Saxby v The Queen
[2011] TASCCA 1
•7 February 2011
[2011] TASCCA 1
COURT: SUPREME COURT OF TASMANIA (COURT OF CRIMINAL APPEAL)
CITATION: Saxby v R [2011] TASCCA 1
PARTIES: SAXBY, Mark Anthony
v
R
FILE NO/S: 386/2010
DELIVERED ON: 7 February 2011
DELIVERED AT: Hobart
HEARING DATE: 16, 17 September 2010
JUDGMENT OF: Crawford CJ, Evans and Wood JJ
CATCHWORDS:
Taxes and Duties – Income tax and related legislation – Objections and appeals – Objections – Other matters – Whether statement of ground of objection capable of amounting to a false representation of fact – Whether charges of defrauding the Commonwealth and imposition maintainable – Whether notice of objection equivalent to a pleading.
Boileau v Rutlin (1848) 2 Ex 665; Buckmaster v Meiklejohn (1853) 8 Ex 634; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70, referred to.
Aust Dig Taxes and Duties [194]
Criminal Law – Appeal and new trial – Particular grounds of appeal – Inconsistent verdicts – Whether a miscarriage of justice.
MacKenzie v R (1996) 190 CLR 348; MFA v R (2002) 213 CLR 606; R v Kirkman (1987) 44 SASR 591, applied.
Aust Dig Criminal Law [3478]
REPRESENTATION:
Counsel:
Appellant: D Grace QC, M Mahady
Respondent: M Lincoln, I Arendt
Solicitors:
Appellant: Mirko Bagaric Lawyers
Respondent: Commonwealth Director of Public Prosecutions
Judgment Number: [2011] TASCCA 1
Number of paragraphs: 141
Serial No 1/2011
File No 386/2010
MARK ANTHONY SAXBY v THE QUEEN
REASONS FOR JUDGMENT COURT OF CRIMINAL APPEAL
CRAWFORD CJ
EVANS J
WOOD J
7 February 2011
Orders of the Court
Appeal dismissed.
Serial No 1/2011
File No 386/2010
MARK ANTHONY SAXBY v THE QUEEN
REASONS FOR JUDGMENT COURT OF CRIMINAL APPEAL
CRAWFORD CJ
7 February 2011
On counts 2 and 4 of an indictment, the appellant was found guilty by a jury of two charges of imposition, and on counts 5 and 8 he was found guilty of two charges of defrauding the Commonwealth.
The four charges related to four notices of objection, each dated 31 August 2000, which he signed and caused to be sent to the Commissioner of Taxation. The notices related to his income tax liabilities for the 1992, 1993, 1994 and 1995 tax years. The verdicts on the imposition charges related to the two earlier years. The verdicts on the defrauding charges related to the two later years.
The trial judge, Blow J, recorded convictions on all charges on which guilty verdicts were returned. On counts 5 and 8 the appellant was sentenced to two years' imprisonment and it was ordered that he be released after serving one year upon giving security by recognizance, without sureties, in the sum of $5000 on condition that he be of good behaviour for two years after his release from prison. On counts 2 and 4, he was sentenced to eight months' imprisonment to be served concurrently with the sentence imposed on counts 5 and 8.
He appealed against the convictions.
The fundamental factual contentions
The fundamental factual contentions advanced by the Crown at the trial were summarised by the judge as follows:
· During the relevant tax years, a company, the name of which at the trial was Madra Pty Ltd, operated a bakery shop in Elizabeth Street, Hobart under the name Banjo's Bakery.
· It did so as the trustee of a unit trust that became known as the Breadville (Hobart) Unit Trust.
· Throughout the relevant years the appellant was a director of that company, and one of the principal holders of units in that trust.
· Distributions of trust income were made to the appellant and his then wife during all the relevant years, and to BMPL (Breadville (Management) Pty Ltd) in the years 1994 and 1995.
· Throughout the relevant years, records of the shop's gross sales were kept in weekly sales sheets.
· Throughout the relevant years, the takings of the shop were not all recorded in the weekly sales sheets, and not all banked. There was a practice of $1,000 in cash being removed from the takings on Saturdays, Sundays and public holidays, and of the takings on those days being understated by $1,000 in the weekly sales sheets.
· Income tax returns were lodged on behalf of the trust for each of the relevant financial years. The gross sales figures for the shop in those returns were based on the false figures recorded in the weekly sales sheets, with the result that the taxable incomes of the trust and of the appellant were understated.
· The cash that was retained from the takings of the shop was given to the appellant and his wife and not declared by them as income in their personal tax returns for the relevant years.
· During the relevant years, a number of other shops were operated in Tasmania by franchisees using the name Banjo's Bakery. Some of those franchisees did not bank all of their shops' takings, falsified their shops' recorded takings in weekly sales sheets, and paid part of their shops' unbanked takings to the appellant and his then wife. The appellant did not declare those payments as income in his personal tax returns for the relevant years.
· Evidence as to unbanked takings from the Elizabeth Street shop and the franchisees' shops came to light during an audit by the ATO (Australian Taxation Office), with the result that the ATO issued six notices of amended assessments, four addressed to the appellant in respect of the 1992, 1993, 1994 and 1995 tax years, and two to BMPL in respect of the 1994 and 1995 tax years.
· In response to those six amended assessments, the appellant signed six notices of objection dated 31 August 2000 that responded respectively to each of the amended assessments, and caused them to be sent to the ATO. In each he sought to have the assessment to which it related set aside, reduced or remitted.
· Four of the notices of objection were expressed to be objections by the appellant personally and responded respectively to each of the four notices of amended assessments that were addressed to him. The other two notices of objection were expressed to be objections on behalf of BMPL and responded respectively to each of the two notices of amended assessments that were addressed to it.
· In ground 4.b of each notice of objection, the appellant asserted that the total amount of income earned, received or derived by the trust during the income year was properly and accurately recorded in its weekly sales sheets and returned as gross income in calculating the net income of the trust estate of the trust for the purposes of Division 6 of Part III of the Income Tax Assessment Act 1936 (Cth) for the income year. (Appended to these reasons is a copy of the notice of objection relating to the 1993 tax year, to which counts 3 and 4 related. For all purposes relevant to the issues raised by the appeal, the other notices were identical.)
· The assertions in ground 4.b amounted to false representations.
· The appellant knew they were false.
· In signing each notice of objection and causing it to be sent to the ATO, knowing that it included such false representations, the appellant was acting dishonestly, with the intention of having the relevant amended assessment of income tax, penalties and interest set aside, reduced or remitted.
·The accused knew that he and BMPL had no right to have any of those assessments set aside, reduced or remitted.
The charges and the verdicts in more detail
Counts 1, 3, 5, 7, 8 and 10 charged defrauding the Commonwealth contrary to the Crimes Act 1914 (Cth), s29D. They related to the representations made by the appellant in ground 4.b in the six notices of objection.
Counts 1, 3, 5 and 8 respectively related to the four of the six notices that responded to notices of amended assessments of income tax and related penalties and interest payable by him personally in respect of the 1992, 1993, 1994 and 1995 tax years.
Counts 7 and 10 respectively related to the other two notices that responded to notices of amended assessments of income tax and related penalties and interest payable by BMPL in respect of the 1994 and 1995 tax years.
At the conclusion of the Crown case, it was submitted for the appellant that he had no case to answer on any count. The judge ruled that he had no case to answer on the charges of defrauding the Commonwealth in counts 7 and 10. On the direction of the judge, the jury returned verdicts of not guilty on those counts. His Honour ruled that there was a case to answer on the other eight counts.
Counts 2, 4, 6 and 9 charged imposition contrary to the Crimes Act, s29B. They were charged as alternatives to the charges of defrauding the Commonwealth in counts 1, 3, 5 and 8 respectively.
Verdicts of not guilty were returned on the defrauding the Commonwealth counts 1 and 3 and guilty on the alternative imposition counts 2 and 4. Verdicts of guilty on the defrauding the Commonwealth counts 5 and 8 were returned, and no verdict was required on the imposition counts 6 and 9.
