New South Wales Court of Criminal Appeal CITATION: Regina v. Bates, Philip [2007] NSWCCA 297 HEARING DATE(S): 2 October 2007 JUDGMENT DATE: 22 October 2007 JUDGMENT OF: Hodgson JA at 1; Hislop J at 26; Latham J at 27 DECISION: Both questions in the stated case answered yes. CATCHWORDS: CRIMINAL LAW - Case stated from District Court - Double jeopardy - Whether Court of Criminal Appeal can quash an acquittal - Whether it should do so - TAXATION - Failure to furnish an approved form when and as required - Written notice requiring taxation returns by a specified date - Extension of time requested and not responded to - Question of fact as to what was required by the Commissioner - Whether offence proved Criminal Appeal Act 1912 (NSW) s.5B LEGISLATION CITED: Income Tax Assessment Act 1936 (Cth) s.162 Taxation Administration Act 1953 (Cth) s.8C, Schedule 1 par.388-55 Criminal Code 1995 (Cth) ss.6.2, 13.3 Attorney-General for the State of New South Wales v. X [2000] NSWCA 199, 49 NSWLR 653 CASES CITED: R v. Sirocic [2000] NSWCCA 325 Robinson v. Woolworths Limited [2005] NSWCCA 426 The Australian Gaslight Company v. The Valuer-General (1940) 40 SR(NSW) 126 PARTIES: Regina - Crown Philip Bates - Opponent FILE NUMBER(S): CCA 2007/3294 COUNSEL: Mr. M. Buscombe for appellant Crown Mr. D. Raphael with Ms. Ketas for respondent SOLICITORS: Commonwealth Director of DPP, Sydney for appellant Johnson Winter & Slattery, Sydney for respondent LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 06/12/1039 LOWER COURT JUDICIAL OFFICER: Zahra DCJ IN THE COURT OF CRIMINAL APPEAL CCAP 2007/3294 DC 06/12/1039 HODGSON JA HISLOP J LATHAM J Monday 22 October 2007 REGINA V. BATES, Philip Judgment 1 HODGSON JA: This matter concerns questions submitted to this Court pursuant to s.5B of the Criminal Appeal Act 1912 by a document in the following terms signed by Zahra DCJ: 1. On 21 May 2007 I heard and upheld an appeal against a conviction by a magistrate of Philip Bates, (Bates), for an offence under s 8C(1)(a) of the Taxation Administration Act 1953 (Cth). The terms of the charge of which Bates had been convicted by the magistrate were as follows: On or about 7 June 2005 at Sydney in New South Wales pursuant to paragraph 8C(1)(a) of the Taxation Administration Act, 1953 you failed to furnish an approved form to the Commissioner of Taxation when and as required pursuant to a taxation law, namely section 162 of the Income Tax Assessment Act 1936. 2. I have been requested by the Crown to submit the following questions to the Court of Criminal Appeal pursuant to section 5B of the Criminal Appeal Act 1912: A. Did I err in determining that a notice issued under s 162 of the Income Tax Assessment Act 1936 requiring that a nominated income tax return be given to the Commissioner of Taxation by a nominated date, required the taxpayer named in the notice to do one of two things, either give the nominated income tax return to the Commissioner of Taxation by the nominated date, or seek an extension of the time nominated in the notice? B. Did I err in determining that as Bates, through his tax agent, had requested an extension of time for the lodgement of the nominated income tax return shortly after the receipt of the notice under section 162 of the Income Tax Assessment Act, there was evidence before me that the notice had been complied with, and consequently no offence had been committed under s 8C(1)(a) of the Taxation Administration Act 1953 (Cth)? STATUTORY PROVISIONS 2 Section 5B of the Criminal Appeal Act provides as follows: 5B Case stated from District Court (1) A Judge of the District Court may submit any question of law arising on any appeal to the District Court in its criminal and special jurisdiction coming before the Judge to the Court of Criminal Appeal for determination, and the Court of Criminal Appeal may make any such order or give any such direction to the District Court as it thinks fit. (2) At the request of a person who was a party to appeal proceedings referred to in subsection (1), a question of law may be submitted under that subsection to the Court of Criminal Appeal for determination even though the appeal proceedings during which the question arose have been disposed of. The question of law must be submitted not later than 28 days after the end of the appeal proceedings, or within such longer period as the Court of Criminal Appeal may allow. (3) The Court of Criminal Appeal may, in connection with the determination of a question of law in the circumstances referred to in subsection (2), quash any acquittal, conviction or sentence of the District Court on the appeal to the District Court. 