Mallan v Lee

High Court of Australia|1949-07-01|Before: McTiernan JJ, Ligertwood JJ, Mayo J

The application of s. 5 of the Crimes Act is not, in my opinion, limited by the common law rules that in cases of felony there is a distinction between principals and accessories whereas in cases of misdemeanour a person who would be an accessory if it were a matter of felony is called a principal. Section 5 provides that in cases to which it is properly applicable a person who infringes the section shall be deemed to have committed an offence against the relevant law of the Commonwealth. The words of the section prevent any such question arising as that which led to the decision in Morris v. Tolman [1] . Gould & Co. Ltd. v. Houghton [2] is a case which is directly in point. It was there held that a person prosecuted as accessory to an offence which was a misdemeanour was prosecuted as a principal, and that the prosecution was therefore subject to the period of limitation prescribed in relation to that offence.

There is no doubt that a person who falls within the terms of the section has infringed s. 5. But s. 5 provides no penalty for any offence. In order to ascertain what penalty is permissible it is necessary to look at the "law of the Commonwealth" against which the offence has been committed. The person is deemed to have committed an offence against that law and is "punishable accordingly." Thus the penalty applicable is the penalty appropriate to the offence against the law of the Commonwealth which a defendant is deemed to have committed. That is the offence for which he is prosecuted, and the law relating to prosecutions for that offence is the law which is applicable. That law in the present case is contained in s. 230 (2) of the Income Tax Assessment Act, namely, that a prosecution can be instituted within six years of the commission of the offence. The Crimes Act, s. 23 (3), applies that provision to persons knowingly concerned in the commission of the offence.

I have dealt with the arguments which were presented on behalf of the appellant. They relate to the possibility of any person becoming punishable by reason of being knowingly concerned in the commission of an offence against s. 230. But in this case the particular person charged with the offence is the public officer of the company by reason of whose act the company is alleged to have committed the offence. No argument based upon this fact was addressed to this Court. But I agree with my brother Dixon, for the reasons which he states, that s. 230 makes it an offence for any person to understate or misstate income in any income-tax return, whether his own or that of another person. Thus the appellant, if guilty at all, is simply guilty of an offence against s. 230 and s. 5 of the Crimes Act has no application in the present case. The complaint is not entirely satisfactory in form, but it does sufficiently allege an offence against s. 230 as the offence for which it is sought to recover against the appellant the penalties for which that section provides. The penalty would be joint (s. 252 (i)) but only the appellant could be imprisoned under s. 247, because a company, though it may have many capacities, is incapable of going to gaol.

For these reasons I am of opinion that the appeal should be dismissed but that instead of the answer to the first question being based upon s. 5 of the Crimes Act, the answer should be "Yes, by reason of the Income Tax Assessment Act 1936-1944, s. 230." Section 250 of the Income Tax Assessment Act provides that costs may be awarded and in my opinion the appeal should be dismissed with costs.

In my opinion the manner in which the complaint is framed in this case is a result of a misunderstanding of s. 230 (1) of the Income Tax Assessment Act 1936-1944. The complaint contains a charge under that section against an incorporated trading company and a charge under s. 5 of the Crimes Act 1914-1946 against the appellant. The averments accompanying the complaint describe the appellant as the public officer of the company and he is so described in the charge against the company contained in the complaint.

Where separate offences arise out of the same set of circumstances s. 51 of the Justices Act 1921-1943 S.A. allows them to be joined in one complaint and this is taken to include offences by different defendants. The company is charged with contravening s. 230 of the Income Tax Assessment Act in that the public officer of the company to wit the appellant in a return knowingly and wilfully understated the amount of income of the company derived from all sources during a specified accounting period. The charge against the appellant is that by act he was directly knowingly concerned in the commission of the offence above alleged. The charge refers to the Crimes Act 1914-1946, s. 5. I think that the charge against him should have been for an offence against so much of s. 230 (1) as says that any person who in any return knowingly and wilfully understates the amount of any income shall be guilty of an offence. It was in my opinion neither necessary nor possible to treat the appellant's signature as public officer of the company's return, in which, according to the allegation, he knowingly and wilfully understated the income, as exposing him to liability under s. 5 of the Crimes Act as one knowingly concerned in the company's offence under s. 230 (1). The company's offence consists only in its vicarious responsibility for his alleged act in knowingly and wilfully understating on behalf of the company in its return the amount of income derived by the company. That act amounts in my opinion to an offence by him under s. 230 (1). The provision may be divided into two parts. The one part says that any person who 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 other part says that 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. A public officer cannot, I think, make his company responsible under the second part of the provision without himself becoming liable under the first part. The first part is not confined to a taxpayer making a return of his own income. This is designedly done because 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. A trustee or an agent may as a result of s. 254 make a return of the income of others, and an executor of a deceased taxpayer may make a return of the deceased's income. A partner may make a return of the income of the partnership. The master, agent or other representative in Australia of the owner or charterer of a ship may be called upon to make a return of freight or passage money: s. 130. The expressions "any person" and "any income" in s. 230 (1) were adopted so as to cover cases where the person making the return did so in a representative capacity and did not derive the income. The expression "any person" where it secondly occurs does not necessarily mean, or refer to, the same person as is designated by the expression where it first occurs. A curious thing is that, where it first occurs, it probably does not cover a company falling under the second part of the provision; but where the expression secondly occurs the expression must do so. I think that a public officer of a company falls under the words "any person who understates the amount of any income" and that the words "any income" cover his company's income. In the same way, if the public officer knowingly and wilfully made a misstatement affecting the liability of his company to tax, he would fall within the provision. The company's income would be the income of a person within the words "income of any person."

