New South Wales District Court CITATION: YOUNAN, Adison v R [2010] NSWDC 168 JUDGMENT DATE: 13 April 2010 JURISDICTION: District Court of New South Wales JUDGMENT OF: Cogswell SC DCJ DECISION: The conviction is set aside CATCHWORDS: CRIMINAL LAW - conviction appeal - failure to file personal tax return - appellant a tax consultant - submission that ATO cannot prove beyond reasonable doubt that a tax notice pursuant to s 162 Income Tax Assessment Act 1936 was posted and served - circumstantial evidence only showing notice sent - ATO's computer system Taxation Administration Act 1953 s 8C(1)(a) LEGISLATION CITED: Income Tax Assessment Act 1936 s 162 Crimes (Appeal and Review) Act 2001 CASES CITED: Mahmood v Western Australia (2008) 232 CLR 397 R v Louizos [2009] NSWCCA 71 PARTIES: Regina Adison Younan FILE NUMBER(S): 2009/117172 COUNSEL: Mr Young for the appellant Ms Beckett for the respondent JUDGMENT 1. Adison Younan is a tax consultant. He is a qualified chartered accountant and solicitor. He presently works for the National Australia Bank, placed in its subsidiary the MLC Limited. In the recent past he was employed by Greenwoods & Freehills, a specialised tax advisory firm, connected with the law firm Freehills. 2. Despite these qualifications, professional employment and responsibilities, he is being prosecuted by the Australian Tax Office for failing to file one of his personal tax returns. When it was eventually filed, it resulted in a refund to Mr Younan. 3. The ATO's case depends on proving that it posted and served a final notice on Mr Younan, requiring him to file his tax return. Mr Younan not only says he never received the tax notice, he also says that when the ATO's case is examined closely it cannot satisfy me beyond reasonable doubt that the notice was actually posted and served. 4. He has an alternative argument. He says that even if I am satisfied that the notice was posted and served, it was in fact sent to the wrong address, so that it was ineffective as a basis for the prosecution. 5. This case comes before me as an appeal. It started when Mr Younan was charged with an offence against section 8C(1)(a) of the Taxation Administration Act 1953. That is an offence which is described as failing, when and as required, under a taxation law, to furnish any information to the Tax Commissioner. 6. In this case the allegation is that Mr Younan failed to furnish his income tax return for 2007, despite being required to by a final notice which was issued under section 172 of the Income Tax Assessment Act 1936. The particular allegation was that a notice was issued on 2 May 2008 which required him to lodge with the Commissioner of Taxation, on or before 30 May 2008, the tax return for 2007. The ATO claims that by 30 May he had not lodged that document so that he committed the offence on or about 31 May 2008. 7. The ATO's case relies on legal assumptions and circumstantial evidence. To state it in those terms gives the impression that it is by nature a weak case. That is not necessarily so. For reasons which I will refer to, the legal assumptions which I mentioned are provisions in the Tax Administration Act 1953 which provide that when someone is prosecuted for a taxation offence a statement or averment contained in the information becomes prima facie evidence of the matter so stated. 8. The fact that the ATO case is based upon these averment provisions and circumstantial evidence is not surprising, given the size of the ATO which must be one of the larger Australian Government departments and which I expect has offices in all States and Territories and thousands of employees with millions of taxpayers to deal with. 9. The reason that there are averment provisions in the legislation dealing with the Tax Office is explained by Ms S Beckett of counsel, who appeared for the ATO, in her amended crown submissions which became MFI 5 in these proceedings. As Ms Beckett points out "the public policy behind this provision is no doubt the difficulty for large agencies like the Tax Office, with specialised systems and with branches all over the country doing different designated tasks, to not have to call evidence from each person who has undertaken a particular part of a task that is part of the operation of the system." 10. Nevertheless, it is common ground that because this is a prosecution for a criminal offence the ATO, as the prosecutor, bears the onus of satisfying me beyond reasonable doubt that Mr Younan has committed the offence with which he is charged. 11. The averments which were contained in the court attendance notice, which was issued on 1 December 2008 - the relevant averments - are that Mr Younan was required by notice in writing dated 2 May 2008 to give the ATO before 30 May 2008 an income tax return in the approved form for the year ended 30 June 2007. The court attendance notice also contained relevantly the averment that the notice was served on Mr Younan by posting it on 2 May 2008 by prepaid letter post at his preferred address service, namely 11 Dunkley Street, Smithfield. It goes on to aver that he failed to furnish the return in compliance with the notice. 