Ambrose v. Edmonds-Wilson
Judges:Bollen J
Court:
Supreme Court of South Australia
Bollen J.
The respondent is a farmer. He lives near Coonalpyn. He is ``in business'' with his father. He engaged an accountant in one of the suburbs of Adelaide to prepare his income tax return for the year ending 30 June 1986. In late October or November 1986 the respondent gave that accountant his bank statements, cheque books and documents touching his ``access'' bank account together with all other information necessary for the preparation of the return. The accountant did not timeously prepare and submit the return.
The Deputy Commissioner in Adelaide under authority given him by the Commissioner of Taxation caused a notice to be sent to the respondent. It was sent to the respondent's address for service. That address for service was the office of the accountant. That notice required the respondent to submit his return within 14 days from the date of that notice. The date of the notice was 25 February 1987 on which day it was posted to the respondent at his address for service. It was received by the accountant. It had been sent pursuant to the provisions of the Taxation Administration Act (``the Act''). There is no doubt that the notice was posted and received by the accountant. The respondent did not dispute those facts. By virtue of reg. 59 of the Regulations made under the Act the respondent is deemed to have been served with the notice. That is to say, although the notice did not come to his personal
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attention, although it was not served on him personally, and although it was not served in his own home or office, he is deemed to have been served with the notice.The accountant did not tell the respondent that he had received the notice. Nor did he get on with the preparation and submitting of the return. The respondent and his father spoke with the accountant on the telephone on a number of occasions between November 1986 and August 1987. In March 1987 the respondent rang the accountant who told him that ``everything was under control''. There is no doubt but that the respondent was ignorant of the existence of the notice until he was served on 18 September 1987 with the complaint and summons issued by the appellant who was acting for the Commissioner of Taxation. That complaint was laid under sec. 8C of the Taxation Assessment Act. It is the successor of the former sec. 223 which in effect required people to comply with requirements of the Commissioner. The former section was in different terms to sec. 8C. Section 8C was inserted by the Taxation Laws Amendment Act, No. 123 of 1984.
I think it well to set out the complaint in full in its crisp language. It is:
``THE COMPLAINT of THE COMMISSIONER OF TAXATION by DONNA NELLIE AMBROSE an officer of the Australian Taxation Office, stationed at Adelaide in the State of South Australia, the person authorised by the said Commissioner to lay this complaint on his behalf and in his official name, taken this day before the undersigned a Justice of the Peace for the State of South Australia, who states and pursuant to section 8ZL of the Taxation Administration Act 1953 avers that
JOHN MARK EDMONDS WILSON
of SECTION 23 HUNDRED CONEYBEER, COONALPYN 5265
in the said State
(hereinafter called `the defendant') on being required by the Deputy Commissioner of Taxation, Adelaide to whom the Commissioner of Taxation had delegated his powers and functions in this respect (which delegation had not at any material time been revoked) pursuant to the provisions of the Taxation Administration Act 1953, by notice in writing dated the 25th day of February 1987 which said notice was on the 25th day of February 1987 duly posted by pre-paid letter post addressed to the said defendant at the said defendant's address for service,
c/- MURRAY E. LAMBERT,
PO BOX 195, PARKHOLME 5043
to furnish to the said Deputy Commissioner of Taxation at his office, King William Tower, 65 King William Street, Adelaide, in the said State, within fourteen days of the date of the notice, for the purposes of the Income Tax Assessment Act 1936, a return in writing in the prescribed manner of income derived by the said defendant from all sources in Australia or elsewhere during the year 1st July 1985 to 30th June 1986 failed to furnish such return when and as required, to the extent that the said defendant was capable of doing so contrary to section 8C of the Taxation Administration Act 1953.''
For the moment I emphasise the words ``to the extent that the person is capable of doing so''.
The respondent denied the charge. The complainant called no evidence. She relied on the averments in the complaint. The respondent and his father gave evidence. They proved the facts which I have earlier mentioned. The respondent by his counsel argued that he was not capable of complying with the notice at all because he did not know of its existence and because the accountant had all relevant ``books''.
