneration of employees of various Caratti companies, including the six companies parties to these consolidated proceedings. This resulted in a trial for over four months in 1999. At the end of the case for the prosecution a directed verdict of acquittal was entered in respect of the charges against Alan Caratti. Maddeliene Caratti was acquitted by the verdict of the jury at the end of the trial. John Caratti was convicted, and sentenced to a term of imprisonment which he has since served. An appeal against the conviction by John Caratti was later dismissed but his application for leave to appeal against sentence was granted, that appeal was allowed and the sentence was reduced. The details of the charges against the three accused and of the conviction of John Caratti can be found in the judgment of the Court of Criminal Appeal in Caratti v The Queen (2000) 22 WAR 527 which was given in September 2000.
12 Upon the completion of the criminal proceedings the civil recovery actions for unpaid tax and civil penalties were resumed. It will be necessary to say more about the details of the defences advanced by the defendants in the civil recovery actions later, but for the moment it is sufficient to say, in general terms, that they all share a common feature in pleading that the pursuit of the recovery actions, insofar as they include claims for civil penalties arising out of the alleged failures to deduct and remit the various PAYE instalments, put each of the defendants in a situation of "double jeopardy".
13 The contention of the Caratti parties is that the circumstances alleged to give rise to the liability for penalty tax involve conduct relied upon by the Director of Public Prosecutions as constituting the overt acts, or part of the overt acts, in the prosecution for the criminal conspiracy alleged against Maddeliene Caratti, Alan Caratti and John Caratti already described. The defendants to the civil action contend that, because the three individual members of the Caratti family stood trial on the conspiracy charges resulting in the two acquittals and the one conviction, neither Mrs Caratti nor any of the defendant companies can be liable for, or be put in jeopardy of being liable for, civil penalties under the ITAA in respect of the same conduct canvassed in the criminal proceedings. The Caratti parties wish to defend each of the civil recovery actions by raising specific defences to this effect and, in a more particular way, by pleading a special defence under s 221NB of
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- the Income Tax Assessment Act. Further, in the application for constitutional writs, an injunction and a declaration, they also contend that the DCT is unable to institute or pursue the actions for the recovery of alleged unpaid tax and civil penalties, at least in so far as they relate to the recovery of civil penalties, because the doctrine of "double jeopardy" and also because the provisions of s 221NB render unlawful any attempt to recover such civil penalties in these circumstances.
14 Of the six Caratti parties who are the defendants to the civil recovery actions, and applicants for leave to appeal from the strike out orders, only Mrs Maddeliene Caratti was charged and stood trial in respect of the alleged criminal conspiracy. Similarly, of the seven appellants (including Zel Nominees Pty Ltd) against the decision of Wheeler J to dismiss the application for constitutional writs, injunction and declarations, again, only Maddeliene Caratti was charged or stood trial for the alleged criminal conspiracy. Nevertheless, the Caratti parties contend that each can and should be identified, for the purposes of the application of the double jeopardy doctrine and s 221NB of the Income Tax Assessment Act, with the individual accused persons at the criminal trial. They support this submission by copious references to evidence and submissions by the prosecution in the criminal proceedings to the effect that the various individual members of the Caratti family were directors or officers of many of the companies involved and, for all practical purposes, controlled and determined the actions of the various companies in the group, including the defendants to the civil recovery proceedings and the applicants for the constitutional writs and associated relief. It is unnecessary to go to the evidence or to all those detailed submissions as it is accepted that, in the criminal proceedings, the DPP alleged, successfully in the case of John Caratti, but unsuccessfully in relation to Mrs Maddeliene Caratti and Mr Alan Caratti, that they were, or should be regarded as being, directly involved in making the decisions and in determining the conduct of the various companies, including the non-deduction or non-remission of PAYE instalments and in many steps and artifices designed to conceal this.
15 The difference in identity between the persons charged on indictment, and the defendants in the civil recovery actions (apart from Maddeliene Caratti) became one of the factors upon which Wheeler J concluded that it was not even arguable, that any of the Caratti companies could have a defence of "double jeopardy" or a defence under s 221NB of the ITAA. I also observe that her Honour considered that Mrs Maddeliene Caratti faced major hurdles in her attempt to rely
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- on those defences in the recovery action brought against her but that, nevertheless, decided that there was scope for argument in her case that those defences might apply sufficient, at least, to avoid striking them out. As already noted, portions of Mrs Caratti's defence were struck out, for other reasons, but leave was granted to her to re-amend and introduce a reformulated defence including these grounds.