The elements of the two crimes
There is no issue arising out of the directions to the jury about the elements of the two crimes. The jury were instructed that to find the appellant guilty of any charge of defrauding the Commonwealth and any charge of imposition, they had to be satisfied beyond reasonable doubt of each of the following:
(a) He signed the notice of objection to which the charge related.
(b) He caused it to be sent to the ATO.
(c) Ground 4.b of that notice amounted to a representation.
(d)For defrauding the Commonwealth, the representation was false, and for imposition, the representation was untrue, in that the total income of the relevant trust was not properly and accurately recorded in the weekly sales sheets, and not returned as gross income in calculating the net income of the trust estate for the relevant year. It is common ground that the difference between "false" and "untrue" is immaterial.
(e)He knew or believed that the relevant notice contained the representation that appeared in ground 4.b.
(f)When he signed the notice of objection and caused it to be sent to the ATO, he intended to create a situation in which less money than the Commonwealth would be legitimately entitled to would be payable to the Commonwealth in respect of the relevant year by way of income tax and/or penalty tax and/or interest.
The jury were instructed further that to find the appellant guilty of defrauding the Commonwealth they also had to be satisfied beyond reasonable doubt that in signing the relevant notice of objection and causing it to be sent to the ATO, he acted dishonestly according to the standards of ordinary decent people.
It would appear to follow that by finding the appellant not guilty of defrauding the Commonwealth on counts 1 and 3 but guilty of imposition on counts 2 and 4, the jury were not satisfied beyond reasonable doubt that he acted dishonestly when he signed the relevant notice of objection and caused it to be sent to the ATO. On the other hand, by finding the appellant guilty of defrauding the Commonwealth on counts 5 and 8, the jury were satisfied beyond reasonable doubt that when he signed the relevant notice of objection and caused it to be sent to the ATO, he acted dishonestly.
Grounds of appeal that the verdicts of guilty were unreasonable and not supportable by the evidence
Ground 1 of the appeal asserts that the verdicts of guilty were unreasonable and could not be supported having regard to the evidence. Particulars of the ground are:
"1.1Ground 4(b)[sic] of each of the relevant Notices of Objection was incapable of amounting to a false representation by the Appellant so as to found a conclusion that the Appellant had defrauded the Commonwealth as alleged in Counts 5 and 8 of the Indictment.
1.2Ground 4(b)[sic] of each of the relevant Notices of Objection was incapable of amounting to an untrue representation by the Appellant so as to found a conclusion that the Appellant had imposed upon, or endeavoured to impose upon, the Commonwealth as alleged in Counts 2 and 4 of the Indictment.
1.3Ground 4(b)[sic] of each of the relevant Notices of Objection was a 'pleading' in the process of the normal course of lodging an objection to an income tax assessment and could not satisfy essential elements of each of Counts 2, 4, 5 and 8 of the Indictment.
1.4It could not be concluded beyond reasonable doubt in respect of Counts 2 and 4 that the Notices of Objection for the 1992 and 1993 financial years related to the Breadville (Hobart) Unit Trust.
1.5It could not be concluded beyond reasonable doubt that the Appellant intended any representations contained within the Notices of Objection for the 1992 and 1993 financial years (Counts 2 and 4) to refer to the Breadville (Hobart) Unit Trust.
1.6It could not be concluded beyond reasonable doubt that the total business income figures disclosed in the income tax returns for the 1992, 1993, 1994 and 1995 financial years (Counts 2, 4, 5 and 8) were understated.
1.7The failure of the Crown to call the financial controllers of the Banjo group of companies, namely Robert Bacon and Peter Baily, in circumstances where they could give direct evidence in relation to the business income figures referred to in Particular 1.6 above and in relation to the Appellant's knowledge of those figures, ought to have given rise to a reasonable doubt that the said business income figures were understated and/or that the Appellant knew that the figures were so understated.
1.8The jury verdicts of guilty in respect of counts 2, 4, 5 and 8 were inconsistent with the directed acquittal in respect of counts 7 and 10."
I will deal with particulars 1.1, 1.2 and 1.3 together, 1.4 and 1.5 together, 1.6 and 1.7 together and 1.8 separately.
Was ground 4.b of each notice of objection incapable of amounting to a representation that was false?
The question is raised by particulars 1.1, 1.2 and 1.3 and by ground 2.
The evidence was that all of the notices were prepared by the appellant's accountants and counsel and submitted to the appellant. He signed them on the same day and they were forwarded to the ATO.
It was his case that the statement in ground 4.b of each notice was incapable of amounting to a false representation because of the nature of a notice of objection and the way the notices were expressed. It was submitted that each notice was in the nature of a pleading and that the statements of the grounds of objection did not amount to, and were not capable of amounting to, representations of fact.
The Taxation Administration Act 1953 (Cth) provided for the making of objections to assessments. By s14ZU, an objection was to be lodged with the Commissioner and to have stated in it, fully and in detail, the grounds on which the objector relied. By s14ZY, the Commissioner was obliged to decide whether to allow the objection, wholly or in part, or dismiss it. By s14ZZ, an objector who was dissatisfied with the Commissioner's objection decision was entitled to apply to the Administrative Appeals Tribunal for review of it or to appeal to the Federal Court against it.
It was submitted by the appellant's counsel that as a matter of law, the statements in the grounds of objection were not capable of amounting to representations of fact and therefore, false representations, because notices of objection are equivalent to pleadings in a civil action.
It was argued that each notice of objection contained a series of inconsistent assertions. The grounds of objection were the same in each notice. In effect, grounds 1, 2, 3 and 4.a asserted that no undeclared income was received, or could properly be treated as having been received by the relevant entity during the relevant year. Ground 4.b then specifically asserted that all the income was recorded in the weekly sales sheets and declared for tax purposes. The subsequent grounds advanced additional and alternative contentions, such as that any understated income was misappropriated, embezzled, stolen or otherwise lost; that any such income was paid out in gaining or producing assessable income or necessarily incurred in carrying on a business for the purpose of gaining or producing such income; and that the appellant was not entitled to any of the income, nor was any part of it paid or credited to him.
It was submitted for the appellant that the law is clear that assertions made in unsworn pleadings do not amount to assertions of belief in the truth of the correctness of those assertions. Reliance was placed on the statement of Parke B in the Court of Exchequer Chambers in Boileau v Rutlin (1848) 2 Ex 665; 145 ER 657 (at Ex 680 – 681; ER 663):
"It would seem that [bills in equity], as well as pleadings at common law, are not to be treated as positive allegations of the truth of the facts therein, for all purposes, but only as statements of the case of the party to be admitted or denied by the opposite side, and if denied to be proved, and ultimately submitted for judicial decision."
That principle was applied to common law pleadings in Buckmaster v Meiklejohn (1853) 8 Ex 634; 155 ER 1506, where at 637; 1507 Parke B said: "In point of law, pleadings are not admissions, but are merely the statement of the case, which the party wishes to raise for the opinion of the jury."
After referring to those and other cases in which consideration was given to whether statements in pleadings were capable of amounting to admissions, Mason CJ and Brennan J in Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 86 held that facts pleaded in a defence, not being verified on oath nor required to be so verified, were incapable of amounting to admissions by the party whose pleading it was. Of course, the issue here is a different one, for it is not a question of whether the assertions in ground 4.b were admissions by the appellant. It is whether they were capable of amounting to representations of fact.
It was pointed out by the trial judge when ruling on a submission that the appellant had no case to answer, that by virtue of the Taxation Administration Act, s8J(2)(a), a statement made in a notice of objection, or any other document given pursuant to a taxation law, amounted to a "statement made to a taxation officer" and that by s8K(1)(a), it was an offence to make a statement to a taxation officer that was false or misleading in a material particular. It followed that it was an offence to make a statement in a notice of objection that was false or misleading in a material particular. [1]
[1] However, under s8K(2), it was a defence to a charge under s8K(1) for the person to prove that he or she did not know, and could not reasonably be expected to have known, that the statement was false or misleading.