The magistrate accepted these arguments. She dismissed the complaint. She said:
``Although Regulation 59 deems that the defendant has received the notice it does not go on to say exactly what effect that has upon the defendant's knowledge.
I consider in particular that in order to have the attributes and traits required to perform a deed or action, that one must have some knowledge of the request to perform that action and secondly, the sources available to enable one to do so.
In this case the defendant had neither the knowledge nor the sources, that is the books and accounts, available
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Accordingly, I do not consider that it has been proved that he has not complied to the extent that he is capable of.''
The appellant appeals. The grounds of appeal are:
``1. The learned Special Magistrate erred, in law and in fact, in finding that the defendant was not capable of complying with the notice requiring him to furnish his income tax return for the year ended 30th June 1986.
2. The learned Special Magistrate erred, in law, in finding that the defendant should have had personal knowledge of the notice requiring him to furnish his income tax return for the year ended 30th June 1986.
3. The learned Special Magistrate should have found the charge proven on the weight of the evidence before her.
4. The learned Special Magistrate erred, in law and in fact, in dismissing the charge.''
Before me Mr Edmonds-Wilson, for the respondent, put forward more arguments than were put to the magistrate. The respondent is entitled to support the order of dismissal by any available argument. Mr Edmonds-Wilson travelled through many cases in a most interesting submission. In short his argument other than the one which succeeded before the magistrate (which, of course, he put to me) was that the relevant section required proof of intention, of mens rea, by the complainant.
But first the argument accepted by the magistrate. I was referred to a number of cases which deal with the words ``fail'' and ``capable'' in other legislation. I do not think that those cases are directly helpful. Of course, they help in a general way. But the phrase ``to the extent that the person is capable of doing so'' in sec. 8C of the Act must take its meaning and operation from the section itself considered in the light of the object of the whole Act. Section 8C is a section designed to compel people to do things lawfully required of them pursuant to a ``taxation law''. The subsection has several placita. The magistrate referred to only one. True it is that that was the relevant one in the sense that it was the one not obeyed. But I think that the whole section should be considered. It is:
``Failure to comply with requirements under taxation law
8C A person who refuses or fails, when and as required under or pursuant to a taxation law to do so -
- (a) to furnish a return or any information to the Commissioner or another person;
- (b) to lodge an instrument with the Commissioner or another person for assessment;
- (c) to cause an instrument to be duly stamped;
- (d) to notify the Commissioner or another person of a matter or thing;
- (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,
to the extent that the person is capable of doing so is guilty of an offence.''
Now we can see that the phrase ``to the extent that the person is capable of doing so'' is general. That is to say, it is capable of applying to each placitum. Its force and effects may vary depending on that which is required of a person.
With all respect I cannot agree with the magistrate. I do not think that the phrase refers at all to ``the person's'' knowledge or state of mind. I agree with the submission of counsel for the appellant that ``the language of the Taxation Amendment Act and the Income Tax Regulations lead to the conclusion that knowledge of the requirement was not necessary''.
In this context I refer to the reasons of Mr D.F. Wilson S.S.M. in
Kelton v. Goodes 79 ATC 4252. Amongst other things his Honour said: ``There is a clear indication of an intention by Parliament that a purported requirement by the Commissioner under either section is nonetheless a requirement because it does not come to the notice of the person concerned'' (see pp. 4255-4256). Of course, Mr Wilson S.S.M. was referring to the ``old'' sec. 223. The present phrase does not connote any requirement that the respondent should have known that the notice had been served.
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The scheme of ``taxation law'' is that a taxpayer may have an address for service removed from his own home or office. Parliament recognises that will often happen when people engage accountants to prepare their returns. Service of notices on such a taxpayer is good service if it is served at the removed address. It behoves taxpayers to take steps to see that accountants or tax agents keep them informed of the receipt of any notices. No doubt it is a system which can produce harsh results. But it is the scheme and from time almost immemorial taxpayers have suffered penalties through default of accountants and tax agents.