16 Hence, the question on the applications for leave to appeal is not whether "double jeopardy" or s 221NB of the ITAA is an absolute defence for any of the Caratti parties to the recovery actions by the DCT but, rather, whether, in the cases of the five Caratti companies, those grounds may provide arguable defences in the sense of being sufficient to survive the strike out applications. In the case of Maddeliene Caratti, the legal efficacy of these defences will, eventually, need to be considered at the trial of the action or on the trial of a preliminary point or question of law, if that were ever to be ordered. It is not appropriate, nor have we been asked, to decide the actual efficacy of such defences in her case on the present applications. These same observations apply in relation to the application for orders nisi for constitutional writs, or for an injunction or declaration. The question for consideration by this Court is whether or not the applicants for the constitutional writs and other relief have shown any arguable entitlement to any of those remedies.
Application for constitutional writs, injunction and declarations – federal jurisdiction
17 The Caratti parties' application for constitutional writs, and injunction and other relief against the DCT is directed to preventing the DCT from further prosecuting the civil recovery actions in this Court insofar as they seek to recover civil penalties for the failure to make or remit the PAYE tax deductions. Although not raised by the parties, a claim to relief of this kind immediately raises the question of the potential application of subs 24(5) of the Supreme Court Act 1935 which provides as follows:
"24(5) No cause or proceeding at any time pending in the Supreme Court shall be restrained by prohibition or injunction; but every matter of equity on which an injunction against the prosecution of any such cause or proceeding might have been obtained, if the Supreme Court Act 1880 had not been passed, either unconditionally or on any terms or conditions, may be relied on by way of defence thereto:
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- Provided that –
(a) nothing in this Act shall disable the court, if it thinks fit, from directing a stay of proceedings in any court or matter pending before it; and
(b) any person, whether a party or not to any such court or matter, who would have been entitled, if the Supreme Court Act 1880 had not been passed, to apply to any court to restrain the prosecution thereof, or who may be entitled to enforce, by attachment or otherwise, any judgment, decree, rule, or order, contrary to which all or any part of the proceedings in such cause or matter may have been taken, may apply to the court, by motion in a summary way, for a stay of proceedings in such cause or matter, either generally or so far as may be necessary for the purposes of justice;
and the court shall thereupon make such order as shall be just."
18 This subsection, part of the Judicature reforms, can be traced to the English Supreme Court of Judicature Act (1873) s 24 (now the Supreme Court of Judicature (Consolidation) Act 1925) and has its analogues in all other Australian jurisdictions. It recognises that both legal and equitable relief can now be obtained from this Court exercising complete jurisdiction in equity and at common law so that it is no longer appropriate or necessary for a court which possesses equitable jurisdiction, to restrain by injunction or otherwise the prosecution of proceedings at law. Since the Judicature Act reforms any matter of equity which might have secured an injunction from the court of Chancery can be relied on as a defence or be made the basis of an application for a stay of proceedings, but recourse to the jurisdiction of the Supreme Court cannot be enjoined or prohibited on the basis of any claim in equity. However, the section has a broader scope and, by its terms, would prevent the grant of the prerogative remedy of certiorari or prohibition, or an injunction which would have the effect of preventing a litigant from prosecuting a cause in the court. Instead, the litigant will be obliged to raise the substantive defence as an alleged answer to the claim and/or to apply for a stay of proceedings on that ground to prevent the further prosecution of the claim. As the relief
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- being sought by the Caratti parties includes relief designed to prevent the DCT from prosecuting the recovery actions, it is necessary to address the potential application of s 24(5) of the Supreme Court Act in this context.
19 Because these applications involve the exercise of federal jurisdiction the law which is to apply is determined by s 79 and s 80 of the Judiciary Act. These provide:
" 79. The laws of each state or territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all courts exercising federal jurisdiction in that state or territory in all cases to which they are applicable.