For that reason, his Honour held that it was a question of fact for the jury to decide whether ground 4.b should be regarded as doing no more than asserting a ground of objection or whether it amounted to a dishonest representation of fact. What his Honour said was:
"I think it must follow that, because of s8K(1)(a), a factual assertion in a notice of objection made and lodged in accordance with s14ZU had a different status from an assertion pleaded in the course of civil litigation. It may be that the jury will conclude that the relevant notices of objection contain no more than a collection of assertions that the accused wanted to have the right to pursue or abandon at some later stage, and that ground 4(b) of each notice should be regarded only as something that had to be written in order for the accused to keep every option open. However I consider that it would be open to the jury to conclude that the accused signed each notice of objection, and caused it to be lodged, intending to rely on dishonest assertions about weekly sales sheets and fully declared income, for the purpose of obtaining financial benefits to which he was not entitled by having his amended assessments set aside, reduced or remitted.
His Honour's conclusion was a correct one. The principle that statements in pleadings are not admissions or assertions of belief in the correctness of the pleaded facts does not apply to pleadings that are verified on oath or required to be so verified. Laws v Australian Broadcasting Tribunal (supra) at 85. That is because the law imposes an obligation on a deponent to assert only the truth. By reason of the Taxation Administration Act, s8K(1), the law imposed on the appellant an obligation to assert facts in his notices of objection that were not false or misleading in a material particular.
By ss14ZZK and 14ZZO, on an application for review to the tribunal, or an appeal to the Federal Court, the applicant or appellant was limited to the grounds of objection stated in the notice of objection, unless the tribunal or court otherwise ordered. Those provisions appear to have their origins in an amendment to the Income Tax Assessment Act, s190(a), that was made by the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986 (Cth). Counsel for the appellant drew the Court's attention to the explanatory memorandum relating to the Bill containing the amendment, in which it was stated: "It is expected that, in exercising the discretion, the general principles on which courts have permitted amendments of pleadings in other areas of the law will generally be applied. For example, the discretion is likely to be exercised where the need for an amendment of the grounds of objection arises as a result of the Commissioner relying on arguments in defence of an assessment where the particular basis was not adverted to in the adjustment sheet accompanying the notice of assessment."
If it is capable of assisting in the ascertainment of the meaning of the provision, the Court may consider what was said in the explanatory memorandum to either confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act, or to determine the meaning of the provision if it is ambiguous or obscure, or if its ordinary meaning leads to a result that is manifestly absurd or unreasonable. Acts Interpretation Act 1901 (Cth), s15AB.
However, the explanatory memorandum is not of assistance in determining whether a statement made in a notice of objection is capable of amounting to a representation of fact. All it does is suggest that if an application is made to amend a ground of a notice of objection, it will be considered in the same way as amendments to pleadings are considered.
There is nothing in the words of ss14ZZK or 14ZZO that bears on the question whether a statement in a notice of objection is capable of operating as a representation of fact. There is no relevant ambiguity or obscurity in the meaning of the sections. They were not intended to deal with what is in issue here.
Particulars 1.1, 1.2 and 1.3 and ground 2 fail.
Was it open to conclude that the notice of objection for the 1992 and 1993 tax years related to the Breadville (Hobart) Unit Trust?
The question is raised by particulars 1.4 and 1.5. It concerns the charges of imposition in counts 2 and 4, of which the appellant was found guilty (and the charges of defrauding the Commonwealth in counts 1 and 3, of which he was found not guilty).
The Crown case was that the business of Banjo's Bakery at Elizabeth Street, Hobart was at all material times between 1 July 1991 and 30 June 1995 operated by the one company as trustee of the one trust and there was no evidence to suggest that there was any change of ownership of the Banjo's Elizabeth Street business during that four year period. However, the name of the company changed and the name of the trust changed. It was also the Crown case that in addition, references to the name of the trust changed as a result merely of human error when describing it. Four names of a trust were in evidence, namely Breadville (Hobart) Unit Trust, Moorine (Hobart) Unit Trust, Hobart (Tasmania) Unit Trust and Moorine (Tasmania) Trust.
There was evidence that the operating company had three names. It was incorporated in 1984 with the name Moorine (Tasmania) Pty Ltd. In 1987, its name was changed to Breadville (Hobart) Pty Ltd. Then on 26 March 1995, it changed its name to Madra Pty Ltd.
In evidence were the four income tax returns for Banjo's Bakery, Elizabeth Street for each of the tax years 1992 to 1995. They all bore the same tax file number. In the returns for 1992, 1993 and 1994 the name of the trustee was shown as Breadville (Hobart) Pty Ltd, but in 1995 Madra Pty Ltd. The change in the name was consistent with the evidence that the company changed its name to Madra Pty Ltd on 26 March 1995.
In the returns for 1992 and 1993 the name of the taxpayer was stated to be Breadville (Hobart) Unit Trust. However, the return for 1994 showed the name of the taxpayer as Moorine (Hobart) Unit Trust. In the return for 1995 the name of the taxpayer reverted to Breadville (Hobart) Unit Trust. That the name of the taxpayer was Moorine (Hobart) Unit Trust on the 1994 return created a problem.
There was evidence that the returns for 1992 and 1993 were prepared by Mr Dawson, an accountant with Malcolm Gray Pty Ltd. However, Banjo's then changed accountants and the 1994 and 1995 returns were prepared by Mr Rees, an accountant with KPMG. The Crown case was that the jury should infer that Mr Rees had mistakenly inserted the wrong name for the trust, but in the 1995 return he got it right when he returned to the name Breadville (Hobart) Unit Trust. (The evidence of Mr Rees was that the Breadville (Hobart) Unit Trust was the same trust as the Moorine (Hobart) Unit Trust following a name change in 1995.) That aspect of the Crown case was supported by the evidence of an officer of the ATO that a tax file number was given to only one entity and was never given to another entity.
Also in evidence were some documents produced to the ATO by KPMG. One was a copy of a declaration of trust dated 26 November 1984. It established the Moorine (Tasmania) Unit Trust, its trustee being Moorine (Tasmania) Pty Ltd (later to become Breadville (Hobart) Pty Ltd and later again Madra Pty Ltd).
Another document produced by KPMG was a deed of variation of trust dated 19 May 1995. It purported to vary some of the terms of the trust. It recited that the name of the trust was Breadville (Hobart) Unit Trust and that it had previously been known as Moorine (Tasmania) Trust. It did not reveal the date upon which the name of the trust had been changed. However, also in evidence was an earlier deed of variation dated 29 June 1994. It gave the name of the trust as Moorine (Tasmania) Trust. Therefore, the evidence suggested that the name of the trust changed to Breadville (Hobart) Unit Trust from Moorine (Tasmania) Trust between 29 June 1994 and 19 May 1995. However, there was no evidence to explain how the name of the trust came to be changed from Moorine (Tasmania) Unit Trust in 1984 to Moorine (Tasmania) Trust by 1994. The Crown case was that the name never changed but that a mistake had been made and "Unit" was omitted in references to the trust.
The two deeds of variation of trust to which I referred were signed by the appellant and his then wife as director and secretary respectively of the company, Breadville (Hobart) Pty Ltd in the first deed and, following the change of name, Madra Pty Ltd in the second deed.
Also in evidence was what purported to be the minutes of a meeting of the directors of Breadville (Hobart) Pty Ltd held at 85 Elizabeth Street. It recorded a resolution that the name of Moorine (Hobart) Unit Trust be changed to Breadville (Hobart) Unit Trust, but the date of the meeting was omitted. It purported to be signed by the chairman of directors. The appellant's former wife gave evidence that the signature was that of the appellant. The minutes recorded that both of them attended the meeting.
Those minutes added to some of the confusion in the evidence for the name of the trust in the original declaration of trust dated 26 November 1984 was Moorine (Tasmania) Unit Trust and not Moorine (Hobart) Unit Trust, the name used in the minutes. The Crown case was that the minutes were another example of someone making a mistake concerning the name. A possibility that occurs to me is that at some time prior to that director's meeting, the name of the trust was changed from Moorine (Tasmania) Unit Trust to Moorine (Hobart) Unit Trust, but I do not know whether there was any evidence bearing on that possibility.