12. Ms Beckett relies upon those averments together with the evidence comprised in exhibits tendered before the learned magistrate and a witness who was called on behalf of the ATO before her Honour. 13. I should have mentioned in introducing this judgment that when charged Mr Younan's case came on for hearing on 21 September 2009 before Local Court Magistrate Russell at the Parramatta Local Court. Mr Younan pleaded not guilty and on 13 November 2009 her Honour found the offence proved and convicted Mr Younan of the offence. 14. I need to make some reference to the evidence which is relied upon by the ATO which was in the Local Court. The witness called was Janette Gens, who was an in-house prosecutor for the ATO at Penrith. She described a computer system called Siebel which the ATO has and in respect of which she said that "any outgoing correspondence to taxpayers are attached to - or are attached - and in that Siebel system under particular tax payers." She went on to say that an urgent action letter had been set out in respect of Mr Younan and she described the relevant system. It was that the "case officer dealing with a particular case will issue either the reminder or the urgent action letters. They are then put in - placed in envelopes and put in a central part of the office which there are central parts within each four of each office, and then we have - Australia Post employees come in and actually take the mail away." That explains, she said, how the relevant letter, being the final notice in this case, was, she said, posted out. 15. When asked how the letter comes to be on the system to be viewed later, she said that once the letter is created "the letter is then saved in the system and attached to the Siebel case - which, each taxpayer has a Siebel case once it's created, and then those documents are attached to that particular case." 16. She referred to an ATO officer called Michael Oppermann whose name appears on some of the correspondence directed to Mr Younan in this case. She described him as the person who "would have case ownership of that". She acknowledged that another officer could deal with an enquiry if necessary. 17. She had seen the final notice relied upon by the ATO in this case on the Siebel system. The final notice was an annexure, namely annexure B, to exhibit 1, which was a statement by Ms Gens admitted by the learned magistrate in the lower court. The final notice is dated 2 May 2008 and purports to be issued under section 162 of the Income Tax Assessment Act 1936 and - it is common ground - requires Mr Younan to relevantly lodge his 2007 tax return. 18. The issue in this case is not the form of the notice but whether I am satisfied beyond reasonable doubt that the notice was served by post on Mr Younan. 19. Ms Gens referred to another document which was admitted as annexure D to her statement, which is a record of a telephone conversation between Mr Younan and a tax officer on 9 May 2008. She said that he had contacted the department on that day and annexure D is a file note of the conversation. 20. She was asked to briefly explain what a "preferred address for service" was. She said that it is "an address either provided by the taxpayer or an address that is found through means of the ATO that would be a preferred address or documents to be issued to." There appears to be a typographical error and "or" should read "for". 21. She referred to a document which is in the ATO records indicating that the address for service from 9 May 2008 for Mr Younan was unit 6, number 1 Hunter Street, Parramatta. The final notice was posted to him at 11 Dunkley Street, Smithfield. As a result of looking at the annexure E document, she agreed that the Parramatta address was the "new preferred address for service". She agreed that the address at Smithfield was the preferred address for service before 9 May 2008, namely at the time that the final notice in this case was issued. 22. She said that there are checks through the ATO system to make sure that no suspension of time was given and that letters were not returned unclaimed. She says it is easy to identify because a final notice has a bar code, so if the letter comes back unclaimed the bar code is put into the system and the indicator will go onto the ATO system and there were, in this case, no indicators. 23. She referred also to an item on the Siebel computer system dated 16 June 2008 which she agreed was a "contemporaneous file note" of a conversation on that date which Mr Oppermann had had and it seems to be that he had had that conversation, with Mr Younan. 24. She agreed that there was a procedure within the department that personal contact by telephone, where possible, is made before proceeding with a prosecution against someone who has not lodged a tax return. She said that the procedure is that once a final notice is issued "there would be three attempts made to the taxpayer in respect to advising them that there is an intention to transfer their case over to the prosecution section" as a result of unlodged returns. She said that after "the three contacts, if they are unsuccessful, then a letter from the ATO would issue in respect to the intent to prosecute information". 