80. So far as the laws of the Commonwealth are not applicable or so far as their provisions are insufficient to carry them into effect, or to provide adequate remedies or punishment, the common law in Australia as applied by the Constitution and by the statute law in force in the state or territory in which the court in which the jurisdiction is exercised is held shall, so far as it is applicable and not inconsistent with the Constitution and the laws of the Commonwealth, govern all courts exercising federal jurisdiction in the exercise of their jurisdiction in civil and criminal matters."
- So, the laws of Western Australia, including laws relating to procedure, (a reference which should be taken as including s 24(5) of the Supreme Court Act) shall apply, except as otherwise provided by the Constitution or the laws of the Commonwealth. Consequently, unless the Constitution or a law of the Commonwealth otherwise provides, s 24(5) would appear to deny the possibility of certiorari, prohibition, injunction or other remedies being available to prevent or enjoin the prosecution of proceedings in this Court. However, the special feature of the availability of constitutional writs under s 73(v) of the Constitution and s 39B of the Judiciary Act means that the availability of those remedies is provided for by a law of the Commonwealth which, in the circumstances, therefore prevents the operation of s 24(5) of the Supreme Court Act in such instances.
20 The availability of the constitutional writs in a wide variety of circumstances has been recognised as a special statutory remedy more
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- extensive in its application than the prerogative remedies themselves. So, a constitutional writ of prohibition or mandamus or a writ of certiorari in aid may issue against a Judge of the Federal Court of Australia, notwithstanding the rule that the prerogative remedies may not issue to a superior court of record: The Queen v Gray; Ex parte Marsh (1985) 157 CLR 351, see per Deane J at 386 – 387 and Re McBain; Ex parte Catholic Bishops Conference (2002) 209 CLR 372 per McHugh, Kirby and Hayne JJ. As Hayne J said in the latter case at 438:
"The entitlement of this Court in its original jurisdiction to provide such remedies, directed to the judges of Federal Courts under s 75(v) of the Constitution, and addressed to their judgments and orders and the records of their proceedings, must now be taken as part of the settled law of the Commonwealth Constitution: Eastman v The Queen (2000) 203 CLR 1 at 12 – 13. It was not challenged in these proceedings. It rests upon the express language of s 75(v). That provision is of cardinal importance. It affords an assurance of conformity to the requirements of the Constitution and to the laws validly made under it. It restricts the enactment of 'exceptions' and 'regulations' such as the Parliament can prescribe to limit the appellate jurisdiction of this Court. These considerations present cogent reasons why it is inappropriate to reconsider, or qualify, this long line of the Court's authority now: Abebe v The Commonwealth (1999) 197 CLR 510 at 527 – 534; 589 – 590; and 605.
Once it is accepted that collateral attack on the official acts (including judgments and orders of Federal judges) of 'officers of the Commonwealth' is possible under s 75(v) of the Constitution, notwithstanding the concurrent facility of appeal ordinarily available pursuant to s 73, it is impossible logically to maintain the strict dichotomy between the exercise of original jurisdiction in respect of judgments and orders. If the other constitutional requirements are satisfied, there is nothing in the language or structure of Ch III of the Constitution that confines this Court's intervention in the judgment or orders of Federal judges and Federal Courts to the exercise of appellate jurisdiction."
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- proceeding with this action by recourse to the constitutional writs or by other remedies. This would not be possible because, even though exercising federal jurisdiction, a Judge of this Court is not "an officer of the Commonwealth" and thereby susceptible to such remedies – R v Murray; Ex parte Commonwealth (1916) 22 CLR 437; Re Anderson; Ex parte Bateman (1978) 53 ALJR 165 and Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51, per McHugh J at 112 – 114. Accordingly, I conclude, that s 24(5) of the Supreme Court Act is no bar, in the circumstances of this case, to the applications for constitutional writs or other relief sought by the Caratti applicants.