It might be argued that the express provision made by s. 230 (1) relating to the case of a company shows an intention on the part of the legislature to make the company and not the public officer director or servant of the company penally liable for a wilful understatement of income or misstatement, and that the wide words of the other part of the sub-section should not be interpreted as including the public officer director or servant making a return. Such an inference would in my opinion be mistaken. I understand the policy of the more general part of s. 230 (1) to be to place upon all persons who make in a return a wilful understatement of income or misstatement, a penal responsibility whether they do so on behalf of themselves or of others. There is no reason why this principle should not extend to public officers &c. of companies. The purpose of the express reference to the company is to make the corporation vicariously liable, not to exclude the liability of the public officer or other agent of the company whose act and guilty mind form the essential elements in the offence. This view is supported by the history of the provision: cf. s. 68 of No. 37 of 1922 and s. 60 of No. 34 of 1915. The result of the view I have adopted is not necessarily that the company and its public officer are each separately liable to the penalty stated at the foot of s. 230 (1). That "penalty" may not exceed £500 and double the amount of the tax which would be avoided, but of course it may reach that maximum. Section 252 (1) (i) of the Income Tax Assessment Act 1936-1944 provides that any proceedings under that Act taken against the public officer shall be deemed to have been taken against the company and that the company shall be liable jointly with the public officer for any penalty imposed upon him. Probably this provision was made in contemplation of s. 252 (1) (f) which makes the public officer liable to the same penalties as the company in the case of default in the requirements imposed by the Act or regulations. But I do not see why it should not apply to s. 230 (1). If it does apply, it is perhaps logically possible to give it an operation by which it makes the company jointly liable with the public officer for his offence and separately liable for its own offence, incurring a separate penalty for each. But I think the more reasonable interpretation of the two provisions in combination is that they show a legislative intention that the public officer and the company shall both be liable, but only in one penalty. On either view, s. 252 (1) (i) tends to confirm the conclusion that s. 5 of the Crimes Act 1914-1946 can have no application to the public officer who brings his company under the sanctions of s. 230 (1). For it shows that for penal purposes the company and the public officer are to be identified and the company is to be jointly liable with him for any penalty he incurs.

On the interpretation I have given to s. 230 (1), for more than one reason s. 5 of the Crimes Act cannot apply to a public officer so as to make him an accessory to the offence of the company. In the first place, the public officer's act on behalf of the company making it an offender ipso facto amounts to a substantive offence on his part under s. 230 (1). In the second place, the sub-section makes him the actor, the principal, for whose guilty conduct the company is responsible vicariously. It would be an inversion of the conceptions on which the degrees of offending are founded to make the person actually committing the forbidden acts an accessory to the offence consisting in the vicarious responsibility for his acts.

But if the interpretation were placed on s. 230 (1) opposed to that which I have adopted, I should think it would equally follow that s. 5 of the Crimes Act could not be applied to make the public officer liable under that provision. For it would mean that by s. 230 (1) the legislature had made the company responsible as an offender for the knowing and wilful understatement of income by the public officer to the exclusion of any such liability of the public officer. If that conclusion were reached it would be impossible to make him liable for the same conduct under a provision dealing with accessories. There is a number of cases which show that the application of sections dealing with aiding and abetting may be excluded by the nature of the substantive offence or the general tenor or policy of the provisions by which it is created: cf. R. v. Tyrrell [1] ; Morris v. Tolman [2] ; Ellis v. Guerin [3] .