In his summing up, the trial judge reminded the jury of all of those aspects of the evidence. He also reminded them of the following.
Each of the bakery's tax returns for 1992, 1993, 1994 and 1995 stated that they related to the business being carried on at 130 Elizabeth Street. The 1992 and 1993 returns, prepared by Mr Dawson, showed the name of the business as Banjos Bakery Hobart. The 1994 and 1995 returns prepared by Mr Rees showed the name as Banjos (Hobart).
The trial judge pointed out to the jury the figures in those returns for closing stock at the end of one year and opening stock for the next year, commenting that it would normally be expected that the figures would be the same if they related to the same business. The closing stock in the 1992 return was $13,868 and the opening stock in the 1993 return was the same figure. However, the closing stock in the 1993 return was shown as $10,686, whereas the opening stock in the 1994 return was $12,952, a figure that did not match. The closing stock figure in the 1994 return did match the opening stock figure in the 1995 return.
I deal next with the notices of objection that are central to the crimes of which the appellant was found guilty. They all displayed his tax file number, which was not the tax file number of the trust in each of the bakery's tax returns to which I have been referring. He lodged his own tax returns for the years in question. It was the Crown case that he did not disclose in them the income he had received by way of the unbanked takings. It was also the Crown case that the income in the bakery's returns was understated because of those unbanked takings.
Each of the appellant's notices of objection was lodged in response to a notice of amended assessment he had received. In the notice of objection relating to the 1992 year, ground 2 of the objection commenced with the words: "No part, or some lesser part, of the alleged understated amount was income earned, received or derived by Madra Pty Ltd ("the Trustee") as Trustee of the Moorine (Tasmania) Unit Trust ("the Trust") ...". Thereafter the grounds referred merely to "the Trust". The notice did not refer to the trustee at any other place.
The notice of objection relating to 1993 (appended to these reasons) was the same in those respects. However, ground 2 of each of the notices relating to 1994 and 1995 referred to "Madra Pty Ltd ("the Trustee") as Trustee of the Breadville (Hobart) Unit Trust previously known as the Moorine (Tasmania) Unit Trust ("the Trust")."
The reference in each of the notices of objection for 1992 and 1993 to Moorine (Tasmania) Unit Trust (said in each of the notices for 1994 and 1995 to have become Breadville (Hobart) Unit Trust) conflicted with the references to Breadville (Hobart) Unit Trust in the bakery's tax returns for those years.
Further, the reference in the notice of objection for 1994 to the Breadville (Hobart) Unit Trust previously known as the Moorine (Tasmania) Unit Trust conflicted with the bakery's tax return for 1994 which referred to Moorine (Hobart) Unit Trust.
The reference in the notice of objection for 1995 to the same trust agreed with the reference in the bakery's return for 1995 as to the name of the trust.
The appellant's case at the trial was, and still is, that there was so much conflict between documents concerning the identity of the relevant trust that the jury could not be satisfied concerning it. His counsel argued that if there were representations of fact by the appellant in relation to the respective financial years, the jury ought to have entertained a reasonable doubt that the representations related to the tax paying entity.
On the other hand, the Crown case has been that upon a review of all of the evidence, the jury was justified in being satisfied that the tax returns and notices of objection obviously were intended to refer to the business of Banjo's Bakery in Elizabeth Street and that, on the evidence, the business was carried on at all material times by the one company on trust for the one unit trust. The Crown relied on the fact that apart from the use of different names, there was no evidence to suggest that the bakery business changed hands during the relevant years. The Crown also relied on the use of the one tax file number in the bakery's tax returns for each of the years from 1992 to 1995.
The conclusion I come to is that there was ample evidence justifying satisfaction beyond reasonable doubt that the notices of objection for the 1992 and 1993 financial years related to the Breadville (Hobart) Unit Trust and that the appellant intended that they did so.
I particularly refer to the following evidence:
· The notice of objection for the 1993 year stated that it related to the Breadville (Hobart) Unit Trust and that a previous name of that trust was Moorine (Tasmania) Unit Trust.
· The notice of objection for the 1992 year stated that it related to the Moorine (Tasmania) Unit Trust.
· In each of those notices, the name of the trustee was stated to be Madra Pty Ltd. The only conclusion open on the evidence was that the company was the trustee of the operator of the Hobart bakery at all relevant times, although it changed its name twice.
· The same tax file number was used for the taxpayer conducting the bakery business in each of the years 1992, 1993, 1994 and 1995.
· Overall, the evidence at the trial supported a finding that the same business was operated by the same entity in each of the four years and that the principals were the appellant and his wife. The evidence also led to a conclusion that the witnesses, Marriott, Graves and Otto, who gave evidence of the practice of removing $1000 cash from the takings on Saturdays, Sundays and public holidays on the instructions of the appellant and his wife, and of the alteration of the weekly sales sheets so as to hide that removal, were employees at the Hobart bakery operated in the name of Banjo's throughout the four years in question.
· There was no evidence at the trial, other than the confusion of names in documents, to suggest that any other trust was involved or intended by the appellant to be the subject of the notices for the 1992 and 1993 years.
The inference open from the evidence and the way in which the defence case was conducted is that at the trial, the appellant sought to take advantage of the apparent confusion created by the use of different names in documents in evidence without there being any other evidence of substance that the notices of objection for the 1992 and 1993 years related to, and were intended by the appellant to relate to, an entity other than the Breadville (Hobart) Unit Trust.
Particulars 1.4 and 1.5 fail.
Was it open to conclude that the total business income figures disclosed in the tax returns for 1992, 1993, 1994 and 1995 financial years were understated?
The question is raised by particulars 1.6 and 1.7.
In general terms, the Crown case was that on Saturdays, Sundays and public holidays the appellant and his wife, with the assistance of staff, removed $1000 from the cash takings and the weekly sales sheets were falsified by reducing the figures for cash sales by the amount so removed. The Crown case continued that for that reason, the statement of the appellant in ground 4.b of each of the notices of objection, that the total amount of income earned was accurately recorded in the weekly sales sheets and returned as gross income for the purpose of calculating the net income, was false.
The defence case was that the cash registers would have accurately recorded daily sales and that the Crown had failed to prove that the net income figures in the respective tax returns were not in accordance with the daily sales sheets, the information in which having been derived from cash register records. The appellant relied on the fact that the business's in-house accountants at the time, either Mr Bacon or Mr Bailey, were not called by the Crown to give evidence as to the source of the information they provided for the calculations of the net income. The appellant also relied on the evidence of his witness, Mr Roberts, who was an accountant, that the net income could not be calculated from the weekly sales sheets without reference to a debtors' subsidiary ledger, which was unavailable at the time of the trial.
Many relevant documents were not available at the trial and it would seem many of them were not available to the ATO at the time of its audit. Weekly sales sheets for the 1994 and 1995 tax years were available but not those for 1992 and 1993. Only a small number of the records generated by the cash registers were available.
Further, the Crown was unable to prove a definitive amount by which the declared income was deficient by reason of the inaccurate figures in the weekly sales sheets. Arguably, the amount was well in excess of $100,000 in each of the 1994 and 1995 tax years, but there was considerable uncertainty concerning the precise amount, which could not be calculated. [2]
[2] In his comments on passing sentence, the learned judge found beyond reasonable doubt that about $112,000 was the amount of the understatement in each of the four years.
Notwithstanding that the jury may not have been able to make a precise finding concerning the amounts understated, there was evidence that was sufficient to satisfy the jury beyond reasonable doubt that the income in the returns for each year was understated, that the figures in the returns were based on the information in the weekly sales sheets and that those figures were deliberately falsified to cover up the removal of cash by the appellant and his wife. That evidence and matters available to the jury included the following:
·The assertion of the appellant in ground 4.b of each of the notices of objection that the income was properly and accurately recorded in the weekly sales sheets and returned as gross income in calculating the net income for the year. At the trial, the appellant accepted that the assertion was inaccurate but claimed that a mistake was made in the drafting of the ground.