22 Nevertheless, there is another important difference in the reach of the constitutional writs sought by the Caratti applicants under s 39B of the Judiciary Act. They are available only in the case of jurisdictional errors and not in relation to errors of law or fact within jurisdiction whether disclosed on the record or otherwise – Re McBain; Ex parte Catholic Bishops Conference (supra). This restricts the potential availability of the constitutional writs in the present case to an error by the DCT in acting beyond his jurisdiction. The DCT is not a court or tribunal hearing some cause or determining some application but, rather, an officer of the Commonwealth exercising a statutory power to recover a debt or civil penalty alleged to be due to the Commonwealth. He is plainly empowered to commence proceedings in any court in the Commonwealth for the recovery of unpaid taxation or associated penalties by virtue of his statutory powers. Accordingly, no question of the jurisdiction of the DCT to initiate or prosecute the recovery proceedings has arisen or could arise. Whether the DCT has a good claim for the recovery of alleged unpaid or undeducted PAYE remissions, or for associated civil penalties, is another matter and any issue as to the entitlement of the DCT to such relief can be joined in the recovery actions and decided in those causes in the same manner as in any other civil action within the jurisdiction of this Court. The possibility, if it is one, that one or more of the Caratti parties may have a good defence to the recovery action brought by the DCT cannot possibly mean that the DCT is acting beyond jurisdiction in commencing or in prosecuting the recovery action.
23 It therefore follows that the constitutional writs are not available in this present situation and, further, that there is no basis to enjoin the DCT by an injunction, or to declare that he is unable to prosecute those actions. In such circumstances it is unnecessary to consider or to address the other question of whether a constitutional writ of prohibition, or a writ of certiorari in aid, could issue to the DCT, as an
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- officer of the Commonwealth, because he has exercised a statutory power to commence these recovery actions. In doing so he is exercising a function of his office which does not require him to hear, adjudicate or in any way to determine the rights of parties or to act judicially which are the functions amenable to certiorari or prohibition. These conclusions, of themselves, are sufficient to dispose of the application brought by the Caratti parties in reliance upon s 39B of the Judiciary Act but, as they were addressed on different grounds below, it is necessary to consider those grounds as well.
24 In relation to the application for constitutional writs and other relief under s 39B of the Judiciary Act, Wheeler J concluded:
"[10] So far as the defendants' application is concerned, it is my view that this is one of the relatively unusual cases in which I am able to conclude, even at the order nisi stage, that the delay by the defendants in raising these issues is such that no order nisi, and no interlocutory injunction, should be granted ... "
- Her Honour then set out a chronology of the relevant events covering the period from December 1997 when the writ of summons was first issued to the present and then said:
"[12] At the latest, it is apparent that the time at which the issues which the defendants now seek to agitate would have crystallised would have been the time of the conclusion of the criminal proceedings in June of 1999. No amendment to the statements of claim after that date substantially altered the claim which the plaintiff seeks to prove. Further, so far as the s 221NB(1) issue is concerned, precisely that issue was raised by the defendants in December 2001 and I at that stage found against them for the reason that they had delayed raising it. They did not seek to appeal that finding, but rather sought to raise the issue again some months later in a different form, in the Federal Court. That seems to me to be an abuse of process."
And then:
"[14] In the face of the considerations which I have outlined above, it does not appear to me that it is open to the defendants to persuade the court to grant any of the discretionary remedies which they seek. I should also
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- add that, in any event, I am of the view that the argument underpinning the application lacks merit. ...
- ... I have, for reasons which I shall outline shortly, reached the view that these issues are not arguable, and that seems to me to be a further reason for refusing relief on the defendants' application for mandamus and other associated remedies."
- It is therefore clear that her Honour had declined this relief both on discretionary grounds associated with the delay by the Caratti parties in seeking the relief and because of obvious lack of merit. The grant of the constitutional writs is discretionary and delay in making the application, particularly where other parties are affected prejudicially, is an acknowledged cause for refusing to exercise the discretion – Re McBain; Ex parte Catholic Bishops Conference (supra). With respect, I agree entirely with Wheeler J, that this was an occasion when the passage of time was such as to require the refusal of discretionary relief. This is the more so in the light of the limitations on the availability of the constitutional writs which I have previously set out.
Application for leave to appeal from orders striking out portions of defences in the recovery actions
25 At the time the criminal proceedings were instituted, and at other times material to these actions, s 221NB(1) of the Income Tax Assessment Act provided:
"(1) Where -
(a) but for this subsection, an amount is payable, by way of penalty, by a person to the Commissioner under this Division by reason of an act or omission of the person; and
(b) a prosecution is instituted against the person for an offence against this Division constituted by the act or omission,
the amount is not payable unless and until the prosecution is withdrawn."
