High Court of Australia Mason, Wilson, Brennan, Deane and Dawson JJ. Grapsas v Unger [1986] HCA 52 ORDER Appeal allowed with costs. Orders of the Full Court of the Supreme Court of Victoria discharging orders nisi Nos. 14, 14d, 14e and 14f be set aside and in lieu thereof order that orders nisi Nos. 14, 14d, 14e and 14f be made absolute and that the convictions and fines imposed in respect of informations Nos. 919, 920, 925 and 926, including the order for costs in information No. 919, be quashed. Order that the respondent pay the appellant the costs of the proceedings in the Full Court in so far as they relate to orders nisi Nos. 14, 14d, 14e and 14f. Cur. adv. vult. The following written judgments were delivered:— Sept. 23 Mason and Deane JJ. The appellant appeals, by special leave, from a decision of the Full Court of the Supreme Court of Victoria (Murphy and Murray JJ., Young C.J. dissenting) [1] discharging orders nisi to review his conviction of four distinct offences under s. 230 of the Income Tax Assessment Act 1936 Cth ("the Act"). As presently relevant, that section provided that "[a]ny person who in any return knowingly and wilfully makes any misstatement affecting the liability of any person to tax or the amount of tax shall be guilty of an offence". The sole question which remains in issue is whether the appellant, on the now undisputed facts of each case, came within the tolerably clear words of that provision. In our view, he did. Since our reasons for that view substantially correspond with the reasons expressed in the judgments of Murphy J. and Murray J. in the Victorian Supreme Court and since the particular legislative provision has now been repealed, it is unnecessary that we do more than indicate, in summary form, what those reasons are. 1. [1986] V.R. 117. At material times, the appellant carried on business as a registered tax agent. As such, he prepared the four income tax returns to which the disputed convictions under s. 230 of the Act relate. It is not now contested that, in each case, the return contained at least one "misstatement affecting the liability of [a] person to tax or the amount of tax" within the meaning of the statutory provision. In each return, one or more of the claimed deductions from assessable income were inflated or completely fabricated by the appellant in preparing the return. That being so, the appellant was, in each case, guilty of an offence under the then provisions of s. 230 if the misstatement (or misstatements) was wilfully and knowingly made in the return by either the appellant or the relevant taxpayer. If wilfully and knowingly made in the return by the appellant, he was guilty as a principal offender. If wilfully and knowingly made in the return by the taxpayer, he was guilty as an accessory who was punishable as a principal under s. 5 of the Crimes Act 1914 Cth. The appellant's case is that no one at all knowingly and wilfully made any of the relevant misstatements in a return. No misstatement was wilfully and knowingly made by the taxpayer for the reason that, in each case, the taxpayer was unaware of the falsity and therefore did not make the misstatement wilfully and knowingly. So much is common ground. Plainly enough, the appellant was knowing and wilful in the sense that he formulated each relevant misstatement and was fully aware of its falsity. But, the appellant contends, he did not himself make any of the misstatements "in a return". It is that last contention that constitutes the issue in this appeal. The appellant's argument was squarely based upon a general proposition that, in cases such as the present where an income tax return of a personal taxpayer is signed by the taxpayer personally, the only person who makes any statement in the return is the taxpayer himself or herself. As a prima facie touchstone, this proposition is quite unobjectionable. In the ordinary case, statements in such a return are made by the taxpayer alone. This is ordinarily so even in a case where a tax agent prepares and certifies the return. The reason for this is that, in the ordinary case, the tax agent does no more than extract or formulate the information which the taxpayer furnishes. Even though formulated by the tax agent, the statements in the return are those of the taxpayer alone when he or she adopts the tax agent's formulation of them by signing the return. It was not, however, as a prima facie touchstone that the appellant propounded the proposition in the present case. It was as an invariable rule which, at times, seemed to be invested with the status of an irrebuttable presumption of law. So understood, the proposition finds nothing to support it in the statutory provision itself. To the contrary, the terms of the statutory provision would seem to have been carefully framed to negate it. It is any person who in any return knowingly and wilfully makes any misstatement of the specified kind who is declared to be guilty of an offence. Nor is there anything in other provisions of the Act or in legal principle which precludes a person other than the taxpayer from making a statement in a personal taxpayer's personally signed return. Indeed, any such legal principle would be contrary to common sense. Obviously, the fact that one