3 The case also requires reference to provisions of the Commonwealth Taxation Legislation, namely s.162 of the Income Tax Assessment Act 1936, and s.8C (as it was at the relevant time) and par.388-55 of Schedule 1 of the Taxation Administration Act 1953: 162 Further returns and information A person must, if required by the Commissioner, whether before or after the end of the year of income, give the Commissioner, within the time required and in the approved form: (a) a return or a further or fuller return for a year of income or a specified period, whether or not the person has given the Commissioner a return for the same period; or (b) any information, statement or document about the person's financial affairs. 8C Failure to comply with requirements under taxation law (1) A person who refuses or fails, when and as required under or pursuant to a taxation law to do so: (a) to furnish an approved form or any information to the Commissioner or another person; or (aa) to give information to the Commissioner in the manner in which it is required under a taxation law to be given; or (b) to lodge an instrument with the Commissioner or another person for assessment; or (c) to cause an instrument to be duly stamped; or (d) to notify the Commissioner or another person of a matter or thing; or (e) to produce a book, paper, record or other document to the Commissioner or another person; or (f) to attend before the Commissioner or another person; or (g) to apply for registration or cancellation of registration under the A New Tax System (Goods and Services Tax) Act 1999 ; or (h) to comply with a requirement under subsection 45A(2) of the Product Grants and Benefits Administration Act 2000 ; is guilty of an offence. (1A) An offence under subsection (1) is an offence of absolute liability. (1B) Subsection (1) does not apply to the extent that the person is not capable of complying with the relevant paragraph. (2) For the purposes of paragraphs (1)(a) and (d), a person shall not be taken to have refused or failed to furnish information to the Commissioner or another person, or to notify the Commissioner or another person of a matter or thing, merely because the person has refused or failed to quote the person's tax file number to the Commissioner or other person. 388-55 Commissioner may defer time for lodgment (1) The Commissioner may defer the time within which an approved form is required to be given to the Commissioner or to another entity. (2) A deferral under subsection (1) does not defer the time for payment of any amount to the Commissioner. 4 The reference to "absolute liability" in s.8C(1A) engages s.6.2 of the Criminal Code 1995 (Cth); and the evidential burden in relation to s.8C(1B) engages s.13.3 of the Criminal Code: 6.2 Absolute liability (1) If a law that creates an offence provides that the offence is an offence of absolute liability: (a) there are no fault elements for any of the physical elements of the offence; and (b) the defence of mistake of fact under section 9.2 is unavailable. (2) If a law that creates an offence provides that absolute liability applies to a particular physical element of the offence: (a) there are no fault elements for that physical element; and (b) the defence of mistake of fact under section 9.2 is unavailable in relation to that physical element. (3) The existence of absolute liability does not make any other defence unavailable. 13.3 Evidential burden of proof - defence (1) Subject to section 13.4, a burden of proof that a law imposes on a defendant is an evidential burden only. (2) A defendant who wishes to deny criminal responsibility by relying on a provision of Part 2.3 (other than section 7.3) bears an evidential burden in relation to that matter. (3) A defendant who wishes to rely on any exception, exemption, excuse, qualification or justification provided by the law creating an offence bears an evidential burden in relation to that matter. The exception, exemption, excuse, qualification or justification need not accompany the description of the offence. (4) The defendant no longer bears the evidential burden in relation to a matter if evidence sufficient to discharge the burden is adduced by the prosecution or by the court. (5) The question whether an evidential burden has been discharged is one of law. (6) In this Code: evidential burden , in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist. CIRCUMSTANCES 5 On 4 October 2006, Magistrate Reiss in the Local Court convicted Mr. Bates of an offence under s.8C(1)(a) of the Taxation Administration Act and imposed a fine of $450.00 plus court costs and witness expenses. 