- Where a penalty amount had already been paid, s 221NB(2) required the DCT to refund the amount of any penalty that had been paid or to apply it in total or partial discharge of a tax liability of the payer. These
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- provisions need to be read in conjunction with s 8ZE of the Taxation Administration Act (1953) (Com) ("the Administration Act"). At the material time this provided:
"(1) Where –
(a) but for this subsection, an amount is payable by a person under a penalty tax provision by reason of an act or omission of the person; and
(b) a prosecution is instituted against the person for an offence against section 8C, subsection 8K(1) or section 8N or 8P of this Act or section 262A of the Income Tax Assessment Act 1936 constituted by the act or omission,
the amount is not payable unless and until the prosecution is withdrawn."
26 As pointed out by Wheeler J, the operation of s 8ZE of the Administration Act, at the times material to these proceedings, was confined to the five nominated statutory provisions. As the prosecutions against the Caratti family members were not brought under any of those sections, but, rather, solely under s 86A of the Crimes Act, there is no scope for any application of s 8ZE of the Administration Act. There has been no challenge in the present applications to her Honour's decision in that respect.
27 Wheeler J then proceeded to address the Caratti parties' attempt to rely on s 221NB of the Income Tax Assessment Act and concluded that, except for Mrs Maddeliene Caratti, who, because of the fact that she was acquitted of the charges against her in the criminal prosecution may arguably have some scope to rely on s 221NB and upon a double jeopardy defence, decided that there was no prospect of such a defence being available for any of the other defendants. In that regard, her Honour said:
"[18] The reason why, in my view, all defendants are precluded from relying upon s 221NB, is the reference in par (b) to an offence 'against this Division'. There
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- has been no prosecution of any of the defendants, as I understand it, for an offence against any provision contained within the relevant Division, being Div 2. Maddeliene, John and Allen Caratti were charged pursuant to s 86A of the Crimes Act which at the relevant time read:
'A person who conspires with another person to defraud the Commonwealth or a public authority under the Crown is guilty of an indictable offence.'
- It is true that, as I understand the way in which the prosecution was run, a very large number of overt acts were alleged as evidence from which the conspiracy might be inferred, which overt acts might have been prosecuted pursuant to some of the provisions of Div 2. However, the offence of conspiracy was a different and distinct offence. In particular, it had at its heart the element of agreement, which appears to be entirely missing from the offences created by Div 2. (Cf Ahern v The Queen (1988) 165 CLR 87 at 93.) Conversely, the penalties imposed in respect of Div 2 offences are imposed principally against employers, while it was not apparently necessary in the criminal trial to demonstrate that any of the accused was an employer.
- [19] The argument of the defendants in relation to s 221NB requires reading the expression 'offence against this Division' in subpar (b) as including a reference to the offence of conspiracy, where the conspiracy is an agreement to commit or is evidenced by the commission of offences against that Division. Such a reading is, in my view, inconsistent with the plain meaning of the words used. Any inability of the plaintiff to recover penalties from the defendants must rest, if it is to be found at all, on broader principles rather than upon the words of s 221NB.
[20] So far as all defendants other than Maddeliene Caratti are concerned, the second insuperable obstacle to reliance upon s 221NB, is that that section in its terms applies only where the prosecution has been instituted against the same person as the person by whom the
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- penalties are payable. None of the defendants, other than Maddeliene Caratti, has ever been prosecuted in relation to the non-payment of the amounts which the plaintiff now seeks to recover. ... "
- On that basis her Honour held that none of the defendants, with the exception of Maddeliene Caratti, had any arguable defence in reliance on s 221NB. With respect, I consider that Wheeler J was entirely correct in reaching this conclusion which simply follows as a matter of interpretation from the statutory provisions themselves. Nothing further is required to reject, as unarguable, the submissions of the Caratti parties (other than Maddeliene Caratti) to the contrary.
28 The Caratti parties then advanced a very broad operation of the doctrine of "double jeopardy" to provide for each of them a defence to the claim for pecuniary penalties by the DCT. However, once more, the same disparity of identity between the defendants to the civil recovery actions (other than Maddeliene Caratti) and the individual members of the Caratti family acquitted or convicted of the charge of conspiracy remains.