person signs, publishes and bears the overall responsibility for a document does not preclude another person from making a statement in it. If one needed to seek examples outside the area of taxation law, the laws of defamation and misrepresentation would provide fruitful fields for research. In fact, however, one does not need to stray outside the taxation field. Circumstances could obviously exist in which a personal taxpayer's return made it clear that a particular statement, which constituted part of the return, was made by some person or persons other than the taxpayer. If, e.g., each return in the present case had included, under the relevant head or heads of expenditure, an express statement over the signature of the appellant that "the taxpayer has no records relating to this item of expenditure and the amount claimed has been estimated by me, Peter Grapsas, on the basis of my understanding of what the Commissioner is prepared to allow", it would, in our view, be plain that that statement was made in the return by the appellant notwithstanding that it had been adopted by the taxpayer when he or she signed and lodged the return. Once one reaches the conclusion that there is nothing in the Act or in principle which precludes a person other than the taxpayer from making a statement or misstatement in a return, it becomes apparent that the question whether the misstatements in the returns in the present case were made in the returns by the appellant is a question of fact. The circumstance that the returns were signed personally by a personal taxpayer weighs in favour of a negative answer to the question. It does not, however, preclude a positive answer to it. One must look at the relevant return in each case in the light of the surrounding circumstances to determine whether the particular misstatement or misstatements were made in the return by the appellant. When that is done in the present case, it appears to us that, as a matter of plain fact, each of the misstatements was made in the relevant return by the appellant. The appellant was, in every sense of the word, the author of each misstatement. In no case did the appellant simply formulate or extract information from material supplied by the taxpayer. Each misstatement was an invention of the appellant in the teeth of the information which the taxpayer supplied. Each misstatement was formulated by the appellant to be included in the draft return which the appellant prepared and certified and which, upon signature by the taxpayer and lodgment with the Commissioner, became a "return" for the purposes of the statutory provision. Each misstatement referred to "the taxpayer" in the third person and was a misstatement of objective fact. Plainly enough, both in its origins and in the draft return which the appellant submitted to the particular taxpayer, it was the appellant's misstatement and his alone. What then was the effect of the taxpayer's signature and lodgment of the overall return? As has been said, where a return has been prepared from information supplied by the taxpayer, a misstatement in the taxpayer's signed return, though formulated by the tax agent, will be that of the taxpayer and the taxpayer alone. The same can be said of the case where a misstatement has been formulated by the tax agent as a draft intended to serve as a basis of discussion with the taxpayer. Where, however, a misstatement in the return has been simply made up by the tax agent with the intention that it should be and remain part of the taxpayer's return and has, without discussion, been inadvertently permitted by the taxpayer to remain in the return which is signed and lodged with the Commissioner, there is no reason either in principle or common sense why that misstatement should not properly be seen, as a matter of fact, as remaining in the return as a misstatement made by the tax agent regardless of whether it has, by innocent adoption, also become the misstatement of the taxpayer. Thus, in the particular circumstances of the present case, the adoption of a particular misstatement by the relevant taxpayer (by reason of his or her signature and lodgment of the overall return) did not deprive the misstatement of its character as a misstatement formulated by the appellant on his initiative and as his own invention. In its formulation in the third person and in its context in a return which had been prepared and certified by the appellant, each misstatement remained a misstatement made by the appellant in the return. Indeed, in the return signed by the particular taxpayer and lodged with the Commissioner, each misstatement appeared in the form in which the appellant had expressed it and in the very context for which the appellant had devised it. In these circumstances, we can see no reason whatsoever for disagreeing with the conclusion of a majority of the Full Court of the Supreme Court that the learned magistrate's findings that the appellant had knowingly and wilfully made the misstatements in each of the four returns were properly open to him. To the contrary, we consider that those findings of the learned magistrate were plainly correct. We note that our conclusion in that regard is not inconsistent with the decision or judgments in Mallan v. Lee [2] and is supported by the judgment of Gowans J. in Bell v. Canny [3] . It is unnecessary that we consider whether Gowans J. attributed an unduly wide operation to the repealed statutory provision in some of the statements in his judgment in the latter case. 1. (1949) 80 C.L.R. 198. 