25. She said if a final notice had been issued there would be no reason for what she described as "an intent to prosecute contact" being made to the taxpayer in this case. 26. In cross-examination Ms Gens agreed that the Siebel system is a repository of correspondence. She said in response to a question that a document is created independently, and then at some point attached to the Siebel system, she said that if it is "not processed through Siebel, then yes, another system will actually issue the letter, and then that letter would be saved and attached to the Siebel case." 27. She agreed that the Siebel system records the creation of documents and when it was put to her that the Siebel system does "not record anything about whether a document a sent" (which I read as "was" or "is" sent), she said "No, it records the creation of the document." 28. It was then put to her that "by reference to the Siebel system, we can't tell whether a document was sent or not" and her response was that only "if a note was made on the system". Asked whether the final notice in this case was the subject of a note, she said that "there could be a note within the notes - the note comments within Siebel, just saying that this notice went out on this particular day and was approved. The process is that once a final notice is issued, it has to go to a manager for approval, and then generally put a note on the system saying that it's approved." When asked if there was such a note, then it would have been discovered on the system by a search, she agreed "but it would not have been necessary at the time to include that". 29. It was put to her by Mr Young of counsel - who appeared for Mr Younan in the Local Court and before me - that as far as the final notice in this case is concerned "there is no record that you are able to produce whatsoever that it was posted" and her response was "No". 30. She returned to the issue of the ATO procedure after the issue of final notice. She said that the "lodgement enforcement procedures is, once a final notice has expired, that, as previously advised or stated to the court, that lodgement enforcement procedures are to make the three phone calls. They have scripting which I don't have a copy of, but the scripting indicates that they make the taxpayer aware that a final notice was issued, has now expired, the returns are still not lodged, and this is the action that we are going to take." 31. She acknowledged that the note on the ATO system comprising annexure F to exhibit 1 - which was the previously referred to contemporaneous note of a telephone conversation on 16 June 2008, between Mr Oppermann and Mr Younan - was one of the three phone calls in accordance with the procedure. She agreed that there was nothing in that note "which tells us one way or another, as to whether there had been a section 162 notice issued". She said that had not been noted in the record. 32. Mr Young called his client who gave evidence that he did not receive the final notice. Had he received he, as he said, "would have jumped on it". He understood the repercussions attached to a notice issued under such a notice. 33. He recalled the conversation with a tax officer in June 2008, which I accept is the conversation which is the subject of the Tax Office note which is dated 16 June 2008. He said that definitely nothing was said about "any section 162 notice having been issued" and if it had he would have attended to it straight away. 34. Cross-examined, he said that the word "prosecution" was not said and when it was put to him that the officer said that a summons would be issued if the return was not lodged, he said that "you can put it to me, that's fine, but I wasn't threatened with prosecution." 35. He gave evidence that he had been employed by Greenwoods & Freehills from about September, October 2007 and had filled in a TFN declaration which became an exhibit marked 5 in the proceedings and was dated 20 November 2007 and is a document called "Tax File Number Declaration". He said that he filled it in. Its relevance is that it records the Parramatta address as his "home address". There is an issue - which I will turn to in due course - about whether or not that document reached the ATO. Mr Younan's evidence was that his then employer "would have sent it in, they have to send it, and they did send it, because I was getting - my tax was getting withheld and that address had unit 6/1 Hunter Street, Parramatta". 36. Asked what he meant by "it would have been sent", he responded "it was sent because I was, you know, I was - tax was being withheld. So obviously it was sent, tax wouldn't have been withheld if it wasn't sent." 37. He said there was a system at the Smithfield address to which the ATO said it sent the file notice, whereby his mother, who lived there with his father, would put aside mail for him and the mail which she put aside did not include the relevant file notice. His mother was called to give evidence that there was in fact a system whereby she put aside mail for Mr Younan. 