6 The evidence before him showed that a document in the following terms was served on Mr. Bates at his address for service provided to the Australian Taxation Office (ATO): Final notice to lodge income tax returns Our records show that we have not received your income tax returns for the periods 1 July 2002 to 30 June 2003 1 July 2003 to 30 June 2004. Under section 162 of the Income Tax Assessment Act 1936, as delegate of the Commissioner, I now require you to give the Commissioner of Taxation the income tax returns referred to above by 6 June 2005. The returns must: " give a full statement of total income from all sources in and out of Australia, and " be in the approved form, signed by you or your authorised agent. If posting the returns, please address them to: PO Box 4071 HURSTVILLE NSW 2220 Court fines may be imposed If you ignore this notice, you may be prosecuted and convicted of a criminal offence. If you are convicted, a court may fine you up to $2,200 for a first offence and up to $4,400 for a second offence. For any further offences you may be fined up to $5,500 or imprisoned for a period of up to 12 months, or both. Penalties may apply If prosecution action is not instituted, penalties for failing to lodge on (illegible) may apply to late and unlodged income tax returns for the 2000 01 (sic) (illegible) year and subsequent years. Penalties range from $110 to $550 depending on the size of the entity and can increase depending on how long the document is overdue. Shane Reardon Deputy Commissioner of Taxation and Delegate of the Commissioner of Taxation 7 Mr. Rose, the tax agent for Mr. Bates, gave evidence that he received this notice on 12 May 2005, that on that day he telephoned the ATO and left a message on the answering machine requesting that someone telephone him in relation to Mr. Bates and that no response was received. He also gave evidence that on 12 May 2005 he wrote the following letter to the ATO: Taxpayer: Mr Philip Bates Tax File Number: 126 087 585 Extension of time to Lodge Income Tax Returns We confirm we act as taxagents (sic) for the abovementioned taxpayer Mr Philip Bates. We refer to your letter dated 7th May 2005 regarding the final notice to lodge income tax returns for our client in relation to financial years ended 30 June 2003 & 30 June 2004. Our client understands the importance of lodging tax returns however will have difficulty in complying with the lodgement due date of 6th June 2005. To allow our client adequate time to lodge accurate income tax returns we request an extension of time to 30 June 2005 to lodge the abovementioned income tax returns. Should you have any further questions please contact me immediately on (02) 9981 9361. He gave evidence that there was no response received to that letter prior to 6 June 2005. 8 The return for the 2003/2004 year was not lodged until 7 November 2005, and it was the failure in respect of this return that was the subject of the charge. The return for 2002/2003 was lodged on 7 July 2005, also outside the time limited, but this was not the subject of the charge. 9 There was evidence that Mr. Rose advised Mr. Bates on or about 12 May 2005 that he had left a message or messages with the ATO in order to seek an extension of time, and Mr. Bates gave evidence that he contacted his bookkeeper and commenced action to comply with the notice. 10 There was also evidence before the Magistrate of the ATO's taxpayer's charter, to the effect that, if a taxpayer writes to the ATO not using its automated reply services, it would aim to provide its response within 28 days of receiving all necessary information, and if all the information was not provided, it would aim to contact the taxpayer within 14 days to ask for it. 11 The Magistrate relevantly gave the following reasons for finding the offence proved: Certainly it is submitted on behalf of Mr Bates that ATO is a big organisation; there were references to their charter. No doubt if they had received that letter which on the balance of evidence I am prepared to accept that that letter was sent to an address which was not an inappropriate address and that something appears to have gone awry. There is no record of that letter having been received and it appears to have gone astray within Australia Post or within the ATO. These things of course can happen, they should not happen but that appears on the face of it what happened: a not perhaps unexpected action for mail to perhaps go astray in Australia Post or the ATO hence obviously the need where there is a fairly strict and clear obligation upon a taxpayer, (1) to have returned annual returns at an appropriate date which had not been met but (2) and in particular when a final notice is issued that there must be follow up action of a very specific and clear and definite manner to ensure that any request is received and is being acted upon and that follow up action should