2. [1973] V.R. 156. The appeal should be dismissed. Wilson J. The fate of this appeal depends on the construction of a provision which, prior to its repeal in 1984, appeared as s. 230(1) in the Income Tax Assessment Act 1936 Cth, as amended at the material time, ("the Act"). So far as relevant, the provision read as follows: Any person who in any return knowingly and wilfully makes any misstatement affecting the liability of any person to tax or the amount of tax shall be guilty of an offence. The question to be determined is whether the appellant, a registered tax agent, was rightly convicted of four offences under this provision. It is common ground that in each case he prepared for a taxpayer a return in which he knowingly and wilfully included erroneous material affecting his client's liability to tax. In no case did he sign the return. When the return was prepared it was sent to the taxpayer who completed the return by signing the declaration on the front page and then furnished it to the Commissioner. It is not suggested in any of the four cases that the taxpayer was privy to the false statements contained in his return. The convictions of the appellant cannot therefore be explained on the basis that in each case he was an accessory to the commission of an offence by a principal offender. The Commissioner's case, which was accepted by Murphy J. and Murray J. in the Full Court of the Supreme Court of Victoria, is that the language of s. 230(1) naturally covers a person who inserts a false statement in a return of another's income which return is made by that other person. The words "Any person" and "in any return" are emphasized. Nevertheless, with all respect to those who have come to a different conclusion, I do not think the proposition reflects a correct reading of the sub-section. The breadth of these expressions is explained to my satisfaction by the necessity to ensure the application of the section not only to a taxpayer, but to a person who makes a return in a representative capacity: Mallan v. Lee [4] . The language of the sub-section does not fit the actions of the appellant. In the course of preparing a document which might become a return he deliberately included material which was not correct. But he did not make any misstatement in a return. The document was not a return. At most it had a provisional quality in that it would become a return if, but only if, the taxpayer later appended his signature to a declaration that the particulars shown in the document were true and correct in every detail and did so with the intention of furnishing it to the Commissioner: the Act, ss. 161, 164. The submission of counsel for the Commissioner presents the incongruity that, unless and until the subsequent steps were taken by the taxpayer without correction of the erroneous information, the appellant may or may not have committed an offence notwithstanding that, so far as he was concerned, the offence both as to the actus reus and mens rea was complete. A form of contingent liability such as this is wrong in principle and quite unsatisfactory. 1. (1949) 80 C.L.R. 198, at pp. 212, 214-215. The Act makes it clear that the task of a registered tax agent is to "prepare" a return for the taxpayer: the Act, ss. 165, 251J(3), 251K(2). In my opinion, the mere act of preparation by the agent cannot support a conclusion that he has made statements in a return. In the course of argument, counsel was asked whether the position would be different if, within the body of a return, the tax agent expressly accepted responsibility for the accuracy of a particular item. I venture to say that such a surprising circumstance would be interesting and informative, but irrelevant. The fact would remain that the person responsible for any statements in the return is the person by or on whose behalf it was signed; liability under s. 230(1) for any misstatements would then depend on the state of mind of the taxpayer. The terms of the declaration which the taxpayer is required to sign in order to make a return and the warning printed alongside it on the form accurately reflect the proper construction of the sub-section. It was argued on behalf of the Commissioner that the sub-section should be construed in the light of the fundamental objective of the Act to ensure the supply of accurate information on which tax is to be assessed. In this perspective it is then simply a question of fact whether a tax agent knowingly and wilfully inserted a false statement in a document which ultimately became a return made by another person. But the issue might not be so simple. It could readily open up intricate and time-consuming legal battles which on my construction of the provision were not within the contemplation of the Parliament. Nor, in my opinion, is there any necessity to strain the plain language of the sub-section in order to secure the objective of the Act. Even as the Act stood before the major amendments introduced by the