(1894) 1 Q.B. 710. 2. (1923) 1 K.B. 166. 3. (1925) S.A.S.R. 282.

The first question which is asked in the amended special case asks whether by reason of s. 5 of the Crimes Act or otherwise the complaint discloses any offence by the appellant. On the interpretation I place upon s. 230 (1) the complaint alleges the facts which constitute an offence by the appellant and in this sense "discloses" the offence. It necessarily does so in the charge against the defendant company. But the further statement of the charge against the appellant is wrong in referring to and following the words of s. 5 of the Crimes Act. I would amend the order of the Supreme Court by substituting for the answer to the first question an answer to the effect that the complaint while alleging facts amounting to an offence on the part of the appellant under s. 230 (1) of the Income Tax Assessment Act incorrectly charges an offence by the appellant under s. 5 of the Crimes Act and should be amended so as to charge him under s. 230 (1): see s. 240. Of course it follows that sub-s. (2) of s. 230 fixes the time within which the prosecution may be brought. Accordingly it is within time.

Although it can form no part of the grounds of my decision, I think that it is desirable to add that I agree in the interpretation given by Ligertwood J. to the concluding words of s. 5 of the Crimes Act, "and shall be punishable accordingly." That is to say I think that they mean that the accessory shall be liable to be tried convicted and punished as a principal offender. It would follow that where prosecution for the principal offence is subject to a limitation in point of time the limitation would apply to the exclusion of that stated in s. 21 (1) of the Crimes Act: Homolka v. Osmond [1] . It is also perhaps desirable to add that I do not think that the fact that penalties for an offence are recoverable by a taxation prosecution within the meaning of s. 222 of the Income Tax Assessment Act 1936-1944 is enough to exclude the application to the offence of s. 5 of the Crimes Act. The reasons advanced to the contrary and the authorities relied upon appear to me to be sufficiently met by R. v. Justices of Appeals Committee of the County of London Quarter Sessions [2] .

Subject to the foregoing variation which I would make in the order of the Supreme Court I think that the appeal should be dismissed with costs.

Section 230 of the Income Tax Assessment Act 1936-1944 says that any person or company whom the section makes answerable for an understatement of income done in breach of the section "shall be guilty of an offence" and that "a prosecution for an offence against this section" may be commenced within six years after the commission of the offence. Section 5 of the Crimes Act 1914-1946 applies to any person who aids and abets "the commission of any offence against any law of the Commonwealth." The section provides that an aider and abettor "shall be deemed to have committed that offence and shall be punishable accordingly." It is clearly in accordance with the ordinary meaning of the words of s. 230 and s. 5 to say that any person or company made answerable by the former section for the understatement of income in breach of it commits an offence against a law of the Commonwealth. But it is argued that the understatement cannot be aided and abetted in the proper sense of the words because the understatement does not amount to the commission of a crime. In order to accept that argument it would be necessary to ascribe to the words of s. 230 a meaning, other than their ordinary meaning, which the words could bear. The argument is based upon other sections of the Act providing procedure which is more appropriate to civil than to criminal matters, for the prosecution of "offences" against the Act. The authorities which have been cited in connection with this argument do not enable a clear conclusion to be reached that such procedural provisions alter the character which the words, "guilty of an offence," naturally ascribe to the conduct of understating income in breach of s. 230. I think that the better test is to accept the legislative definition of the conduct: I should hold accordingly that it is an offence and is criminal. It follows that the commission of this offence is within the scope and operation of s. 5.

This section is expressed to apply not only to any person who aids, abets, counsels or procures the commission of an offence against any law of the Commonwealth, but also to any person who "by act or omission is in any way directly or indirectly knowingly concerned in or party to the commission" of any such offence. The charge against the appellant is that he "by act was directly knowingly concerned in" the understatement of income in breach of s. 230 on behalf of a company of which he was the public officer. Besides the argument that s. 5 did not apply to the understatement it was argued that the particular participation by the appellant alleged in the charge was not aiding and abetting and while an aider and abettor was punishable as a principal offender, a person connected with the offence in the manner charged in the complaint could not be so punishable. It is a matter for the legislature whether if a person is not an aider and abettor in the strict sense he should be subject to the same criminal liability as an aider and abettor. It follows that the complaint under s. 5 lies and was made within time.

I agree however that it was not necessary to have recourse to s. 5 because upon the allegations in the complaint a charge would lie against the appellant under s. 230 of the Income Tax Assessment Act.

High Court of Australia Latham C.J. Dixon and McTiernan JJ. Mallan v Lee [1949] HCA 48

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