occur clearly and properly within the notice period. Clearly the 6 June deadline has passed without any follow up action by Mr Bates or Mr Rose of the relevant kind and without any confirmation of such action, the presumption that something may be happening is a far from sufficient response by Mr Bates or Mr Rose. Whilst if the ATO had received the letter there certainly is an obligation for them to respond to it within a reasonable and prompt timeframe there is no case law or statutory provision that suggests that should the Australian Tax Office be unreasonable in its dealings with a taxpayer in that regard that somehow alleviates or removes any responsibility the taxpayer has in relation to complying with the final notice. Certainly the cases referred to on behalf of Mr Bates make reference to implying aspects of reasonableness in terms of timeframes for such matters. There is certainly nothing in those cases or any case referred to on behalf of Mr Bates that talks about a general obligation to the Tax Department to behave reasonably in such circumstances. Certainly one expects that charter to be adhered to as indeed the ATO witnesses indicated that it would be reasonable to do so but there is no statutory provision or case law that in any way supports that such unreasonable action provides a defence to a matter of this kind. The statutory scheme, again it is a defence of absolute liability, it places a very heavy burden upon the recipient of the notice not upon the ATO. The ATO certainly has to discharge its onus beyond reasonable doubt, in discharging that onus it does not have to establish that it is beyond reasonable doubt that it has acted fairly in every dealing with the taxpayer or recipient of that notice. Whilst there is a slight suggestion, very slight indeed, from the letter, exhibit 15, that there might be some difficulty in complying with the obligation by 6 June there was no clear or specific evidence from Mr Bates or Mr Rose or from Mr Bates' bookkeeper that there was some significant or real difficulty in complying with the notice. The evidence tended to suggest that there was no real great complication, certainly matters had to be dealt with chronologically and 2003 returns needed to be brought up to date, BAS statements needed to be done but there was no evidence suggesting any great complexity or timeframes involved in so doing. It is two returns in what on the face of it appears to be no complex tax circumstances for Mr Bates; certainly no specific evidence as to a complicated and difficult tax scenario. He was dealing with a significant amount of work. It is a much different circumstance to that in Ganke where the Court was dealing with a large number of annual returns, quite a number of years six or seven I believe were involved there. Evidence suggested some complexities with the circumstances of the taxpayer in that matter. I am satisfied that on the evidence before the Court it has been established beyond reasonable doubt that the timeframe that I have referred to that gave the deadline of 6 June for those two returns was reasonable in the circumstances. There is certainly no indication of any real impedient that Mr Bates had in complying with that obligation, certainly he is not entitled, even though there is not clear evidence to that effect, he is not entitled to simply delegate his responsibilities and hope that those matters are dealt with promptly by his bookkeeper or tax agent, the obligation was on him to carry out action. It seems that very minimal efforts were made by him during the relevant period to ensure that that obligation was made. There does not appear to be any issue of a mistake of fact which has caused an error but in any event ... (not transcribable) ... does not make such matter available to him even if there were such facts before the Court. 12 In allowing the appeal and quashing the conviction, the primary judge relevantly gave the following reasons: Simply put, as the crown has helpfully noted in written submissions, that there are four elements that need to be proved in order to make out an offence under s.8C. They are, firstly, that the ATO had issued a final notice requiring the defendant to lodge a relevant income tax return. Secondly, that the final notice was sent to the defendant normally at his or her address for service. Thirdly, that the defendant failed to comply with the requirements of the final notice. Four, that the defendant was capable of complying with the requirements of the final notice. During the course of the oral argument the element in dispute had been distilled to that third element, that is, whether the defendant failed to comply with the requirements of the final notice. It