Taxation Laws Amendment Act 1984 Cth there were adequate sanctions available in respect of the conduct of the appellant. His registration as a tax agent was liable to cancellation in accordance with s. 251K(2), and it would seem to me that he was liable to prosecution as an accessory (Crimes Act 1914 Cth, as amended, s. 5) to an offence under s. 227 and as a principal offender under s. 228. It is unnecessary and, in the light of their repeal, inappropriate to examine the relevance and operation of these sections in any detail. It may be true to say that the problem that is presented for decision can be resolved only as a matter of first impression. The arguments either way do not gain strength from repetition. It follows from what I have said that I agree entirely with the judgment of the Chief Justice in the Full Court and am unable to accept as correct the decision of Gowans J. in Bell v. Canny [5] . 1. [1973] V.R. 156. I would allow the appeal. Brennan J. The appellant was charged with and convicted of a number of offences including four offences of contravention of s. 230(1) of the Income Tax Assessment Act 1936 Cth ("the Act") as it stood prior to its repeal on 14 December 1984. (For present purposes, I shall refer to the provisions of the Act as though the repeal had not been enacted.) Orders to review the convictions were made returnable before the Full Court of the Supreme Court of Victoria. The Full Court discharged the orders to review and this appeal was brought from that judgment. The resolution of this appeal depends upon the true construction of s. 230(1) and the application of the statute to the facts proved by the prosecution. The appellant was convicted as a principal offender, not as a party liable to conviction under s. 5 of the Crimes Act 1914 Cth. It is not necessary to consider whether the appellant might have been liable to conviction under s. 5. As the appellant was convicted as a principal offender, the question is whether he committed the act which the statute proscribes. Therefore I turn to the construction of s. 230(1) and to the facts which are said to have established the elements of the offences of which the appellant was convicted. Section 230(1) provides, inter alia, as follows: Any person who, or any company on whose behalf the public officer, or a director, servant or agent of the company in any return knowingly and wilfully understates the amount of any income or makes any misstatement affecting the liability of any person to tax or the amount of tax shall be guilty of an offence. The critical phrase is "in any return makes any misstatement". In each case, the prosecution sought to establish the making of such a misstatement in a return by proving that the appellant tax agent had inserted false particulars in a document which he prepared as a 1981 tax return for signature by a client taxpayer. In each case, the taxpayer signed the form declaring that the particulars shown in the return were "true and correct in every detail" without adverting to the particulars or without knowing that the particulars were false. In each case, the document was duly signed by the taxpayer and delivered to the Commissioner. There is some inaccuracy in describing a document as a return before it is delivered to the Commissioner. A document which is not delivered to the Commissioner would not ordinarily be regarded as a return. The reference to a return in ss. 227 and 230 must therefore be taken to be a reference to a document which is intended by the person doing the act proscribed by the particular section to be delivered to the Commissioner as a return and which is in fact delivered to the Commissioner as a return. None of the offences created by ss. 227 and 230 is complete if the document which is intended to be furnished to the Commissioner as a return is not delivered to the Commissioner. In each of the cases with which we are here concerned, the document said to constitute a return was in fact delivered to the Commissioner. Section 230 is to be found in a group of sections which creates offences relating to the giving of false information to the Commissioner. The necessity to provide penalties for giving false information to the Commissioner is obvious, for the Commissioner makes an assessment of a taxpayer's taxable income and of the tax payable thereon "[f]rom the returns, and from any other information in his possession": s. 166. This group of sections is complementary to other provisions of the Act which either require or authorize the giving of information to the Commissioner. Sections 227, 228, 229 and 230 are calculated to ensure that, when the Act requires or authorizes information to be given to the Commissioner, the information given pursuant to the statutory requirement or authority should be honestly given. Section 227(1) provides, inter alia: Any person who makes or delivers a return which is false in any particular, or makes a false answer whether orally or in writing to any question duly put to him by the Commissioner or any officer duly authorized by him, shall be guilty of an offence. The most general obligation to make and deliver a return is imposed by s. 161(1), which requires every person, unless exempted, to furnish to the Commissioner in the