38. I have been greatly assisted by written and oral submissions, both from Mr Young and from Ms Beckett. Mr Young's position is that I cannot be satisfied beyond reasonable doubt on the evidence that the final notice was served by post on his client. It would follow if I am not satisfied of that beyond reasonable doubt that Mr Younan is not guilty of the offence because he was not "required" by the relevant legislation to file the notice. 39. There are, in my opinion, at least seven bases which are made out by Mr Young which would lead me not to be satisfied beyond reasonable doubt that the final notice was issued and served at the appropriate address on his client. 40. Briefly, they are these. One, Ms Gens conceded that the Siebel system itself does not record whether or not a document is sent. 41. Two, Mr Young drew attention to documents which came into existence after 9 May 2008, which was the date the ATO records indicated the preferred address had changed, which indicated that his preferred address was still the old address. Mr Young says this shows that the "ATO record is unreliable". He argues that if the ATO system was reliable "the preferred address of Mr Younan would have been updated no later than 9 May 2008." I think he is right in that submission. It raises a doubt about the reliability of the ATO system. 42. Three, Ms Gens' evidence was that once the final notice was issued then there are three attempts to personally contact the taxpayer. In this case there is evidence of only one such attempt and not three such attempts. As Mr Young says, the records "do not show such a procedure having been followed in relation to Mr Younan, which further points to doubt that the final notice was issued". 43. Four, there is no reference - in the ATO file note of the conversation between Mr Oppermann and Mr Younan of 16 June 2008 - to a final notice. That, as Mr Young asserts, is suggestive of Mr Oppermann not having informed Mr Younan of the issue of a final notice. 44. Five, there is a doubt about the adherence to ATO procedure for postage of notices because there is evidence of an unrelated notice having issued from the Penrith office on 2 May 2008 and an identical notice issuing from a Queensland office on 8 May 2008. As Mr Young argues, had the notice issued from Penrith on 2 May 2008 - as I said this is an unrelated notice - been entered on the Siebel system once sent, then "presumably the officer in Queensland would have seen recorded on the ATO Siebel system the notice of 2 May 2008 ... and would not have then created an identical notice on 8 May 2008." 45. Six, Mr Young pointed to Ms Gens' evidence of the process being that once a final notice is issued "it has to go to a manager for approval, and then generally put a note on the system saying that it's approved." Mr Young pointed out that no such notes were tendered by the prosecution to substantiate the approval of the final notice. 46. Seven, there is reference in Ms Gens' evidence, as I said, to an officer named Mr Oppermann. Mr Oppermann was described by her as a "lodgement officer". She agreed he would have authorisation to issue the final notice such as the one issued in this case. He was, as I earlier said, the person described by her as having "case ownership" of the case. He was the person who had relevant telephone conversations with Mr Younan in this case. 47. Mr Young referred me to remarks made by the High Court of Australia in Mahmood v Western Australia (2008) 232 CLR 397, which were adopted by the Court of Criminal Appeal in this State in R v Louizos [2009] NSWCCA 71. In Louizos Howie J, with whom the Chief Judge at Common Law and Grove J agreed, quoted with approval - at [55] - from the High Court's judgment in Mahmood a passage which asserted that "where a witness, who might have been expected to be called and to give evidence on a matter, is not called by the prosecution, the question is not whether the jury may properly reach conclusions about issues of fact but whether, in the circumstances, they should entertain a reasonable doubt about the guilt of the accused." Howie J said in the following paragraph that that decision in Mahmood "has effectively changed the law in this State." 48. Given the significance of the role played by Mr Oppermann in this case, I have hesitation in reaching conclusions beyond reasonable doubt regarding the proof of the prosecution case by the ATO in this case. 49. In deference to Ms Beckett's very helpful submissions, I will make some remarks about the submissions that she made on some of the issues. In dealing with Mr Young's argument that Mr Younan did not receive a final notice sent on 2 May 2008 addressed to the Smithfield address, Ms Beckett relied not only upon the averments but other circumstantial matters, namely system and process. She acknowledged that there was no evidence of a note in the Siebel system but argued that the evidence was consistent with the practice to upload the document. That is true but in a case where I need to be satisfied beyond reasonable doubt before finding an offender guilty, the absence of a note on the system must, in my view, raise such a doubt. 