appears clear that the other elements 1, 2 and four are made out. I have not heard submissions to the contrary. Turning to that third element, that is the question whether the defendant failed to comply with the requirements of the final notice, the evidence establishes that on receipt of that notice, which is exhibit, 1 the chartered accountant, Stephen Rose, who was engaged by Mr Bates, had sent a letter to the Australian Taxation Office dated 12 May 2005. The letter firstly acknowledged the receipt of the final notice dated 7 May. It sought an extension in time to 30 June 2005. After considering the evidence led in the Local Court, I am of the view here that the particular notice, which is exhibit 1, required the taxpayer to do one of two things in order to comply with that notice. Firstly, either send the return to the taxation office by the due date, or to seek an extension in time. The processes of the seeking of an extension in time were the subject of evidence during the course of the proceedings before the Magistrate. What is quite clear from that evidence is that there is a well recognised procedure for the application for extensions in time for a return to be remitted. I am of the view, again in the circumstances of this particular case, that upon receipt of the notice, which is exhibit 1, that the taxpayer, through his accountant Mr Rose, had sent a letter to the taxation office. That finding is consistent with the Magistrate's finding on the evidence that such a letter was sent. The evidence does support that conclusion when one, not only looks at the evidence of Mr Rose, the taxpayer, but also the contents of the letter and the context of that letter with other emails that were exchanged. It was open to the Magistrate to conclude that the letter was in fact sent. I have, after considering the evidence, also conclude that the letter was in fact sent. The Magistrate did not go on to decide the question as to whether the letter was in fact received, preferring to conclude that either the letter had gone astray somewhere within Australia Post or within the Australian Taxation Office. It appears that the Magistrate did not go on to consider deciding as a question of fact whether the Australian Taxation Office had received the letter. I am of the view that having come to a finding that the letter was sent that it is reasonable to conclude, on the balance of probabilities, that the letter was received by the Australian Taxation Office. I am consequently of the view that in the circumstance the taxpayer had complied with the notice in legitimately seeking an extension in time for which a return could then be filed. I am of the view that consequently, as of the 6th, that it could not be said that he was not complying with the notice because, reasonably, the period of time in which he would have reasonably presumed that he was not failing to comply would include the 6th June. In determining the period of time over which the taxpayer could be said to be legitimately complying with the notice by seeking an extension of time in this matter, I have considered the contents of the charter of the Taxation Office. It is not necessary to go on to decide the relationship of the charter to the particular legislation. All I need to decide is whether the defendant failed to comply with the requirements of the notice. I am of the view that he did not so fail to comply with the requirements in the sense that he legitimately applied for an extension in time. SUBMISSIONS 13 It was submitted for the Crown that the terms of the document sent by the Commissioner were clear and unambiguous, that nothing in it was capable of supporting a finding that it could be complied with by making a request for an extension of time, and that there was no evidence capable of supporting an inference that it could be complied with in that way. Accordingly, the Crown submitted that question 1 disclosed an error of law: see The Australian Gaslight Company v. The Valuer-General (1940) 40 SR(NSW) 126 at 138, proposition (4). 14 Also, in circumstances where there was no evidence that the request for an extension had been granted or the return had been lodged within the time required in the document, the facts found by the primary judge necessarily amounted to the commission of the offence; so there was also an error of law disclosed in question 2. 15 The Crown submitted that the Court should act on s.5B(3) and quash the acquittal, and remit the matter to the District Court to be determined in accordance with the Court's decision. The Crown referred to R v. Sirocic [2000] NSWCCA 325 and Robinson v. Woolworths Limited [2005] NSWCCA 426, both decided before the enactment of s.5B(3). 