prescribed manner a return signed by him setting forth a full and complete statement of the total income derived by him during the year of income, and of any deductions claimed by him. The making and delivery of a return fulfil the obligation of furnishing a return: see reg. 26 of the Taxation Regulations. A return is made when the document is completed and signed, i.e., when the "finishing touch" is put to the document: cf. Revelstoke v. Inland Revenue Commissioners [6] . Section 161 is not the only provision imposing an obligation to make a return. As Dixon J. pointed out in Mallan v. Lee [7] , pursuant to other sections of the Act "there are many cases in which persons may or must make returns of income in which they have no beneficial interest or which they do not derive". The second limb of s. 227(1) relates to the answering of questions put by the Commissioner. The Act imposes an obligation to answer questions put by the Commissioner in certain cases: see, e.g., s. 264. 1. [1898] A.C. 565, at p. 569. 2. (1949) 80 C.L.R. 198, at p. 214. Section 228(1) creates an offence of failing to sign an agent's certificate or signing a certificate that is false in some particular when the agent is required by the Act to sign a tax agent's certificate. The obligation to sign such a certificate is imposed on a tax agent by s. 165. Section 229 deems a person to be guilty of wilful and corrupt perjury when he wilfully declares to a matter or thing which is false or untrue and the declaration is made under or is authorized or prescribed by the Act. The offences created by ss. 227, 228 and 229 penalize either the failure to discharge obligations imposed by other sections of the Act or the giving of false information in the course of doing what other sections of the Act require or authorize to be done. Sections 227, 228 and 229 being complementary to other sections of the Act, the offences created by those sections can be committed only by persons on whom the relevant obligation has been imposed by other sections or, in the case of s. 229, by persons who are authorized or required by other sections to make a declaration. By analogy, the offences created by s. 230(1) can be committed only by persons who, pursuant to the Act, are bound or authorized to make in a return of income statements relating to the amount of income of any person or relating to matters affecting the liability of any person to tax. A tax agent is not so bound or authorized by the Act, but a taxpayer or a person who is bound to make a return of income or who is authorized to make and makes a return in a representative capacity is under an obligation or has authority to make such a statement. Section 230(1) is therefore directed to the person who makes the return. It is impossible to make a misstatement in a return unless one is the maker of the return. A similar view was expressed by Blackburn J. with respect to the offence of wilfully making a false statement in company accounts: see Kent v. Summers [8] . 1. [1978] C.L.C. 29,717, at p. 29,718. The Act distinguishes between the preparation of a return and the making of a return. The preparation of a return is part of the function of a tax agent (s. 251J(3)) but the making of a return is, generally speaking, the duty of the taxpayer: s. 161. The preparation of a return is for the purpose of its being made but the making of the return is a step which follows its preparation and precedes its delivery to the Commissioner: s. 227(1) and reg. 26 distinguish between the making of the return and the steps to be taken to deliver it to the Commissioner. The taxpayer makes the return when the complete document is signed by him: McGovern v. Chaplain [9] , per Webb J. As the provisions of s. 230(1) are clearly designed to protect the accuracy of the information conveyed to the Commissioner, and as the making of the return is the means by which the content of the return is settled, the making of a statement in a return is an integral part of the making of the return. Such a statement is made by a taxpayer in the course of discharging the duty imposed by s. 161 and the offence created by s. 230(1) is therefore an offence which can be committed, in respect of a taxpayer's return, only by a person on whom the obligation to make that return is imposed, namely, the taxpayer. 1. (1951) 9 A.T.D. 351, at p. 356. In a sense, a tax agent who prepares a return for a taxpayer makes the statements which the return contains but that is not the statutory sense of the critical words in s. 230(1). The mischief to which s. 230(1) is directed is the giving of false information to the Commissioner in a return and the only person whom the Act recognizes as responsible for the giving of information to the Commissioner in a return is the person upon whom the obligation or authority to make a return is imposed or conferred by some provision of the Act. No such obligation or authority is imposed or conferred on a tax agent. A tax agent is under no obligation and has no authority to make the statements in a taxpayer's return and the insertion of misstatements in the course of preparing a return to be signed by a taxpayer is not the act proscribed by s. 230(1). It is only the making of a misstatement by the taxpayer which attracts the operation of the section. If an innocent taxpayer made a misstatement in a return by signing a return prepared by a tax agent who had knowingly and wilfully inserted the misstatement with the intention that the taxpayer should make the return containing the misstatement, an interesting question could arise as to whether the act of making the return containing the misstatement is the act of the tax agent in accordance with the "innocent agent" doctrine which Gibbs J. explained in White v. Ridley [10] . 