50. Ms Beckett refers to the ATO procedure which automatically comes into play after the notice is sent. She refers to the telephone conversation on 16 June 2008. She is right about those procedures but the area of reasonable doubt which arises relating to that procedure is that there is no evidence of the three phone calls which are said to be part of the procedure, nor of the approval by a senior officer for the issue of the notice. In other words, so far as the system and the process relied upon by Ms Beckett are concerned, when that system and process are closely examined in this case the evidence, in my view, exposes areas where I must have a reasonable doubt about whether that system and process can be relied upon as demonstrating the service of the relevant notice at the relevant address on Mr Younan. 51. Ms Beckett refers to evidence of a telephone conversation on 9 May 2008. She says "that assists me to conclude that Mr Younan must have received the final notice." Although the telephone conversation concerned another topic, namely the issue of the unrelated notice, that notice was issued on the same day as the final notice and to the same address. Mr Younan appeared to exhibit knowledge about that. 52. The difficulty with that argument is that another notice was issued on the previous day from the Queensland office. Ms Beckett argues that at the time of the relevant conversation, which was at 9.39 on the morning of 9 May, that notice would not have been received. I must say I would not comfortably myself reach that conclusion. It would be not unheard of that a letter posted interstate on one day may reach its destination the next day but Mr Young pointed to an agreement from Ms Gens to the effect that that could be the case, that the letter issued one day could have been received the next day. 53. Ms Beckett refers to the conversation on 16 June 2009 between Mr Oppermann and Mr Younan. That is the conversation said to constitute one of the three telephone calls referring to a final notice. Mr Young's point is there is no mention of a final notice. It was put to, as I said, Mr Younan that there was mention of a prosecution and he denied that. Ms Beckett's argument is that I have a contemporaneous record entered by the ATO employee, Mr Oppermann, to the effect that a prosecution was mentioned and that there was clearly discussion of prosecutions and summonses. 54. The difficulty with that argument, in my opinion, is that it relies upon a record - yes a contemporaneous record made in the course of a business - but made by a person who was not a witness and I am asked to give that greater weight than the sworn evidence of a person who was called as a witness before me. I, in those circumstances, would not regard the file note written by the person who was not called as a witness over the sworn evidence of Mr Younan. 55. Ms Beckett argues that the final notice was sent to the correct preferred address, namely 11 Dunkley Street, Smithfield. She points to the evidence of the ATO record showing that the Parramatta address was not changed until 9 May 2008. Mr Young, on the other hand as I have said, argues that a document was completed in November 2007 containing the Parramatta address as "a home address". Although I am not satisfied that a home address would meet the regulatory description of a "preferred address", Ms Gens agreed that the address referred to in the document could amount to a preferred address. 56. In fairness to Ms Gens, it seems to me that the indication could be in compliance with the regulation and the concession was appropriate. It could be that Ms Gens regarded it as an appropriate preferred address for service in accordance with regulation 6(1)(c) as other circumstances indicating that the person wished the address to be used, even though it had not been specified as an address for service of documents. 57. Ms Beckett argued that there was no evidence that the form had been in fact sent. In that regard I do, however, accept the evidence of Mr Younan himself. Given his qualifications and evidence of his experience, I would regard him as appropriately qualified to express the opinion about the likelihood of that form being received by the Tax Office in light of his evidence that tax was being deducted from his income. 58. As I said, I have been greatly assisted by both counsel in their submissions but for the reasons which I have just given I am not satisfied beyond reasonable doubt that Mr Younan is guilty of the offence charged and I propose to allow his appeal. 59. The formal order which I make under section 20 of the Crimes (Appeal and Review) Act 2001 is that I determine this appeal against conviction by setting aside the conviction. 60. Now, I think that is the only formal order I need to make. The penalty would follow the setting aside of conviction. Mr Georges or Ms Beckett, do either of you say I should make any other orders? BECKET: No. GEORGES: No, your Honour. I'm sorry, your Honour, now that you mention it, there was a fine issue; would that need to be quashed? HIS HONOUR: I do not think so because the conviction has been set aside, there is no basis for the fine. If there is a problem, then you can come back to me but I would not have thought that there would be any basis for the levying of the fine. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.