·The undisputed evidence of the employees, Marriott, Graves and Otto, of the practice of removing $1000 from the takings each Saturday, Sunday and public holidays, entering figures on the weekly sales sheets that showed that the takings were $1000 less than the true takings and the giving of the $1000 to the appellant or his wife.
·The undisputed evidence that in the weekly sales sheets for 1994 and 1995 there were 16 different days on which people completing the weekly sales sheets had written down a figure for total cash sales and then altered it to a figure that was $1000 less.
·The till tapes and daily sales sheets (only a few were in evidence at the trial) which, when compared with the corresponding weekly sales sheets, revealed a $1000 discrepancy in the weekly sales sheets on a number of days.
·The evidence of the appellant's wife at the time, Mrs Dixon, that the money so taken was applied to personal expenditure such as groceries, school uniforms, petrol, holiday trips and work on their holiday house.
·The evidence of the three female staff members, Marriott, Graves and Otto, of a meeting or meetings they had with the appellant at his request, in 1998 or 1999. The essence of their evidence was that he told them he was being audited by the ATO, that he needed their help and that he wanted them to lie about the practice of removing $1000 by denying it, if they were interviewed by ATO officers. For example, Ms Otto's evidence was that he said that unless they lied about it he could go to gaol and they could be charged as well. It was the evidence of Ms Marriott that in return for lying to the ATO, she received $20,000 from the appellant, some in cash and the rest by way of a pay rise. Ms Graves said that her reward was $25,000, some in cash and the rest by way of a pay rise. Ms Otto's evidence was that her reward was a motor vehicle priced at $19,900. The Crown case was that the evidence should be accepted and that it amounted to very strong evidence that the appellant knew that the income from the business had been understated in the tax returns.
·The evidence of Mr Hine, a chartered accountant with KPMG who drafted the notices of objections which were then settled by counsel and signed by the appellant. He said that what was stated in ground 4.b was consistent with instructions received during the course of the ATO audit from the appellant and the in-house accountant, Mr Bailey.
·The evidence of Ms Otto that she was told by the appellant that the ATO had found frequent discrepancies in the weekly sales sheets and that a comparison between some register rolls retained by the in-house accountant, Mr Bacon, with the weekly sales sheets had revealed them.
·On the evidence, the only documents which did not record all the income of the store were the weekly sales sheets.
The appellant's evidence was that the figures in the weekly sales sheets were altered only to accord with what was banked. He said that a true record of the takings was to be found at the material time in the computer records of the business that were based on the sales recorded by the cash registers. He claimed that when cash was taken, the in-house accountant, Mr Bacon or Mr Bailey, was informed by him, so that accurate and appropriate records could be kept.
He disputed much of the evidence of his ex-wife as to the application of the cash so taken. He maintained that it was outlaid on legitimate business expenditure. His evidence was that he did not ask the ex-employees to lie to the ATO about anything and he paid nothing to them in the nature of bribes for doing so, although he agreed that he provided benefits to them as an act of generosity and by way of compensation for the stress they had gone through. Where his evidence differed from their evidence, they had lied, according to him.
As to the notices of objection, he accepted that he signed them, but claimed to have no memory of doing so. Notwithstanding his loss of memory about that, he maintained that he would have signed them without reading them or being aware of what they said.
Concerning ground 4.b of each of the notices of objection, he accepted that the claim in them that the total amount earned was properly and accurately recorded in the weekly sales sheets was untrue, and maintained that he was ignorant of what the ground in fact stated. He claimed that the Crown had not proved that the income disclosed in the returns did not accord with the daily sales sheets and that the assertion in ground 4.b was no more than an unintentional error.
The evidence of the three employees and the appellant's ex-wife was particularly damming. The jury were entitled to accept their evidence and reject his evidence when it was in conflict with their evidence. The jury would have been justified in thinking that the only reasonable explanation for the appellant asking the employees to lie to the ATO about the accuracy of the weekly sales sheets was that to his knowledge, the amount of the income disclosed in the tax returns was based on them and false. For that reason, it was reasonably open to the jury to conclude that the appellant had taken cash from the takings of the business and that he knew that what he had taken was not disclosed to the ATO as income in the tax returns.
Mr Bacon was the financial controller of the Banjo's group at all relevant times up until about 1995, when he was replaced by Mr Bailey. As such, they were the in-house accountants of the group's stores and responsible for the accounts. Between them, they provided to Malcolm Gray Pty Ltd for 1992 and 1993, and to KPMG for 1994 and 1995, the books of accounts and other financial records so that Malcolm Gray Pty Ltd or KPMG could prepare the profit and loss statements and balance sheets for the trust and the income tax returns for the trust, the appellant and his wife.
Mr Dawson of Malcolm Gray Pty Ltd gave evidence that Mr Bacon provided the necessary financial records. However he had no recollection of what they were. Given that the business had an in-house financial controller, it was his expectation that the documents were summarised and reconciled accounting reports. He did not believe that his company received any original sales records.
Mr Rees of KPMG gave similar evidence. He said that Mr Bacon was replaced by Mr Bailey in 1995. His firm relied on the internal accountant to provide accurate records and it did not receive any source sale documents.
Mr Bacon and Mr Bailey did not give evidence. As a result, there was no direct evidence of the documents that were used to calculate the income for the tax returns. The Crown case was that the jury should infer that the weekly sales sheets, with their falsified information, were used for that purpose. The defence case was that such an inference was not open from the documents.
In his closing address, counsel for the appellant, reminded the jury of evidence that both Mr Bacon and Mr Bailey had access to computer records that included electronic information recorded by the cash registers which would not have been falsified in the way the weekly sales sheets may have been. It was argued that it would have been apparent to the in-house accountants that the electronic record of sales takings differed from the record in the weekly sales sheets and that an accountant would be more likely to draw on electronic records for income figures than manually calculate them from weekly sales sheets.
It was argued to the jury by the appellant's counsel that there was no evidence of the source of the income figures in the tax returns other than that they were provided by Mr Bacon and Mr Bailey, and that without their evidence the jury could not come to a conclusion that what was recorded in the weekly sales sheets was the basis of the income calculations for the tax returns. It was also pointed out that there was no evidence that the appellant knew how Mr Bacon and Mr Bailey had calculated the income figures. It was pressed upon the jury that those two accountants should have been called by the Crown to give evidence about the matter, and that because they were not called, the jury should have entertained a reasonable doubt that there was an understatement of income in the returns that was based on the weekly sales sheets.
If the prosecution fails to call a witness whom it might have been expected to call, the issue that may arise is whether, in the circumstances, the jury should entertain a reasonable doubt about the guilt of the accused person. RPS v R (2000) 199 CLR 620 at par[29]; Dyers v R (2002) 210 CLR 285 at par[120]; Mahmood v Western Australia (2008) 232 CLR 397 at par[27]. Each case will depend on its circumstances.
There is no evidence to suggest that either Mr Bacon or Mr Bailey would have given evidence that suggested that the income figures in the tax returns were not understated, that the appellant did not know they were understated and that they were not based on the weekly sales sheets. Indeed, there is no evidence to suggest that they would have said anything to assist the appellant in his defence. The appellant made no request to the prosecution that they be called as witnesses.
Further, the relevant time for determining the appellant's state of mind was the time when the notices of objection were lodged.
The prosecution's failure to call either or both of the two witnesses did not give rise necessarily to a reasonable doubt about the matter. There was ample other evidence justifying a conclusion beyond reasonable doubt that there was an understatement of business income and that the appellant knew it.
Particulars 1.6 and 1.7 fail.
Was there a substantial miscarriage of justice because the trial judge failed to direct the jury that in the absence of expert evidence they could not use the figures in the weekly sales sheets to conclude that the gross income figures in the relevant tax returns were understated?