But in sec. 8C Parliament allows for some ameloriation of harshness. A man cannot be held responsible in [law] if he has no capacity to do that which is required of him. He cannot be held responsible if he is required to do more than he has the capacity to do. Of course, one can see the force of the argument that a man has no capacity to respond to that of which he is ignorant. But this is one of those cases in criminal law where in effect the agent's knowledge is the knowledge of the person charged. Once the idea or scheme of service other than personal or other than at the home or ``business-place'' of a person is acknowledged, then attributed knowledge or irrelevance of knowledge must follow. The phrase is directed to capacity to do something and not to knowledge of the requirement to do it. The respondent had the capacity to respond. He needed merely to get the information from the accountants and prepare the return himself or to lash the accountant into action or to take the information to another accountant for prompt preparation of the return. It is not correct, in my opinion, to say that the taxpayer cannot respond to the notice of this type because his agent has his books.
But that may not end the matter. Mr Edmonds-Wilson said that mens rea must be proved. He said, too, that even if the offence created by sec. 8C(a) was not absolute it was one to which the defence of honest and reasonable mistake applies. That is to say he said that the ``defence'' often called the ``Proudman v. Dayman defence'' applies. (As to
Proudman v. Dayman see (1941) 67 C.L.R. 536.)
Mr Kavanagh for the appellant said that the offence was absolute, more than strict, but absolute. That is to say he was submitting that intention, knowledge and mens rea were irrelevant.
I have thought about all the authorities to which I was referred. Much has been written about mens rea in statutory offences. Much has been written about the ``defence'' of honest and reasonable mistake. I think that, in this day and age, the less said by a single Judge about the topic in general the better. I attempt to confine myself to saying no more than I believe to be necessary to decide this case.
In
He Kaw The v. R. (1985) 60 A.L.R. 449 Brennan J. said at p. 480: ``It is now firmly established that mens rea is an essential element in every statutory offence unless, having regard to the language of the statute and to its subject matter, it is excluded expressly or by necessary implication''. I respectfully think that this is completely correct and well supported by authority. I take it as my text.
I add a reference to
Gammon Ltd. v. A. G. of Hong Kong (1985) A.C. 1. The Judicial Committee to the Privy Council in effect said that the presumption that mens rea was an essential ingredient of a statutory offence could be displaced by clear words and by necessary implication where the statute creating the defence dealt with an issue of social concern provided that strict liability would be effective to promote the objects of the statute.
We can easily understand the object of the Taxation Assessment Act. More pointedly the object of sec. 8C is to compel compliance with things lawfully required of taxpayers pursuant to a taxation law. It is a section intended to promote and facilitate the assessment and collection of the right amount of income tax from taxpayers. The Commissioner must have quite extensive powers to enable him and his officers so to assess and collect. It is, of course, a very unattractive idea that any person can be convicted without his or her having any intention to break the relevant law or even to take a chance about breaking it. But sometimes it must happen. Road traffic offences and offences under the legislation to provide for the sale of unadulterated food are examples. The interest of the community demands that in some class of statutory offence absolute liability should attach to people who are subjectively innocent. That is necessary for the operation of the legislation which in turn is seen by the
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legislature to be for the good of the general populace. The robust mind initially fights against penalties without guilty intention. But in the end it must be resigned to some areas, perhaps correctly called social issues, in which such penalties must regretfully obtain.Section 8C does not expressly say that mens rea and honest and reasonable mistake are excluded but I think that consideration of the subject matter of the Act, of the object of sec. 8C and of its language shows that both mens rea and honest and reasonable mistake are excluded by necessary implication. I think the subject matter of the legislation and the object of sec. 8C cry out that he who has received a notice at his address for service must comply with it to the extent that he is capable of doing so. Intention, knowledge and mens rea are all irrelevant. The respondent received a notice because it came to his address for service. He, by himself or his agent, had the capacity to comply with it. He did not comply. The offence is complete. I do not think that the magistrate's decision to dismiss because the offence was not made out can be supported.
Mr Edmonds-Wilson referred me to sec. 19(b) in the Crimes Act (Cth). It may well be that I could determine whether any action should be taken under that section and, if so, what action. But in the first instance it should be a matter for the magistrate. I stand ready to hear more submissions by counsel whether I should now proceed to consider penalty and, if so, what penalty or send the matter back to the magistrate.
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