29 As Wheeler J set out in her reasons for decision, the concept of "double jeopardy" has recently been discussed in Pearce v The Queen (1998) 194 CLR 610, especially by McHugh, Hayne and Callanan JJ at 614 – 623 and the variety of uses of meaning and the differences in the concepts which that phrase embodies were there examined. The statutory law or the substantive provisions of the common law of many jurisdictions recognise, to varying degrees, the general principle that a person should not be twice prosecuted for what is the same offence and that there is at least a rule of practice, if not a rule of law, that a person should not be twice punished for what is substantially the same act – R v Hoar (1981) 148 CLR 32 at 38. It is unnecessary and undesirable on this occasion to embark upon any more extensive examination of the reach of these doctrines in this particular case because, in the present proceedings, they are to be raised as defences by Maddeliene Caratti and therefore may require a decision of the court on the basis of the evidence which is eventually accepted or agreed and after there has been a full opportunity to argue the issue. The question arising on this application for leave to appeal is whether or not there is any arguable case for the Caratti companies to avail of such a principle as a defence to the claims by the DCT for the recovery of civil penalty taxes. As none of the Caratti companies was convicted or acquitted of the conspiracy offence, or any associated offence, this question simply does not arise.
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30 None of those companies was ever in jeopardy of conviction or acquittal and none of them has been previously punished in respect of the alleged non-paid or non-deducted PAYE tax instalments. That there is no identity in point of personal liability, between a company, on the one hand and any of its directors, officers or members on the other is so obvious and so deeply entrenched in the law that it does not require detailed analysis. Wheeler J relied on the decision in Hamilton v Whitehead (1988) 166 CLR 121 to support that proposition in a context which was closely comparable with the present. I agree, with respect, that Hamilton v Whitehead is determinative of this point against the Caratti companies and that there can be no prospect of any of them establishing that it was previously convicted or acquitted or punished in respect of the charges brought against the three individual Caratti family members.
31 The distinction between the liability of an individual director or officer of a company, and the liability of the company itself for the commission of an offence by the company, involving participation, assistance, counselling or procuring by the director is well-established and is also evident in other authorities where both the company and the director may be criminally liable, the company for committing the offence, and the director or officer for being an accessory or being knowingly involved in the offence – see Yorke v Lucas (1985) 158 CLR 661 and Hamilton v Whitehead (supra). In consequence, I consider, with respect, that Wheeler J was correct in concluding that none of the Caratti companies had any arguable defence to the recovery actions brought by the DCT, including the claims for penalty tax, on the grounds that any of those corporate defendants had been, or would be, placed in "double jeopardy" either in the sense of being twice prosecuted or twice punished for the criminal offences alleged against the three members of the Caratti family in the proceedings which led to the conviction of John Caratti and the acquittal of Maddeliene and Alan Caratti on that charge.
32 This conclusion also establishes that none of the Caratti companies has any arguable basis to contend that the doctrine of "double jeopardy" as advanced by them in these proceedings, could possibly provide a basis for a grant of a constitutional writ, or for certiorari or an injunction as sought in the proceedings under s 39B of the Judiciary Act. Not only is there no jurisdictional error revealed but there is no arguable error shown by the Deputy Commissioner of Taxation initiating proceedings for the recovery of money alleged to be due and owing by these defendants. In relation to the s 39B claims and the
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- applicant Maddeliene Caratti, again there is no jurisdictional error shown and therefore no entitlement to relief of this kind. Furthermore, the defendant Maddeliene Caratti has been granted leave to re-amend her defence to rely on the "double jeopardy" defence and the s 221NB defence which, because of her particular position, has been held to be arguable. Even if the remedies of prohibition, certiorari, mandamus, injunction or declaration are otherwise available, the ability of Mrs Maddeliene Caratti to rely on these grounds in defence of the claim advanced by the DCT would, in my view, result in discretionary remedies being withheld because of the adequacy of the alternative. Wheeler J also relied on the gross delay in declining discretionary remedies. As previously mentioned, I also consider this to be an entirely sufficient basis for refusing that relief in the present circumstances if, contrary to my earlier conclusions, it had been available.
33 For these reasons I consider that the appeal from the decision refusing to grant relief sought under s 39B of the Judiciary Act should be dismissed, and that the applications for leave to appeal against the orders striking out portions of the defences in the recovery actions should also be dismissed.
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