This question is raised by ground 5 of the appeal. Because it is associated with the matters with which I have just dealt, it is convenient to deal with it now.
In his closing address, counsel for the Crown produced to the jury a page of additions he had made of cash banked according to the weekly sales sheets for the 1994 and 1995 financial years. For the 1994 years, the total banked was $1,453,738.28 which was $35,606.72 less than the income of the business for the year as disclosed in the relevant income tax return. For the 1995 year, the total banked, according to the weekly sales sheets, was $1,591,837.61, which was $12,940.39 less than the income of the business for the year as disclosed in the relevant return.
Counsel for the Crown submitted to the jury that the figures in each pair of figures were fairly close to each other, more so in the case of the 1995 figures. The point was made to the jury that in accordance with the accounting evidence of the defence witness, Mr Roberts, differences might be accounted for by such things as profits from the sale of assets, rebates from suppliers and interest payments and by the fact that some of the money banked may have been paid by debtors for past sales of goods on credit.
Of course, the Crown relied on evidence that $1,000 was removed from the takings and not banked each Saturday, Sunday and public holiday, and it was argued for the Crown that if that evidence was accepted, the difference between the actual takings and the business income in the returns was much greater, and tended to support a conclusion that the figures in the weekly sales sheets were used to calculate the business income, and not the true receipts of the business as recorded by the cash registers.
Over an objection, the trial judge allowed counsel for the Crown to put the figures to which I referred in par[83] before the jury. They were merely additions of figures that appeared in the weekly sales sheets which were in evidence. However, in summing up, his Honour directed the jury that they were not accountants, but ordinary members of the community, and that although, like counsel, they could add up, they should not try to analyse the figures as if they were accountants or speculate about how an accountant might analyse them. The judge pointed out that there were possible explanations for discrepancies, but ultimately, it was a matter for the jury what use they should make of the figures in the documents. His Honour said that the jury might conclude that it was a mystery or on the other hand, that the figures were significant.
It was argued to this Court by the appellant's counsel that the judge should not have allowed Crown counsel to use the totals of the cash banked as part of the Crown case that the gross income figures in the tax returns were understated. It was submitted that without expert accounting evidence no conclusions could be drawn from the totals and because the judge did not direct the jury to ignore them a substantial miscarriage of justice occurred.
It is not uncommon that counsel for either side will advance arguments to a jury that have little or no merit. Even if they do so, there is no general rule that the trial judge should direct the jury when an argument is considered by the judge to fall in such a category.
The jury could have acted on their own initiative and performed the additions themselves. What was proved and not proved by the evidence was their responsibility to determine. Reliance on the totals raised by Crown counsel was one argument among many. The trial judge adequately warned the jury about the need for care concerning what use of the totals could be made. A miscarriage of justice did not arise out of the fact that his Honour did not direct them to ignore them.
Were the verdicts of guilty in respect of counts 2, 4, 5 and 8 inconsistent with the directed acquittals in respect of counts 7 and 10?
The question is raised by particular 1.8. Its answer requires an understanding of the reasons of the learned judge for directing the acquittals in respect of counts 7 and 10.
Six notices of amended assessments were issued. Four were directed to the appellant in respect of the taxation years 1992, 1993, 1994 and 1995 respectively. The other two were directed to BMPL in respect of the taxation years 1994 and 1995 respectively. The appellant signed the six notices of objection dated 31 August 2000, one in response to each of the amended notices of assessments. They all contained the same ground 4.b.
The charges of defrauding the Commonwealth in counts 1, 3, 5 and 8 had similar particulars. They each asserted that the appellant defrauded the Commonwealth in that he falsely represented to the Commissioner of Taxation that the total amount of income earned, received or derived by the trust during the respective financial year was properly and accurately recorded in its weekly sales sheets and returned as gross income in calculating the net income of the trust estate, and that he did so with the intention of having the amended assessment of income tax, penalty and interest set aside in whole or in part or alternatively, reduced, knowing that he had no right to deprive the Commissioner of the amount so set aside or reduced.
The charge of defrauding the Commonwealth in count 7 of the indictment was put on a different basis. The particulars were that the appellant defrauded the Commonwealth in that he falsely represented to the Commissioner that the total amount of income earned, received or derived by BMPL during the 1994 financial year was properly and accurately recorded in its (sic) weekly sales sheets and returned as gross income in calculating the net income of the trust estate, with the intention of prejudicing the Commissioner in performing his or her public duty in assessing and collecting tax penalties and interest on the income earned by BMPL during the financial year.
The particulars relating to count 10 were in identical terms to those of count 7, save that they referred to the 1995 financial year, not 1994.
The trustee had the power to distribute the income of the trust to the appellant, his wife and BMPL. The income tax returns of BMPL for 1994 and 1995 show that it in fact received distributions of trust income. However, there was no evidence that BMPL received any of the unbanked cash that was retained from the takings of the shops. There was evidence that such cash went to the appellant and his wife.
There was no evidence that tended to show that the income of BMPL was understated in either its 1994 return or its 1995 return.
There was evidence that suggested that the amended assessment in respect of BMPL had been issued as a matter of prudence on the part of the ATO, in case evidence later emerged that BMPL, rather than the accused and his wife or anybody else, had received undeclared income from the takings of the shop.
Noting all these matters, the trial judge observed that a charge of fraud may be alleged on different bases. One basis is the more usual and involves the intentional creation of a situation in which one person deprives another of money or property, or puts the money or property of that other person at risk, or prejudicially affects that person in relation to some lawful right, interest, opportunity or advantage, knowing that he or she has no right to deprive that person of that money or property or to prejudice his or her interests. However, such a fraud is not committed if the alleged offender is legally entitled, or believes that he or she is legally entitled, to what is sought to be achieved. Peters v R (1998) 192 CLR 493 at par[30].
It was that kind of fraud that was alleged against the appellant in counts 1, 3, 5 and 8. However, the charges in counts 7 and 8 that related to BMPL were particularised so as to allege a different and more unusual type of fraud, one in which the offender engages in conduct that is calculated to deflect a public officer from the proper performance of his or her public duty. The trial judge provided as examples of that kind of fraud Board of Trade v Owen [1957] AC 602, Welham v Director of Public Prosecutions [1961] AC 103, R v Horsington [1983] 2 NSWLR 72, Connor v Sankey [1976] 2 NSWLR 570 and R v Turner (No 4) (2001) 10 Tas R 81. His Honour observed that in each of those cases, the ultimate objective of the fraud or alleged fraud did not involve the obtaining of a financial advantage and the inflicting of a corresponding financial loss upon the person, authority or government deceived or allegedly deceived.
It was the Crown case that the ultimate objective of the appellant in relation to the objections to BMPL's amended assessments was to secure a financial advantage for that company by persuading the ATO that it should not have to pay any of the income tax, penalties and interest that were the subject of the amended assessments, or that it should have to pay less money than the amended assessments required. But there was no evidence that the income of BMPL was understated in its returns and for that reason, the jury could not be satisfied beyond reasonable doubt that the appellant intended to procure anything other than an objection decision to which BMPL was legally entitled. The learned judge applied what was said in Peters v R (supra) at par[30] and concluded that having regard to that circumstance, the jury could not be satisfied beyond reasonable doubt that any false representations in the notices of objection relating to BMPL resulted in the accused being guilty of the crime of defrauding the Commonwealth.
It was for that reason that the trial judge directed the jury to find the appellant not guilty of counts 7 and 10. The verdicts of guilty in respect of counts 2, 4, 5 and 8 were not inconsistent with those directed acquittals.
Particular 1.8 fails.
Was there a substantial miscarriage of justice as a result of a summing up that inadequately put the defence case to the jury?
Ground 4 raises the question.
General principles upon which the appellant relies include that in a criminal trial, a judge's summing up must uphold an even balance between the cases of the prosecution and the defence and must fairly direct the consideration of the jury to the matters raised by the accused person in his or her defence. Cleland v R (1982) 151 CLR 1 at 10; Domican v R (1992) 173 CLR 555 at 561. In what manner, and in what detail, this should be done will depend on the circumstances of the case.