1. (1978) 140 C.L.R. 342, at pp. 346-347. In Bell v. Canny [11] , Gowans J. addressed the alternative bases of criminal liability of a tax agent: first, the knowing and wilful insertion of false matter in the course of preparing a return; and secondly, the authorization of an innocent agent (the taxpayer) to make a false statement. His Honour held the tax agent liable to conviction on either basis. He said [12] : I think it is reasonably clear that where a person physically preparing a return (albeit not his own) inserts in it matter which is false, and he inserts it knowingly and wilfully, it falls within the sub-section. And, in my view, where a person knowingly and wilfully supplies information which is false to another, and that other is his agent, for the insertion of that matter in the contents of the return, being authorized and directed to insert that matter in the return, then the person supplying the information and authorizing and directing it to be inserted in the return, commits an offence against the sub-section. On general principles a person who authorizes and directs an innocent agent to make a false statement, makes that false statement himself, and if he authorizes and directs the false statement to be inserted in a tax return, he makes that false statement in the return. I would respectfully disagree with his Honour's view that the insertion of false matter in the course of preparing a return is an element of an offence created by s. 230(1). I would reserve my opinion as to his Honour's view that there is criminal liability for the act of an innocent agent who makes a misstatement when making the return. If the doctrine of "innocent agent" had been invoked by the appellant — and the course of argument in this Court showed that it had not — a question would have arisen whether the actus reus of an offence can be attributed to a person who induces an innocent agent to do a proscribed act which the person himself is legally incapable of doing. That question was not explored because the appellant's convictions were not founded on his making the misstatements by making the returns containing them but on his making the misstatements by inserting them in the returns thereafter made by the respective taxpayers. 1. [1973] V.R. 156. 2. [1973] V.R., at pp. 159-160. For the reasons given, I would hold that the insertion of those misstatements in the course of preparing the returns could not constitute the making of a misstatement in a return within the meaning of the relevant words in s. 230(1). The appeal should be allowed, the orders of the Full Court set aside and in lieu thereof the orders nisi be made absolute and the convictions quashed. Dawson J. I agree with Wilson and Brennan JJ. that s. 230(1) of the Income Tax Assessment Act 1936 Cth, as it was at the relevant time, did not apply to a registered tax agent who prepared an income tax return to be signed by his client and furnished to the Commissioner. The section applied to any person who in any return knowingly and wilfully made any misstatement affecting the liability of any person to tax or the amount of tax. It is the function of a tax agent to prepare returns, not to make them: see ss. 165, 251J(3), 251K(2). It is the tax agent's client who makes the return by signing it and furnishing it to the Commissioner: see s. 161(1). Even if the appellant, the tax agent in this case, knowingly and wilfully included in the draft returns prepared for his clients misstatements of the kind referred to in s. 230(1), he did not make those misstatements in any return as would be necessary for s. 230(1) to apply. The actus reus of the offence created by s. 230(1) is the making of a misstatement in a return and all that the tax agent did was to prepare the returns. Nor can it, in my view, be said that the tax agent made any misstatement in a return through the innocent agency of his clients. His clients, the taxpayers, were not the instruments by which he made returns. They made the returns on their own behalf: cf. Kent v. Summers [13] , per Blackburn J. Nor could there be any question of the tax agent being an accessory who was punishable under s. 5 of the Crimes Act 1914 Cth because it does not appear that his clients made any misstatement in their returns either knowingly or wilfully. 1. [1978] C.L.C., at p. 29,718. Section 230(1) extends to persons who make returns in a representative capacity — trustees, public officers and the like. Those persons, if they make misstatements, may be said to make them in a return. The same cannot be said of the tax agent who prepares the return but does not make it. I do not think Bell v. Canny [14] was correctly decided. 1. [1973] V.R. 156. I would allow the appeal in each instance.