16 Mr. Raphael for Mr. Bates submitted that there was evidence to support the primary judge's finding, namely evidence that there was a protocol in place for dealing with the request for extensions and that the Commissioner's employees sought to comply with it and saw themselves as bound by it. Mr. Bates had a reasonable expectation of a reply to his request within 28 days because of this protocol; and having regard to the protocol, it was open for the primary judge not to be satisfied that Mr. Bates had failed to furnish the form "when and as required". 17 Mr. Raphael also submitted that the Court should decline to answer questions which had no precedent value: Attorney-General for the State of New South Wales v. X [2000] NSWCA 199, 49 NSWLR 653 at [42] and [165]; and should not expose Mr. Bates to double jeopardy. This was particularly so, when it was open to the Court not to be satisfied beyond reasonable doubt that Mr. Bates was capable of complying with the notice, this being a requirement of s.8C(1B) of the Taxation Administration Act. DECISION 18 In my opinion, the findings of the primary judge that the notice required the taxpayer to do one of two things, either give the nominated income tax return to the Commissioner of Taxation by the nominated date or seek an extension of the time nominated in the notice, and that the making of a request for an extension amounted to evidence that the notice had been complied with, did amount to errors of law. The notice document was unequivocal, and could not be read as requiring anything other than the giving of the nominated tax returns to the Commissioner of Taxation by the nominated date. 19 However, I would add that this of itself would not be conclusive as to the commission of the offence. The relevant provisions (s.162 of the 1936 Act and s.8C of the 1953 Act) do not in terms require compliance with the terms of a written notice, and there is no section in the relevant legislation giving conclusive effect to such a notice. Each of the sections poses a question of fact as to what is required by the Commissioner; and although a notice given by the Commissioner is very powerful evidence of what is required by the Commissioner, it is not necessarily conclusive. Thus, for example, if there were a practice of suspending the requirements of the notice upon receipt of a request of an extension of time, and then either reinstating them if the extension is refused a reasonable time before the date specified in the notice, or otherwise substituting a different time, it would be arguable that, in the light of this practice, once a request had been made, what was required by the Commissioner was no longer as set out in the notice. 20 I am not saying that this argument would succeed on the facts of this case; but I am saying that it seems there could still be a question of fact to be addressed if the acquittal were quashed and the matter remitted to the District Court. 21 The other question raised by Mr. Raphael, as to whether it was established that Mr. Bates was capable of complying, carries little weight, in my opinion. As the Magistrate said, there was no clear or specific evidence from Mr. Bates or Mr. Rose or Mr. Bates' bookkeeper that there was some significant or real difficulty in complying with the notice; and the Magistrate was satisfied beyond reasonable doubt that he was capable. The primary judge saw no problem with that conclusion, and neither do I. 22 In Robinson, Basten JA doubted the view expressed in Sirocic to the effect that s.5B of the Criminal Appeal Act conferred power to overturn an acquittal. However, both those decisions were before the passage of s.5B(3); and in my opinion, s.5B(3) makes it clear that the Court has that power. 23 There is still a question whether, having regard to the double jeopardy principle, this Court should exercise the power. If the matter were sent back, it seems there could still be the question of fact to be addressed as to what was the requirement of the Commissioner, in the light of his protocols and practices. On the whole, having regard to the double jeopardy principle, I do not think the acquittal should be quashed and the matter sent back. 24 In my opinion the questions raised could be significant in other cases, and the primary judge's decision should not stand as a precedent; and for those reasons, it is appropriate to answer the questions. However, for the reasons given, I would not make any further order. 25 Accordingly, I propose that both questions in the stated case be answered yes. 26 HISLOP J: I agree with Hodgson JA. 27 LATHAM J: I agree with Hodgson JA. ********** 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. 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