In written submissions, it was submitted to this Court that in the summing up the Crown case occupied approximately 45 pages and the defence case occupied only six pages. That was an exaggerated description of his Honour's dealing with the Crown case and an understatement of his dealing with the defence case. In any event, the counting of pages will rarely amount to a test of the adequacy of a summing up.
It was to be expected that the judge would take much longer dealing with what the prosecution had put before the court than with what the defence had put before the court. Prosecution documents before the jury, almost all of them exhibits, occupy about 983 pages in the appeal book and defence documents occupy seven pages. Testimony by witnesses called by the Crown extended for well over twice the time of testimony by defence witnesses.
The summing up was in a common form. It started with the usual directions of law to be expected for a criminal trial and moved on to directions that were required by the crimes charged and the nature and circumstances of the case. It was necessary for the judge to explain at length the elements of the crimes and what the jury needed to be satisfied about beyond reasonable doubt before they could find the appellant guilty of them. A memorandum was provided to assist the jury.
The judge moved on to deal with the evidence, some of it in considerable detail. He explained the use the Crown sought to make of some of that evidence and on many occasions referred to contrary arguments advanced by the defence. There were also references to defence evidence.
Eventually, the summing up moved away from the Crown case altogether and in what occupies seven pages of the appeal book, dealt entirely with defence evidence and the defence case. His Honour then received submissions from counsel, after the appellant's counsel complained that what had been said about the defence case and evidence was inadequate. Following that, his Honour addressed the jury further about the defence case and its evidence, the transcript of which occupies another two pages.
The primary aspect of the summing up about which counsel for the appellant complained concerned its dealing with the evidence of the defence witness, Mr Roberts. It was submitted that the evidence contained the crux of the defence case and if it was accepted by the jury, there had to be a reasonable doubt. Once again there was an exaggeration or mis-statement by counsel.
The crux of the defence case was that the statement in ground 4.b of each notice of objection did not amount to, and was not intended by the appellant to amount to, a representation of fact; that the reference to the weekly sales sheets in ground 4.b was a mistake made by the person or persons who drafted the notices of objection, and that the reference should have been to the electronic recording system's records; that the appellant was not aware of the contents of each notice when he signed it; that the statement that the total amount of income earned, received or derived by the trust was properly and accurately returned as gross income in calculating the net income of the trust estate was not proved to be untrue, nor was it proved that the appellant knew it was untrue; and that it was not proved that the appellant knew that he had no entitlement to have the amended assessments of tax, penalties and interest set aside or reduced.
As I indicated earlier, only the weekly sales sheets for the 1994 and 1995 years were available and tendered in evidence. The weekly sales sheets for the 1992 and 1993 years were not available. Further, only about two months of the records of the electronic recording system were available. They were tendered in evidence and by comparing them with weekly sales sheets for the same dates, it could be seen that there was a substantial discrepancy between the takings for Saturdays and Sundays as recorded by the weekly sales sheets compared to what was recorded by the electronic recording system. That comparison corroborated other evidence about the appellant's practice of having $1000 removed from the takings on Saturdays and Sundays, a practice which he did not deny at the trial.
The defence case was that the weekly sales sheets could not be used to determine that the gross income figures in the tax returns were understated. I dealt with that subject when dealing with grounds 1.6, 1.7 and 5 of the appeal. The purpose of the defence calling Mr Roberts to give evidence was to demonstrate to the jury that the income of the business could not be calculated using only the weekly sales sheets. His undisputed evidence was that other documents were required to make the calculation and he referred to other documents, such as the debtors' subsidiary ledger, which were not available.
In his opening address, counsel for the appellant made no mention of an intention to call evidence from Mr Roberts or of what his evidence would be about. In his closing address, references to the evidence of Mr Roberts were principally to the aspect of his evidence to which I have just referred.
What the trial judge said to the jury about Mr Roberts' evidence in the summing up was as follows. First, his Honour referred to Mr Roberts' evidence being encapsulated in two pages of additions from weekly sales sheets that had been performed by him for the years 1994 and 1995. They were the only documents tendered through Mr Roberts. Next, his Honour reminded the jury of Mr Roberts' evidence that it was not possible to calculate the total income of the business by using the weekly sales sheets, without the debtors' subsidiary ledger. The judge pointed out to the jury that Mr Roberts was an accountant and qualified to express a professional opinion.
The learned judge said all he needed to say concerning Mr Roberts' evidence.
Upon a consideration of all the circumstances of the case, including the closing addresses of counsel and particularly, the summing up, I am not persuaded that there was a failure by the judge to present a balanced summing up which fairly directed the consideration of the jury to the defence case. Ground 4 fails.
Was there a substantial miscarriage of justice because the verdicts returned by the jury were inconsistent, repugnant and irreconcilable?
The only remaining ground of the appeal, ground 3, raises this question.
It is the appellant's case that the verdicts of guilty of defrauding the Commonwealth in counts 5 and 8 were inconsistent with the verdicts of not guilty of defrauding the Commonwealth in counts 1 and 3 and the verdicts of guilty of imposition in counts 2 and 4.
For the purpose of all counts, the jury could not find the appellant guilty unless they were satisfied that he knowingly made a false or untrue statement in ground 4.b, but as I explained in pars[12] – [14], the jury did not have to be satisfied that the appellant was acting dishonestly to be guilty of imposition. They did have to be satisfied that he was acting dishonestly to be guilty of defrauding the Commonwealth. In all other respects, the elements of the two crimes were effectively identical.
For those reasons, as a matter of strict logic the verdicts reveal that the jury were satisfied beyond reasonable doubt that when the appellant signed and caused to be forwarded to the ATO the two notices of objection on his own behalf with respect to the tax years 1994 and 1995 he was acting dishonestly, but they were not satisfied beyond reasonable doubt that when he did so with respect to the 1992 and 1993 years he was acting dishonestly.
It is the appellant's case that on the evidence and in all the circumstances of the case, it was not open to the jury to come to those contrary conclusions. Each of the four notices of objection contained an identical ground 4.b. To find him guilty of either crime the jury had to be satisfied that what was stated in ground 4.b was false (for defrauding the Commonwealth) or untrue (for imposition) and that he knew it was false or untrue. His purpose must have been to reduce his liability to pay tax, penalties and interest for each of the years.
The appellant's argument is that it makes no sense that he was acting dishonestly with regard to two of the notices but not dishonestly with regard to the other two notices. All were signed and lodged at the same time. It was submitted that his state of mind with regard to each must have been the same.
In his comments on passing sentence, the trial judge attempted to rationalise the apparently conflicting verdicts and came to the following conclusion:
"It is difficult to see how the jury could have been satisfied that such conduct involved dishonesty in relation to the 1994 and 1995 notices of objection, whilst not being satisfied beyond reasonable doubt that it involved dishonesty in relation to the 1992 and 1993 notices.
However it could well be that the jury decided to take a merciful view of the facts in relation to the counts relating to 1992 and 1993. A jury is entitled to act upon a view that, although a number of offences have been alleged, justice is met by convicting an accused person of some only: R v Kirkman (1987) 44 SASR 591 at 593; MacKenzie v R (1996) 190 CLR 348 at 367 – 368; MFA v R (2002) 213 CLR 606 at 617. I think it must follow that, in this case, the jury had the right to proceed on the basis that justice would be met by convicting Mr Saxby of only two charges of defrauding the Commonwealth, and on the alternative counts alleging imposition in respect of the years 1992 and 1993. They certainly heard evidence as to his good character and reputation which could have led them to take a merciful view. I am not confident that there is any other basis upon which the jury could properly have arrived at the combination of verdicts that it returned. I will therefore proceed to sentence on the basis that they decided that some measure of mercy was appropriate."
It is the appellant's case that different verdicts based on considerations of mercy amount to an affront to logic and commonsense and strongly suggest a compromise by the jury in the performance of their duty, which is unacceptable.
Counsel for the Crown pointed out that the evidence relevant to the notices for the years 1994 and 1995 was stronger than the evidence for the years 1992 and 1993. The weekly sales sheets for 1994 and 1995 were in evidence but not those for 1992 and 1993. Also in evidence were some till tapes and daily sales sheets which could be compared with some of the weekly sales sheets in evidence. It was argued that as a result of the additional evidence in respect of the 1994 and 1995 years, there was reason for the jury to have more confidence about reaching a conclusion that the total income received by the trust was not properly and accurately recorded in its weekly sales sheets and was not returned as gross income in calculating the net income of the trust estate for the purpose of the tax returns for those years. Further, it was argued, the jury had reason to find that the discrepancy was a considerable one for each of 1994 and 1995, but that they were unable to reach such a finding for the two earlier years. The absence of the weekly sales sheets from the evidence relating to those years may have led the jury to question whether dishonesty had been proved for those two years.
It was argued further for the Crown that relying largely on the evidence of the appellant's wife and the staff members, Marriott, Graves and Otto, the jury may have concluded that they were satisfied of the weekend and public holiday practice of removing $1000 and of a resultant understatement of income in the returns, but without the weekly sales sheets for 1992 and 1993 they may have felt unable to conclude that for those years the total income of the trust was not properly and accurately recorded in them. For that reason, a finding of dishonesty with respect to the notices for 1994 and 1995 years could be made more confidently than it could for the two earlier years.
A statement of the relevant law is to be found in MacKenzie v R (1996) 190 CLR 348 at 365 – 368. This is not a case of legal or technical inconsistency but one of suggested factual inconsistency. In such a case, the test is one of logic and reasonableness. Often cited as expressing the test is the statement of Devlin J in R v Stone unreported, 13 December 1954, referred to, for example, in R v Hunt [1968] 2 QB 433 at 438 and R v Durante [1972] 1 WLR 1612 at 1617; [1972] 3 All ER 962 at 966. After making the point that the burden of establishing the ground of appeal is on the appellant, Devlin J said: "He must satisfy the court that the two verdicts cannot stand together, meaning thereby that no reasonable jury who had applied their mind properly to the facts in the case could have arrived at the conclusion, and once one assumes that they are an unreasonable jury, or they could not have reasonably come to the conclusion, then the convictions cannot stand. But the burden is upon the defence to establish that."
Nevertheless, and as explained in MacKenzie at 367, the respect which the law assigns to juries (and the general satisfaction with their performance) have led courts to express repeatedly reluctance to accept a submission that verdicts are inconsistent in the relevant sense. Thus, if there is a proper way by which the appellate Court may reconcile the verdicts, allowing it to conclude that the jury performed their functions as required, that conclusion will generally be accepted.
Further, the view may be open to be taken that the jury simply followed the trial judge's direction to consider separately the Crown's evidence in respect of each count and to apply to each count the requirement that all the ingredients must be proved beyond reasonable doubt. R v Andrews Weatherfoil Ltd (1971) 56 Cr App R 31 at 40; MacKenzie v R at 367. It should not be forgotten that a verdict of not guilty can mean merely not proven and not that innocence has been proved. R v Andrews Weatherfoil Ltd at 40.
In this case, the trial judge directed the jury that they had a duty to consider each charge separately. It was pointed out to them that they might consider that the evidence was stronger in relation to one charge than another. The Crown's argument relies on that aspect of the case.
As I mentioned, the trial judge interpreted the different verdicts as involving a merciful view of the facts when considering the counts relating to 1992 and 1993. It is accepted that such a merciful view has always been open to, and often exercised by juries. MacKenzie v R at 368; MFA v R (supra) at 617. Gaudron, Gummow and Kirby JJ in MacKenzie at 367 – 368 cited with agreement the following remarks of King CJ in the South Australian Court of Criminal Appeal in R v Kirkman (1987) 44 SASR 591 at 593, adding that they were practical and sensible:
"Juries cannot always be expected to act in accordance with strictly logical considerations and in accordance with the strict principles of the law which are explained to them, and courts, I think, must be very cautious about setting aside verdicts which are adequately supported by the evidence simply because a judge might find it difficult to reconcile them with the verdicts which had been reached by the jury with respect to other charges. Sometimes juries apply in favour of an accused what might be described as their innate sense of fairness and justice in place of the strict principles of law. Sometimes it appears to a jury that although a number of counts have been alleged against an accused person, and have been technically proved, justice is sufficiently met by convicting him of less than the full number. This may not be logically justifiable in the eyes of a judge, but I think it would be idle to close our eyes to the fact that it is part and parcel of the system of administration of justice by juries. Appellate courts therefore should not be too ready to jump to the conclusion that because a verdict of guilty cannot be reconciled as a matter of strict logic with a verdict of not guilty with respect to another count, the jury acted unreasonably in arriving at the verdict of guilty."
King CJ added: "A jury may be quite reasonable in arriving at the verdict of guilty. That verdict may be amply supported by the evidence. They may decide for reasons of their own, unrelated to the strict logic of the situation, that they are unwilling to arrive at a verdict of guilty on another count in the information."
In MacKenzie v R at 368, Gaudron, Gummow and Kirby JJ made the following additional points. A residue of cases will remain where the different verdicts represent an affront to logic and commonsense which is unacceptable and strongly suggest a compromise of the performance of the jury's duty, requiring that the verdicts be so mutually contradictory or violently at odds in relation to the evidence that they cannot stand together in the sense that no reasonable jury, who have applied their minds to the facts of the case, could have arrived at the same conclusion. There may be suggested confusion in the minds of the jury or a misunderstanding of their function, uncertainty about the legal differentiation between the offences or lack of clarity in the judicial instruction on the applicable law. It is only where the inconsistency rises to the point that the appellate court considers that intervention is necessarily required to prevent a possible injustice that the relevant conviction will be set aside. It is impossible to state hard and fast rules. Each case will depend on its own facts and circumstances.
Before turning to my conclusion for this appeal, I make one further point. Mere inconsistency between the verdicts is not enough for the ground of appeal to succeed. Before it does so, the Criminal Code, s402(1), requires that the Court be of the opinion that the verdicts of guilty of defrauding the Commonwealth were unreasonable or that there was a miscarriage of justice.
Although there is merit in an argument that a legally trained person might regard the different verdicts as inconsistent with each other, I am not persuaded that they represent an affront to logic and commonsense, nor that they suggest a compromise in the performance of the jury's duty with a result that was adverse to the interests of the appellant.
There was substantial evidence that justified a finding of guilt by defrauding the Commonwealth on all four counts and certainly of imposition in the alternative. Further, the evidence of guilt with respect to the 1994 and 1995 years was stronger than the evidence with respect to the 1992 and 1993 years. It is possible that the jury thought that without the additional evidence of weekly sales sheets in particular, it was more difficult to conclude that the appellant acted dishonestly when he signed and caused to be sent the notices of objection for the first two years. They may have thought that without the weekly sales sheets in evidence it could not be concluded that it was proved that the total amount of income earned during the two years was not properly and accurately recorded in the weekly sales sheets and that for that reason, they could not find dishonesty.
It is also possible that, as the trial judge concluded, the verdicts of not guilty of defrauding the Commonwealth but guilty instead of imposition were reasonably based on a merciful view of the facts.
For those reasons, I am not persuaded that any of the verdicts were unreasonable or represent a miscarriage of justice. Ground 3 fails.
Order
For the reasons I have stated, all grounds of appeal fail and the appeal should be dismissed.
File No 386/2010
MARK ANTHONY SAXBY v THE QUEEN
REASONS FOR JUDGMENT COURT OF CRIMINAL APPEAL
EVANS J
7 February 2011
I agree with the reasons of Crawford CJ and would also dismiss the appeal.
File No 386/2010
MARK ANTHONY SAXBY v THE QUEEN
REASONS FOR JUDGMENT COURT OF CRIMINAL APPEAL
WOOD J
7 February 2011
I have read the reasons for judgment of Crawford CJ. I agree with those reasons and I would also dismiss the appeal.
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